Data center infrastructure growth accelerates M&A activity in the HVAC and engineered cooling equipment sector

A new report by investment banking firm Brown Gibbons Lang & Company reveals that escalating power and thermal demands from hyperscale data centers are driving aggressive mergers and acquisitions across the engineered HVAC and cooling technologies market. The report, released by the firm’s Engineered Equipment investment banking division, identifies energy-efficient environmental controls and advanced power management as critical investment themes now attracting significant interest from institutional capital and strategic industrial acquirers.

The 2025 midyear analysis arrives amid a sweeping buildout of data center infrastructure globally, spurred by the exponential adoption of artificial intelligence workloads. Brown Gibbons Lang & Company, a Cleveland-based mid-market investment bank, points to a confluence of rising regulatory scrutiny, emerging cooling technologies, and operational uptime requirements as factors reshaping investor behavior within this capital equipment segment.

Notably, recent acquisitions by Schneider Electric (Motivair) and Modine Manufacturing (TMGcore) underscore how thermal management specialists are being rapidly consolidated into diversified industrial platforms, particularly those positioned to support liquid cooling and low-PUE (power usage effectiveness) system integration.

Why is the data center sector increasing demand for HVAC, cooling, and power control technologies in 2025?

The AI-driven digital infrastructure boom has fundamentally altered the thermal and power dynamics inside next-generation data centers. As high-density GPU-based compute loads replace legacy CPU clusters, the resulting heat output and real-time power variability demand more sophisticated engineering solutions at the subsystem level.

According to Brown Gibbons Lang & Company, these requirements are reshaping the engineered HVAC, environmental control, and power management supply chain. The investment bank reports sustained institutional appetite for cooling and power instrumentation specialists capable of serving the AI infrastructure market’s need for performance, uptime, and sustainability.

Participants in these verticals now operate at the convergence of thermal management, emission compliance, and intelligent automation. These changes are increasing demand not only for chillers and cooling system integrators but also for embedded instrumentation firms producing control valves, diagnostic systems, and sensor-driven monitoring platforms.

What factors are motivating investors to consolidate the engineered HVAC and cooling equipment landscape?

Brown Gibbons Lang & Company’s latest industry outlook highlights how historically fragmented suppliers of environmental and power subsystems are now being absorbed into larger industrial and automation platforms. Strategic acquirers and private equity sponsors alike are targeting firms with capabilities in emission control, clean energy hardware, and cooling system design that align with the energy transition agenda.

Justin Wolfort, Director at Brown Gibbons Lang & Company’s Engineered Equipment team, noted that “participants in environmental control and power management segments are seeing exceptional growth,” adding that investor interest has increased markedly as the need for energy efficiency and instrumentation solutions becomes more urgent.

The report underscores the investment case for component manufacturers with recurring service revenues, customization capabilities, and intellectual property related to fluid flow, automation integration, or thermal resilience. M&A trends show a preference for targets with data center-ready credentials, particularly those involved in liquid cooling, airflow optimization, or grid-interactive power solutions.

How are emerging data center energy efficiency requirements influencing HVAC technology innovation?

Rapidly evolving environmental policies across North America, Europe, and Asia-Pacific are placing stricter emissions and power consumption mandates on data center operators. These rules—alongside mounting investor pressure for ESG transparency—are reshaping procurement priorities for infrastructure developers such as hyperscalers, cloud providers, and edge computing firms.

Brown Gibbons Lang & Company’s findings highlight that HVAC solutions are no longer standalone mechanical systems, but embedded layers in broader operational technology ecosystems. Instrumentation that provides predictive diagnostics, usage transparency, and adaptive performance is being prioritized.

Additionally, as the energy mix shifts toward renewables, HVAC and power management vendors must support variable load balancing and storage interface capabilities. Suppliers that offer real-time control systems and grid-aware subsystem modules are outperforming traditional HVAC vendors with commodity-focused offerings.

Which strategic transactions signal a shift in HVAC and cooling M&A behavior?

Recent deal activity illustrates how leading industrial buyers are moving aggressively to acquire thermal management and energy control firms with advanced data center credentials.

Motivair, a cooling systems integrator known for modular chillers and liquid cooling technologies, was recently acquired by Schneider Electric. The deal reflects Schneider’s intent to scale vertically in AI-era cooling segments while integrating Motivair’s solutions into its EcoStruxure digital architecture.

Similarly, Modine Manufacturing announced its acquisition of TMGcore, a developer of two-phase liquid immersion cooling systems. This move enhances Modine’s ability to serve high-density rack environments and positions it within the immersion cooling value chain, an area gaining traction with next-generation colocation providers.

The report further indicates that smaller deals involving instrumentation, diagnostics, and automation hardware are quietly reshaping the HVAC componentry landscape, especially in power-hungry infrastructure environments such as AI training hubs, edge deployments, and crypto mining centers.

What is the historical context of HVAC technology within industrial M&A and how has the data center shift altered that?

Historically, HVAC systems were viewed as secondary procurement layers within broader industrial or construction projects. M&A activity in the sector typically centered on scale consolidation or regional market expansion.

However, the post-2020 surge in digital infrastructure investment—fueled by cloud migration, AI, and 5G—has repositioned HVAC and power control technologies as strategic enablers. This has led to a re-rating of valuation multiples for firms with mission-critical data center exposure or intellectual property in energy resilience.

Institutional capital, once focused primarily on software and digital platforms, is increasingly allocating funds toward physical infrastructure enablers. Brown Gibbons Lang & Company cites this shift as a core thesis behind the spike in private equity roll-ups across cooling and engineered systems markets.

What are analysts and institutional investors expecting for HVAC M&A and engineered equipment trends moving forward?

Investor sentiment remains constructive. Analysts expect HVAC and environmental control M&A to accelerate over the next 12–24 months, particularly as generative AI scales and data center operators pursue power optimization mandates. Brown Gibbons Lang & Company anticipates that strategic acquirers will continue targeting component and sub-system specialists who enable low-energy, high-uptime operational models.

The firm’s Engineered Equipment division notes that companies with product lines supporting clean energy transition, emission compliance, and automation readiness are best positioned for acquisition or expansion capital.

Private equity sponsors, in particular, are seeking to build platform investments around energy-resilient componentry, modular system design, and post-installation service ecosystems. This strategy is consistent with a broader shift among industrial investors toward infrastructure-aligned growth themes.

What is the future outlook for HVAC and cooling component suppliers serving AI-focused infrastructure projects?

The outlook for HVAC and engineered cooling suppliers focused on data center infrastructure is bullish. With global AI adoption expected to double data center power requirements by 2030, thermal management will remain a critical design constraint for operators across geographies.

Brown Gibbons Lang & Company projects continued capital inflows into firms offering subsystem integration, instrumentation intelligence, and environmentally aligned cooling solutions. As ESG standards tighten, suppliers with embedded monitoring and low-carbon design attributes will be prioritized.

Moreover, future platform investments are likely to converge HVAC technology with battery storage, software-based load management, and carbon-tracking diagnostics. These developments position engineered equipment specialists at the center of both infrastructure modernization and sustainability-linked capital markets.