Companies are navigating the reverberations of a global pandemic, the silver lining of which has been the acceleration of home investment, according to an industry report released by BGL’s Industrials investment banking team. Strong underlying fundamentals for new construction, repair and remodeling, and investing in the home environment are propelling deal flow in the Building Products industry.
The Housing market rebounded sharply in mid-2020 with strong fundamentals serving to anchor the Residential market. The Commercial market is strengthening with a full recovery in sight for 2022. Challenges borne from COVID-19 have reemphasized the need for portfolio diversification, supply chain control, and technology to increase scale and operational efficiencies, which will benefit the broader marketplace and drive mergers and acquisitions.
Building Products is seeing M&A activity gain momentum. COVID-19 has been an accelerator as consumers increase investments in home repairs, upgrades, and renovations during the pandemic. The announcement of several headline transactions illustrates broad-based investor appetite and pent-up demand for high-quality assets to accelerate growth. Among the notable buyers to announce transactions over the last three months are Fortune Brands Home & Security (LARSON Manufacturing), Builders FirstSource (BMC Stock Holdings), The Home Depot (HD Supply Holdings), American Securities (Foundation Building Materials), and LafargeHolcim (Firestone Building Products). Acquisitions reflect full multiples and have been termed “transformational” or establish new platforms to build scale and efficiencies, access new growth markets, and bolster the top and bottom lines.