Building Products

Key Trends in the Market

The large, vibrant and often fragmented nature of North American building products markets make them fertile ground for mergers and acquisitions. 

Some of the market trends we are following:

• Housing Affordability: Higher interest rates, combined with pandemic-fueled increased construction cost have led to affordability challenges in the single-family residential market. With mortgage rates declining from their peak, we expect activity in this sector to increase. Most economists agree that there is a structural deficit of homes in the U.S. market. So, whatever the short-term outlook, there is long-term bullishness in the sector. 
   
• Labor Markets: Labor markets continue to be tight, and labor-saving products and systems are in demand. Tight labor markets also make organic growth slower and more expensive. The result is that more companies have turned to M&A to achieve growth goals. We are definitely seeing the scarcity value of acquired labor forces manifest itself in M&A pricing.
   
• Distributor Consolidation: Large, fragmented distribution markets continue to consolidate at a quick pace, principally driven by private equity backed consolidators.
   
• Direct to Consumer: As consolidation and ecommerce alter the distribution landscape, manufacturers are increasingly exploring direct-to-consumer models, channel conflict notwithstanding.
   
• Materials Pricing: Rising raw material prices during the pandemic were a boon to market participants, as high demand led the market to readily accept price increases. Manufacturers are doing their best to hold onto those price increases even as the price of aluminum, steel, PVC resin, forest products and other commodities that make their way into a building decline.
   
• Energy Efficiency: Buildings use a great deal of energy, and the trend – often code driven - is to make them more efficient. And recent federal legislation allocates substantial dollars towards energy efficiency. Products that advance this goal - more efficient appliances, HVAC systems, solar panels; insulation – are all seeing increased M&A interest. 
   
• Infrastructure: Money from the $1.2 trillion infrastructure bill is filtering its way into the market, and products targeting infrastructure are seeing increased M&A demand. We see a specific opportunity in water-related markets, as changing weather patterns lead to too much water in some places and not enough in others.

How We Help

Like you, we are dedicated to the market – studying and analyzing trends and speaking daily with market leaders, investors and key decision-makers. Our focus provides us with insight into how value is created in the market, and how to tell your story to the right audience. So, whether you are looking to harvest the value you have created in your company, expand via acquisition or source private capital, FMI can position your company to achieve maximum success.

Who We Serve

• Window and Door
• Cabinets and Architectural Millwork
• Kitchen, Bath and Plumbing
• Flooring and Tile
• Heating, Ventilation and Air Conditioning
• Lighting and Electrical Products
• Roofing, Siding and Insulation
• Building Envelope
• Waterworks and Infrastructure Products
• Masonry and Concrete Products
• Lumber and Forest Products
• Tools and Hardware
• Solar Energy Products
• Outdoor Living Products
• Adhesives, Sealants and Coatings