In today's episode we have Steve Carroll, CEO and Co-Founder of Kelso Industries, join us to share his journey from a small-town construction background to leading a 25-acquisition HVAC roll-up. We dive into his Walmart days scaling EBITDA from $15M to $250M, his views on where PE firms get it wrong, and how Kelso’s long-term partnership model is flipping the script on traditional roll-ups.

[00:00] Steve Carroll joins to discuss Kelso Industries' growth from 1st to 25th acquisition

[00:27] Background: Walmart experience and scaling from $15M to $250M EBITDA

[00:54] Early years: rural Oregon, construction, MBA, and entrepreneurial itch

[01:50] Lessons from Walmart and foundation of Kelso

[02:21] Mistake PE firms make: copying each other, bidding up same assets

[03:05] Advice: PE should pursue untapped markets and take first-mover risks

[04:21] Kelso's differentiator: deep focus on one long-term strategy

[05:49] “All in” mindset and scaling Kelso as one big platform

[06:18] First acquisition story: moving to AZ, transition challenges

[07:46] Struggles, COVID, and lessons learned from initial takeover

[08:43] Pivot to partnership model after burnout and realization

[09:42] Defining partnership: skin in the game, shared long-term vision

[11:08] Case study: Pancho in Idaho becomes the blueprint for future deals

[13:03] Criteria for Kelso partnerships and alignment with long-term goals

[14:00] Integration learnings: then vs. now at deal #25

[14:50] Kelso now offers finance, legal, HR, recruiting, and systems support

[17:44] Operational push: MEP+ and one-call solution model

[18:43] Scale enabling better integration and centralized resources

[19:12] Raw Selection salary reports plug

[20:11] Top 3 learnings: partnership, finance investment, data center boom

[23:23] Walmart story: monetizing eyeballs, retail media, Sam’s Club success

[26:17] Building a $250M EBITDA business unit through creative thinking

[27:42] Why HVAC: passion, mission-critical systems, smartest people on site

[28:49] Key influence: Brad Jacobs and “How to Make a Few Billion Dollars”

Connect with Steve Carroll on LinkedIn. Thanks for tuning in.

Subscribe for more episodes on iTunes & Spotify

Got feedback or questions? Email Alex at alex.rawlings@raw-selection.com. Until next time—keep smashing it!

From the first HVAC Services acquisition to the 25th with Steve Carroll

The Private Equity Podcast, by Raw Selection