Thne
The Building Products & Services sector’s resilience was amply demonstrated in 2021 as M&A transactions increased by 69%, surpassing pre-pandemic levels to reach an all-time high.
Featuring valuable input from industry leaders and the Construction Products Association, our latest insights publication looks at the key themes that are shaping the Building Products & Services sector and what they mean for M&A globally and in the UK.
Despite increasing headwinds, the sector has yet again proved highly resilient and a hotbed for investment, by both private equity and corporate acquirers.
What are the key themes shaping the Building Products & Services sector?
In this year’s publication we take an in-depth look at ESG and how an acceleration in sustainability awareness is driving deep change in the sector. We also consider a range of other innovation-led topics, including how companies are adapting to price inflation and opportunities for businesses in the sector to access R&D innovation tax relief.
Further evidence of innovation abounds, including how the sector is embracing online channels to market, progressing modular construction and applying new technologies. In the UK businesses are adapting to post-Grenfell regulations and the introduction of the UKCA mark, while aligning with booming sectors of the market, including RM&I and infrastructure.
The industry has been able to overcome challenges from Brexit and COVID-19 in the last two years, but the current crisis in Ukraine, coming on top of already strained supply chains, heightened inflation risks and longstanding skills shortages, is placing pressure on the sector. The CPA has accordingly downgraded forecasts for construction output to 2.2% growth this year.
What does this mean for M&A globally and in the UK?
From our analysis of over 6,000 sector transactions completed in the last nine years, we explore key trends in the M&A market and examine the outlook for M&A.
Particularly valued are companies that focus on sustainability, which is fast moving from a nice-to-have add-on to a basic business requirement. But innovation generally is catching the eye of investors in the sector.
Many opportunities are arising from portfolio reviews, corporates streamlining operations through carve-outs, and significant cash available in the private equity market to invest in attractive businesses.
Special features in this edition include advice on selling a business in the post-COVID market environment, and particularly what this means for valuations. We also explore the increasing prevalence of Building Products & Services businesses to list on the capital markets. A further article explores how liquidity has led to record growth in the US, which has seen deal volumes rise by 81% in 2021. We also include detailed views on market dynamics and valuations by sub-sector in the UK.
Looking ahead, Building Products & Services businesses are still seeking funding and engaging in M&A transactions. IPOs have increased in popularity. Company valuations are the highest in years.
It all adds up to an exciting time for the sector.
Corporate transactions remain as complex as ever, and there are additional challenges to be considered as businesses navigate through this period of upheaval and complexity, so it’s important to seek sector-focused expert advice.
Our global Building Products & Services M&A team is one of the most active advisory houses in the sector: in 2021 alone we completed over 200 deals in the sector. We have extensive coverage in key capital markets, access to private equity and work closely with owner managed businesses.
If you’re thinking of embarking on M&A, or would like to discuss any of the issues arising from our publication, please do get in touch.