Private Equity Keeps Rolling Up the “Unsexy” Economy

Private equity firms are accelerating roll-up strategies in regulation-heavy service sectors such as safety compliance and industrial air filtration. By consolidating fragmented markets with steady, contractual revenue, sponsors are prioritizing operational stability over high-growth bets. While investors view the approach as a hedge against economic uncertainty, regulators and advocacy groups warn that serial acquisitions can quietly concentrate market power beyond current antitrust scrutiny.

Private equity is increasingly directing capital toward fragmented, regulation-heavy parts of the economy most consumers never see—but depend on daily. Across safety compliance, industrial filtration, and other regulation-heavy services, firms are assembling quiet roll-ups in fragmented markets where demand is steady, oversight is complex, and revenues are largely contractual. The strategy reflects a recalibration of private capital away from growth narratives and toward operational durability.

Earlier this year, Gryphon Investors acquired Safety Management Group, a provider of outsourced safety and compliance services for pharmaceutical, utility, and manufacturing clients. The business operates in a segment shaped less by discretionary spending than by regulatory obligation. In a statement, SMG Chief Executive Officer Randy Gieseking said Gryphon’s experience in technical services businesses would allow the company to pursue organic growth and acquisitions. Gryphon Partner Tim Bradley said, 'We believe there is an opportunity to continue to scale a market-leading business by expanding geographic presence, further building out the Company's existing offerings, and executing on strategic M&A in the fragmented Environmental, Health, and Safety (EH&S) market.'

The acquisition places SMG within a broader category of compliance-driven services that are structurally suited to consolidation. Regulatory complexity raises barriers to entry, while outsourcing transfers liability and operational risk from clients to specialized providers. For private equity sponsors, those dynamics translate into predictable demand and repeat revenue.

A similar approach is visible in industrial filtration. Cleanova, backed by PX3 Partners, has expanded through acquisitions of Airflotek and TES-Clean Air Systems. Both companies serve highly regulated environments, including semiconductor fabrication facilities and pharmaceutical laboratories, where air quality standards are non-negotiable. In a statement, Cleanova Chief Executive Officer Chris Cummins said the additions extend the platform’s reach into sectors requiring ultra-clean air and strengthen its position as an independent industrial filtration provider.

These businesses share characteristics that private equity firms increasingly favor. Revenue is often contractual rather than transactional. Demand is reinforced by regulation rather than consumer preference. And the markets themselves tend to be fragmented, allowing sponsors to acquire smaller operators at lower multiples and integrate them into a larger platform.

According to Bain & Company’s analysis, buy-and-build strategies are a way to create value without relying on favorable macroeconomic conditions. In an analysis, Bain said firms can reduce their blended acquisition cost by rolling up smaller targets and improve returns through scale, procurement efficiencies, and standardized operations—an approach that provides insulation from interest rate volatility and uneven growth.

The emphasis on these “infrastructure-adjacent” services contrasts with venture capital’s continued focus on high-growth sectors such as artificial intelligence and financial technology. Private equity’s bet is narrower but more measurable: that stable cash flows and operational improvements can generate returns even when valuation expansion is limited.

The strategy has attracted regulatory attention. Officials at the Federal Trade Commission have warned that serial acquisitions can accumulate market power without triggering antitrust review. FTC Commissioner Rebecca Slaughter has referred to the approach as a “Pac-Man strategy,” in which individually small transactions evade scrutiny while collectively reshaping markets. Historical data cited by regulators show that a majority of acquisitions across industries fall below reporting thresholds.

Advocacy groups have raised parallel concerns. A report from the Economic Liberties Project argued that consolidation in fragmented service sectors can lead to higher prices, reduced service quality, and weaker labor protections, even when the industries involved draw little public attention.

From the investor perspective, however, the appeal is largely mechanical. As According to Bain & Company, private equity firms face high entry prices and uncertain growth, limiting their ability to rely on multiple expansion. Consolidating essential services—where demand is resilient and efficiency gains are tangible—offers a clearer path to return generation.

As capital continues to move into these overlooked segments of the economy, the implications extend beyond investors. The cumulative effects of consolidation on competition, labor, and service quality remain difficult to measure under current regulatory frameworks. Whether oversight adapts to account for these incremental but systematic acquisitions may shape how far—and how quietly—this strategy can proceed.