Photo by Platinum Equity

United Site Services (USS) is one of the largest providers of temporary site services in the United States, supplying portable restrooms, sanitation stations and related on-site infrastructure to construction projects, large-scale events, emergency response efforts and government operations. Over more than two decades, the company built a reputation around reliability, safety and nationwide scale. On the surface, USS appeared well positioned in an essential services niche. Beneath that surface, however, operational strain and an overleveraged balance sheet gradually exposed deeper structural weaknesses that now threaten the company’s durability.

Operational stress has been building since Platinum Equity acquired USS in 2017. Employee reviews on sites like Glassdoor have criticized USS for “unrealistic expectations,” “poor management” and “constant billing errors,” problems that show up directly in frontline customer interactions. These unresolved problems have pushed frontline teams into extended overtime, forcing them to juggle customer complaints while still being tasked with driving new sales. As management focus remained anchored to targets rather than root causes, morale declined, turnover increased and service quality deteriorated. In a labor-intensive, route-based business, erosion at the frontline quickly translates into operational underperformance.

Those operational shortcomings have increasingly collided with financial stress. In recent months, USS entered into a forbearance agreement with its lenders after experiencing acute liquidity pressure. The company reportedly missed multiple coupon payments on its debt, prompting negotiations to temporarily suspend enforcement actions. Despite having taken on additional borrowing in prior years, USS has struggled to generate sufficient free cash flow to meet its debt obligations. Debt service has absorbed operating cash, leaving limited flexibility to reinvest in the business or stabilize execution.

At the core of the problem is an unsustainable capital structure. USS is estimated to be operating with leverage approaching 18x on a last-twelve-month basis. That level of leverage leaves virtually no margin for execution risk, labor disruption or demand volatility. In a business that depends on consistent utilization and disciplined operations, high leverage amplifies every misstep and compresses the runway for corrective action.

These challenges were not resolved when USS transitioned into a continuation vehicle in 2021. Platinum Equity moved the company from an older fund into a new vehicle, allowing legacy investors to achieve liquidity without an outright sale. While continuation vehicles have become more common in private equity, their success depends on the underlying health of the asset. In USS’s case, the transaction shifted ownership without addressing operational weaknesses or balance-sheet risk. New investors inherited a business already under strain, while reported losses tied to the investment have exceeded $1.4 billion. The decision now facing stakeholders is not one of growth, but of control and recovery.

The broader lesson from United Site Services extends beyond temporary site services. Post-COVID demand should have provided a tailwind for a business tied to construction, infrastructure and emergency response. Instead, weak management systems, declining employee engagement and inconsistent service execution eroded what should have been a defensible market position. Rather than prioritizing operational reinforcement, the company relied heavily on financial solutions to bridge performance gaps.

USS’s liquidity crisis underscores the risks of overleveraging and relying on short-term capital fixes in place of structural improvement. Debt can magnify returns when operations are strong, but it accelerates deterioration when execution falters. The use of a continuation vehicle without a parallel operational reset illustrates how financial engineering can delay outcomes without changing them.

United Site Services ultimately serves as a cautionary case study. Sustainable value creation requires more than scale and capital access. It depends on strong governance, realistic management expectations, disciplined leverage and an operating foundation that supports frontline execution. When financing is used simply to keep a struggling business afloat, without reinvesting in people and processes, it does not preserve value. It postpones the reckoning.

Photo by K&C Cooling & Heating

For years, growth in the HVAC industry followed a straightforward playbook. When demand increased, owners added technicians, bought more trucks and expanded service territories. Control remained centralized with the founder and success was measured by how full the schedule stayed during peak seasons. In a stable labor market with predictable demand, that approach worked. As labor tightened and volatility increased, however, the model left many businesses stretched thin and increasingly inefficient.

That dynamic is now changing. As HVAC platforms have scaled and private capital has moved deeper into the sector, operators are being asked to grow differently. The emphasis has shifted away from simply adding capacity toward improving how existing capacity is deployed. Earn-outs have emerged as one of the primary tools enabling that transition, not as a financial engineering tactic, but as an operating mechanism.

Consider Coolray, a large Southeast residential services company with more than 500 employees and estimated annual revenue between $50 million and $100 million. Prior to adopting more structured, performance-linked incentives, growth was driven largely by handling more calls, widening coverage areas and leaning heavily on overtime during peak periods. Technicians spent meaningful portions of the workday driving between jobs, while maintenance agreements remained underpenetrated relative to the size of the installed customer base.

That dynamic is now changing. As HVAC platforms have scaled and private capital has moved deeper into the sector, operators are being asked to grow differently. The emphasis has shifted away from simply adding capacity toward improving how existing capacity is deployed. Earn-outs have emerged as one of the primary tools enabling that transition, not as a financial engineering tactic, but as an operating mechanism. In 2024, earn-out structures represented ~31% of total deal consideration, with 86% of transactions using performance periods between one and three years timeframes designed to reward incremental operational gains rather than aggressive expansion.

As Coolray evolved within a broader platform environment, so did its incentive structure. Earn-outs tied a portion of post-transaction upside to outcomes local leadership could directly influence: branch-level revenue growth, customer retention, technician utilization and the expansion of recurring service programs. The logic was straightforward: improving technician utilization by even a few percentage points created incremental capacity equivalent to multiple new hires without adding trucks or payroll. For Coolray's branch managers, this meant earn-out payments rewarded disciplined execution over raw volume, aligning their interests with sustainable operational improvements rather than short-term growth at any cost. A recent Harvard Law study shows that well-structured earn-outs "align the interests and expectations of sellers and buyers and incentivize sellers to remain involved and committed to the target's post-closing operations" a principle that translated directly into how Coolray's local teams approached service delivery, staffing decisions, and customer relationships post-acquisition.

Earn-outs have gained traction because they reinforce that reality. They keep operators engaged after a transaction closes and align incentives around how value is actually created at the branch and technician level. Rather than rewarding expansion alone, they reward better routing, higher utilization, stronger customer retention, and deeper penetration of recurring revenue programs.

Growth in HVAC is still available, but it is no longer unlocked by expansion alone. Increasingly, it is earned by platforms that align incentives with execution and reward operators for building disciplined, repeatable operating systems rather than simply pushing more volume through a stretched organization.

WestGate Partners (WGP) is an independent sponsor focused on acquiring and growing lower middle market businesses in essential residential and commercial services. We bring institutional experience, tailored capital with hands-on partnership to help owners transition, grow and preserve their legacy. By partnering with strong operators, we build enduring businesses in economically-insulated industries.

For more information,

please visit: