Q1 2018 Building Products & Materials M&A Market Update

March 2018

This issue of the Building Products & Materials (BP&M) newsletter highlights the macroeconomic drivers supporting the strength in mergers and acquisitions (M&A) activity in the sector and frothy valuation multiples.  During the latter part of 2017, many potential acquirers put M&A on hold due to uncertainty surrounding U.S. tax policy. Industry participants expect strong M&A activity in 2018 following the implementation of corporate-friendly tax reform combined with strong economic fundamentals and robust construction activity. In particular, optimism surrounding the residential construction market continues to strengthen as highlighted by the National Association of Home Builders (NAHB) Housing Market Index closing 2017 at its highest level (74) since 1999. Investors continue to view an expected jump in public sector construction activity from a comprehensive infrastructure investment package as a potential upside across the BP&M industry.

Based on our own announced transactions and other potential deals in the pipeline, we expect strong momentum in M&A activity across the building products sector going into 2018. Strategic players are seeking to grow market share via acquisition and are looking to augment their brand portfolio and technological advantage while improving their supply channels and network.  Meanwhile, a large number of private equity firms continue to seek opportunities for new platforms and bolt-on acquisitions for existing portfolio companies.