Investment Thesis

SMB Acquisition Strategy — February 2026

Core Thesis: Buy a service-heavy blue collar business that benefits from AI without betting on AI itself — a "picks and shovels" play for the AI economy in the physical world.

Why This Works

Electrification is structural, not cyclical — EV charging, panel upgrades, heat pumps, data center power demand
AI attacks operational bottlenecks — quoting, permitting, dispatch, scheduling, coordination
Skilled labor shortage increases pricing power — demand exceeds supply of licensed tradespeople
Banks like predictable service cash flow — recurring revenue makes financing easier

Sector Rankings

#1 ⚡ Electrical Services (Top Pick)

Why it wins: Electrification drives constant work: panel upgrades, load calculations, rewiring, smart panels, generators, EV charging. AI can meaningfully raise throughput in estimating, permit paperwork, scheduling, call handling, and parts planning. Closest thing to owning an "AI amplified utility service business."

Best sub-niches:

Residential service electrical + panel upgrades
Light commercial electrical maintenance contracts
EV charging for multifamily and commercial
Backup power and transfer switches

#2 ❄️ HVAC + Heat Pumps

Why: Already operationally software-driven. Heat pump adoption has strong policy and cost drivers. Strong recurring revenue from maintenance contracts.

Best sub-niches:

Replacement and retrofit focused HVAC
Heat pump install + service agreements
Commercial HVAC maintenance

#3 🔧 Plumbing + Leak Detection

Why: High dispatch density and high admin overhead = fast AI gains. Leak detection, smart shutoffs, water filtration create add-on revenue.

Best sub-niches:

Service and drain cleaning with membership plans
Trenchless pipe repair (higher ticket, more differentiated)
Water heater replacement and maintenance

#4 🔥 Fire Protection

Why: Recurring inspections with mandatory compliance requirements. High barrier to entry (licensing). Strong moat from established customer relationships.

How AI Creates Value

AI becomes a margin expansion tool, not a product bet:

AI Application	Impact
Automated call handling and booking	Reduce admin labor 5-10%
Faster estimates from job history	Higher close rates
Smarter routing	More jobs per tech per day
Parts prediction	Less downtime
Technician coaching	Higher quality, fewer callbacks
Proactive follow-ups	Better retention, more upsells

            Year 1 Realistic Outcomes:
            5-10% admin labor reduction
5-8% revenue lift per technician
Faster quote turnaround
EBITDA expansion of 300-500 bps without growth capex

        