A letter from Catalyst CEO, Jim Reddinger
As we close out 2025, it’s clear the equipment and essential services supporting the built environment continue to demonstrate a level of steadiness that’s rare in today’s economic cycle. Interest rates have begun to stabilize, inflation pressures have eased, and while political noise created its share of hesitation early in the year, businesses across our sectors kept moving. What stands out most is the resilience of the founders, operators, and teams who deliver essential services every day. Their priorities did not change with the headlines, and that consistency helped shape the market.
M&A Activity
Private equity remained active, supported by abundant dry powder and a need to deploy capital into durable, non-cyclical sectors. Strategics were selective but opportunistic, especially where acquisitions expanded service lines, strengthened customer density, or accelerated their move into higher-margin specialty niches.
Overall, deal activity remained steady across the lower and middle markets. Transactions took slightly longer to close, but deals that cleared did so with conviction.
Equipment Rental & Services
Specialty rental continued to outperform. Infrastructure spending, complex project requirements, and higher standards for uptime kept demand high across pump, power, trench shoring, and portable sanitation.
The transformational event of the year was Herc’s acquisition of H&E Equipment, a landmark transaction that reshaped competitive dynamics and underscored how aggressively the top players continue to pursue scale. The transaction was also a clear signal of confidence in the long-term fundamentals of rental, particularly in markets where density, utilization, and fleet mix drive outsized returns.
Facility Services / Skilled Trades
Electrical, roofing, HVAC, and other skilled trades once again proved their strength as essential, recurring-demand businesses. Investor interest increased in companies with strong workforce retention, multi-branch footprints, and embedded service relationships.
Regency Electric’s investment from MFG Partners was one of the year’s notable sector transactions and illustrated continued appetite for scaled, high-quality technical service providers. Platform formation and add-ons remained active throughout the year, with investors prioritizing trades tied to infrastructure, energy, and commercial maintenance cycles.
Waste & Environmental Services
Waste and environmental services saw steady consolidation this year as buyers continued to prioritize essential, compliance-driven capabilities across solid waste, recycling, portable sanitation, hazardous waste, and specialty environmental services. Demand remained strong for operators with technical expertise, regulatory alignment, and dense local or regional footprints.
The major event in the sector was Veolia’s acquisition of Clean Earth (from Enviri), a roughly $3 billion transaction that doubled Veolia’s U.S. hazardous-waste footprint and redefined the competitive landscape. The scale of the deal signaled buyers’ willingness to deploy significant capital for national platforms with specialized capabilities, and highlighted the expanding demand for comprehensive, multi-stream waste solutions. It also reinforced the long-term fundamentals of the space, where compliance, diversification, and technical performance continue to command premium valuations.
Infrastructure & Industrial Services
Infrastructure-focused services tied to water, wastewater, power, telecom, and environmental remediation saw consistent demand. These businesses benefited from long-term public spending programs, permitting requirements, and the ongoing need to maintain aging systems.
The most significant movement in the sector centered around water, where multiple platforms expanded their capabilities in pipeline integrity, sewer rehabilitation, and broader water-system maintenance. Investors continued to view water as one of the most resilient, multi-decade opportunities in the built environment. Regulatory drivers, essential service status, and recurring maintenance cycles continued to support stable demand and consolidation interest.
Building Products
Consolidation continued in categories such as exterior products, windows and doors, and specialty materials, where scale, logistics efficiency, and channel access played an increasingly important role. Buyers demonstrated clear interest in platforms serving both new construction and repair and remodel markets, a combination proven resilient across cycles.
Outlook for 2026
The fundamentals heading into 2026 remain solid. Interest rates are expected to hold steady, providing buyers and sellers with clearer visibility. Private equity enters the year with clear mandates to deploy capital, and strategics continue to pursue acquisitions that expand capabilities or strengthen competitive positions.
Momentum across key sectors remains positive:
- Specialty rental should continue to grow as infrastructure and industrial projects scale.
- Skilled trades remain attractive given labor scarcity, recurring service demand, and the fragmented structure across subsectors.
- Waste and environmental services are positioned to benefit from ongoing consolidation and route-density optimization.
- Infrastructure and industrial services stand to gain from long-term public spending and compliance-driven projects.
- Building products should benefit from recovering repair-and-remodel demand and targeted consolidation across key material categories.
Businesses with strong leadership and consistent growth will continue to attract the highest levels of buyer interest.
Closing
Thank you to our clients and partners for a strong 2025. We are dedicated to serving these resilient sectors, built by resilient people, and we’re grateful for the trust placed in us. As we head into 2026, we do so with confidence and a clear view of the opportunities ahead.
Jim Reddinger
CEO & Managing Director
Catalyst Strategic Advisors
