‘Unprecedented’ volumes of M&A activity in building products sector

‘Unprecedented’ volumes of mergers and acquisitions in the building products and services sector were recorded in the Midlands last year.

BDO’s mergers and acquisitions team, which has offices in Snowhill and Calthorpe Road in Birmingham, has seen more than 3,300 sector transactions over the last six years, including double-digit growth in volume over the past four years.

Around 25% of the growth has originated from Midlands-based companies such as lock manufacturer ASSA ABLOY and builders’ merchant Travis Perkins engaging in sales or acquisitions.

Mithun Patel, a director in BDO’s mergers and acquisitions team specialising in the building products and services sector, said: “The demand for residential housing and growing number of commercial infrastructure projects has undoubtedly fuelled corporate and private equity investment in the construction supply chain.

“The Midlands has witnessed a significant slice of this activity due to the number of companies in the region that are a key part of the building supply chain, who are either looking to acquire or merge with firms operating with in-demand materials that have high margins.

“The building products and services sector will continue to benefit from infrastructure projects such as HS2 and Hinkley Point C, such are their long-term nature.

“The construction industry is cyclical and while one could argue that the industry is at the top end of a thriving market at the minute, construction companies are becoming more innovative and are exploring automation methods, which could prolong the industry’s appeal to investors in the long run.

“One in four M&A deals at the moment involve an overseas presence, and given the weakness of the pound currently, this could become more common.”

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