M&A activity has continued to grow in the building products & services (BP&S) sector, with the industry seeing a record increase in M&A transactions during 2024. Despite challenging trading conditions over recent years, dealmaking in the BP&S sector has remained resilient and now seems firmly on a growth trajectory.
According to a new report from BDO, the sector saw a major acceleration in activity last year, with worldwide deal volumes up 13 per cent to 1,481 transactions. In the UK, deal volumes were up even more sharply than the global average, as activity rose by 30 per cent.
The UK saw a record-breaking 451 transactions last year, amid a 25 per cent overall increase in UK M&A across all sectors. Trade deals in the BP&S sector contributed, increasing by 15 per cent, but much of the increase was driven by private equity.
Private equity-backed deals accounted for 42 per cent of transactions in the sector last year, compared to 34 per cent in 2023. Primary investments from PE firms increased by 50 per cent, while follow-on deals for PE platform companies more than doubled amid widespread opportunities for consolidation.
Deals for BP&S manufacturers were up by 10 per cent and transactions involving distributors increased by 26 per cent. However, the major increase was seen in the BP&S services area, with deals increasing 55 per cent, largely driven by soaring demand for compliance services in areas such as fire safety and home energy.
Four sub-sectors accounted for more than half of activity in 2024 (58 per cent): Security & Access; Electrics & Lighting; Building Materials and HVAC & Plumbing.
Mirroring a trend that has been notable across many sectors, cross-border deals also played a major role, accounting for 19 per cent of deals, with strong inbound and outbound activity reported.
BDO Partner, Building Products & Services M&A, John Stephan commented: “Last year was a busy one for M&A in the Building Products & Services sector. With some 30 deals completed by our team in the UK, and many more globally, we saw market sentiment improve during the year. Several key sectors are poised for continued momentum and new opportunities are emerging.”
“We see notable opportunities ahead in housebuilding, renewables, fire safety, security, windows and doors, and infrastructure services, to name a few.”
Looking forward, Stephan indicated that M&A appetite in the sector remains high, saying: “BDO’s latest Economic Engine survey reveals that over a quarter of businesses in the sector are looking to source new capital or engage in M&A to strengthen their position.”
Stephan added that many UK players “are poised for growth in 2025 thanks to favourable tailwinds”, including a government “keen to show it means business” across key areas such as housebuilding and energy infrastructure.
He continued: “As well as this, Building Products & Services companies look set to benefit from activities that cannot be put off for much longer, such as UK water and wastewater infrastructure, where there has been a severe lack of investment."
Demonstrating the strength of activity in the BP&S sector, and its resilience in the face of severe economic headwinds over recent years, BDO’s research revealed that the UK has seen more than 1,500 deals in the sector over the past five years. Globally, there have been over 6,000 transactions in the industry over the past five years, indicating that the UK market remains one of the strongest markets in the sector worldwide.
Find out more about the major trends that are driving M&A in the BP&S sector in this in-depth analysis of dealmaking in the industry
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