Enshittification Is a Losing Exit Strategy

In Brief

Cost-cutting that strips out goodwill destroys the referral engine. It’s brand trust that earned the acquisition premium in the first place. Preserving legacy loyalty practices is a valuation strategy, not a soft play.

Earned media, AI-assisted diagnostics, and job-by-job pricing: discipline separates the shops pulling ahead from the ones reacting. The common thread: build durable trust and quote off reality, not last month's costs.

HVAC deals of the past week: Redwood Services enters Oklahoma with Tulsa's Hendrick Heat, Air & Plumbing, Sila Services pushes into Western Virginia with Davis Heating and Air Conditioning, and a first-time buyer launches a Texas HVAC roll-up with an equity-light structure.

The View from Jay Street

Enshittification Is a Losing Exit Strategy

EBITDA is not enough. Not in this market. Exits are hard right now. Interest rates are elevated. Capital markets are constrained. Home services is where PE is piling in. Add-ons now account for 73% of all PE buyouts according to Cherry Bekaert’s 2025-2026 PE Report. That’s the rollup model in a single number. Platform deals that closed cleanly two years ago now grind through diligence today. Some reprice. Some die. 52% of buyout-backed companies have been held for four or more years according to McKinsey’s 2026 Global Private Markets Report. That’s the  highest level on record.

PwC’s 2026 midyear deals outlook confirms it. The exit bottleneck remains jammed. Buyers want more than strong trailing twelve-month earnings. They want proof the performance holds.

That proof is harder to manufacture than the EBITDA itself.

The Enshittification Trap

Any competent operator can cut costs and push margins for twelve to eighteen months. Diligence findings were the second-leading reason deals failed to close in 2025. Buyers want evidence that the customers will stay. That the brand still means something. That the growth is real–not borrowed against goodwill founders spent decades building.

The PE instinct is to cut. Scrutinize every line item. Optimize every asset. Drive up margin and invoice averages. That discipline is sound and perfectly rational. 

But it often leads to what Cory Doctorow calls "enshittification." He coined the term to describe how tech platforms degrade their products to extract more value from users. It perfectly applies to home services now. When private equity takes over, they systematically cut the one thing they will later regret losing: acts of goodwill.

The Real Cost of "Zero-Dollar" Tickets

Think about what made the brands in your portfolio worth acquiring.

One HVAC company would call every past customer in the Fall for free seasonal inspections. A family garage door company dispatched technicians after power outages to reset customer systems. No charge. These weren’t margin plays. They were loyalty investments. They are exactly why those customers called back and told their neighbors.

The acquiring platform took over and saw zero-dollar tickets. It labeled them non-performing jobs and killed the practice. Never calculated the cost of eroding trust and referral volume. Stripped the cost without measuring the value.

Loyal homeowners noticed. Customer satisfaction sank. Referrals dropped.

The Spiking CAC Penalty

Homeowners across the country report the same pattern. A company they trusted for years changes ownership. Prices soar and service quality drops. The personal touch disappears. The company used to send a technician who remembered their name. Now it sends a stranger who reads from a sales script. “A local company that knows me” became “an impersonal system I’m being routed through.” These customers don’t freely write five-star reviews. They’ll hesitate to call again, and they certainly won’t recommend the company to their friends and family.

Acquiring a new customer now costs 5 to 25 times more than retaining one according to a 2026 Bain & Company study. Platforms that lose trust pay every month in spiking Customer Acquisition Cost (CAC). Referral-driven leads and ad-dependent ones get blended together on diligence reports. Smart operators measure and manage the distinction.

Brand Integrity Is a Valuation Strategy

Before signing an LOI, smart buyers pull 18 months of Google review data. 31% of consumers will not use a business rated below 4.5 stars. A platform with declining reviews loses customers before the ad spend starts. A platform running on paid acquisition to patch the gap created by brand erosion is a liability wearing the costume of a growth story.

Platforms that earn premium multiples have two things going for them: strong financial performance and brand integrity that’s been left intact. That combination is rare. Rarity earns premiums.

An anti-enshittification strategy is not a soft play. It is a valuation strategy.

This week: Sit down with your operators and legacy team. Ask what the previous owner did that made customers loyal for life. Free tune-ups. Post-storm outreach. Remembered names. Write it down. Pick the ones you can sustain. Build them into technician training. When the next buyer runs diligence, you want proof you did not strip the soul out of the business to hit a quarterly number.

Daniel Egan

Daniel Egan is the founder of Jay Street Consulting. He has over a decade of experience in the home services sector. As part of a fast-growing, institutionally-run platform, he helped lead the business into a nine-figure exit. He has built teams, managed agencies, and learned firsthand what drives enterprise value–and what quietly erodes it.

Operator’s Edge

Earned media beats paid ads for local trust.
A contractor quoted on the evening news after a storm carries credibility no commercial can buy, and one placement in the news keeps working across social, sales materials, and recruiting long after it airs. And because search engines and AI answer tools weigh credible third-party coverage, a news mention now serves to buttress your visibility infrastructure. Your approach should be to treat PR as a monthly line item and not a fire extinguisher.

AI hits the walk-in cooler.
Axiom Cloud launched a conversational AI agent for refrigeration techs, now in beta, that lets operators pull system charts, compare sites, and prioritize anomalies by asking questions in plain language. The platform trained on 2,000-plus site-years of field data and 124,000 expert-labeled anomalies from grocery and cold storage facilities. This is an edge that we’ll continue to see more of in the service sector: technicians will diagnose from a question, not a dashboard maze.

AI's real HVAC footprint is already on the truck.
The practical applications for AI in HVAC that already exist in the real world are diagnostics, predictive maintenance, dispatch optimization, and after-hours booking. But this also means that smart equipment is shifting service calls toward software and connectivity troubleshooting alongside mechanical work, which changes what techs need to know. Shops that are treating AI as an extension of a technician's judgment, and not as a replacement, are the ones that will pull ahead.

Pricing can't run on last month's costs.
Labor, tariffs, and material volatility are pushing contractors to quote off current costs job by job rather than fixed schedules. This is the discipline that works: set a gross margin target, review it after every job, and adjust when the numbers say so instead of reacting to every manufacturer announcement. Small supply increases erode margins quietly, and customers tolerate higher quoted prices better than surcharges.

The Deal Sheet

Redwood Services, the Memphis-based national home services platform, acquired Hendrick Heat, Air & Plumbing, a residential HVAC and plumbing provider in Tulsa, Oklahoma founded in 2020. Hendrick serves more than 25,000 customers across greater Tulsa with over 90 full-time employees; co-founder Justin Hendrick stays on to run day-to-day operations. The deal is Redwood's first in Oklahoma and brings its network past 20 partner companies.

Sila Services expanded into Western Virginia with the acquisition of Davis Heating and Air Conditioning, a residential HVAC, plumbing, and electrical provider founded in 1947. The deal adds the Roanoke, Lynchburg, and Danville markets to Sila's Mid-Atlantic platform, and Davis keeps its local identity. Sila's network now spans more than 45 home services brands across the Northeast, Mid-Atlantic, and Midwest.

Cody Sechelski, an independent operator, closed the first acquisition of a planned Texas and Gulf Coast HVAC roll-up, buying an unnamed profitable Texas HVAC business serving residential and commercial customers. Raises.com advised on the deal, structuring an equity-light capital stack that pairs an institutional senior credit facility from US Strategic Capital Advisors with seller financing, including an option for the selling founder to re-enter the cap table post-closing.