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Nicole Kiriakopoulos

E: nicolek@pcecompanies.com

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Industry Trends

Mortgage Rates Fall, Home Prices Rise

Goldman Sachs forecasts US home prices will increase by 4.5% in 2024 and 4.4% in 2025. With the Federal Reserve expected to cut rates by 75 basis points this year, mortgage rates have fallen from a peak of 7.8% to below 6.5%. Despite affordability challenges, analysts project a gradual return to healthier affordability levels by 2029. The overall trend indicates a slow path to better affordability by the end of the decade, potentially spurring increased growth in the sector.1

Bridging the Skilled Labor Gap

The construction industry faces a serious skilled labor shortage, with 91% of firms struggling to find qualified workers. As nearly one-fifth of construction workers are over 55, many seasoned professionals are retiring. Additionally, the decline in vocational training and apprenticeship programs has reduced the number of skilled workers entering the field. Companies are focusing on increased training and retention in the younger workforce to address this problem.Addressing this issue is crucial for maintaining project timelines and overall industry stability.2

Financial Buyers Capitalize on Long-Term Growth Potential

M&A activity in the Building Products sector surged 31.1% year-over-year in 2024, driven by long-term growth prospects despite near-term challenges from high interest rates and inflation. While construction spending has stalled, strong backlogs, particularly in the South, and public funding initiatives support optimism. Financial buyers now account for a significant portion of deals, leading to increased valuations. Key transactions include Home Depot's acquisition of SRS Distribution and Owens Corning's purchase of Masonite International, enhancing market positions.3

Manufacturing Construction Surges

According to the American Institute of Architects (AIA), spending on nonresidential buildings is projected to grow by over 7% in 2024, driven by strong manufacturing activity, which is expected to increase by nearly 14%. However, commercial facilities are anticipated to remain flat due to challenges in the lending market and weakened property values. Institutional construction will see over a 10% gain this year but will slow to 4% in 2025, reflecting diverse sector performances amid ongoing market uncertainties.4

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Cupertino Electric, Inc.
  • Quanta Services, Inc.
  • $,705.00
  • Trachte, LLC
  • nVent Electric plc
  • $695.00
  • Mueller, Inc.
  • Cornerstone Building Brands, Inc.
  • $475.00
  • Wilsonart International Holdings, LLC
  • Clayton, Dubilier & Rice, LLC
  • $398.00
  • ODC Construction, LLC
  • Synergos Companies
  • $250.00
  • Parsec, LLC
  • Universal Logistics Holdings, Inc.
  • $193.60

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Bishop, Inc.
  • Equity Residential
  • $108.00
  • 275 Park Ave. in Clinton Hill
  • Thor Equities, LLC
  • $58.50
  • Premier Building Associates, LLC
  • Boyne Capital Management, LLC
  • n/a
  • Scatter Wash Battery Energy Storage Project in Arizona
  • Copenhagen Infrastructure Partners P/S
  • n/a
  • Franklin Structures, LLC
  • Silver Canyon Group, LLC
  • n/a
  • Pavement Maintenance Group LLC
  • Renovo Capital, LLC
  • n/a
  • Proenergy Holding Company, Inc.
  • Energy Capital Partners, LLC
  • n/a
  • Stratus Team LLC
  • Brightstar Capital Partners, L.P.
  • n/a
  • Action Elevator Company, LLC
  • H.I.G. Capital, LLC
  • n/a

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Public carrier wireless telecommunications infrastructure business of Black & Veatch Holding Company
  • Ansco & Associates, LLC
  • $150.00
  • Xtreme Powerline Construction, LLC
  • Aecon Utilities, Inc.
  • $73.00
  • ThermaSol Steam Bath, LLC
  • Harvia Oyj
  • $30.40
  • Euroview Enterprises LLC/Contract Mirror and Supply Co/CLM Solutions, LLC
  • Installed Building Products, Inc.
  • $20.20
  • Certain Assets of iSun, Inc.
  • Original Clean Energy
  • $10.00
  • JT Russell & Sons asphalt plant on N.C. 8 near Denton
  • Southeast Emulsions Inc.
  • $8.40
  • AusTex Aggregates, LLC
  • Panamera Holdings Corporation
  • $2.75
  • MECHANICAL ENGINEERING & CONSTRUCTION, LLC
  • CoolSys, Inc.
  • n/a
  • U.S.T. Services Corporation
  • SPATCO Energy Solutions, LLC
  • n/a
  • A to Z Dependable Services
  • Sila Services, LLC
  • n/a

 

Source S&P Capital IQ as of 10/9/2024 and PCE Proprietary Data

PCE Transactions

Contacts

Nicole Kiriakopoulos

Chicago Office

224-520-1068 |

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Michael Poole

Orlando Office

407-621-2112 |

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Will Stewart

Orlando Office

407-621-2124 |

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. 1. “US house prices are forecast to rise more than 4% next year.” Goldman Sachs, September 11, 2024.
  2. 2. Patro, Shreya. “Skilled Labor Shortage Crisis in Manufacturing and Construction.” Quickbase, September 3, 2024.
  3. 3. Izzy Jack, “Building Products M&A Update – August 2024.” Capstone Partners, August 27, 2024.
  4. 4. Izzy Jack, “Building Products M&A Update – August 2024.” Capstone Partners, August 27, 2024.
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