Private Equity’s Latest Obsession: Plumbers and Lumber Yards

Local plumbers and lumber-yard owners across the US are feeling a bit like tech entrepreneurs of late — juggling multiple offers from private equity-backed firms that increasingly are targeting mom-and-pop businesses.

Wall Street has been buying into fragmented Main Street industries for years, with dental and veterinary practices among the favorite targets. It’s known as the roll-up strategy – and it’s catching a tailwind right now, and expanding rapidly in household services and building materials.

Small firms account for the biggest share of acquisitions by PE funds and their portfolio companies since the late 2000s, according to data from ...