Business appetite fuels building products and services sector - BDO

The Building Products and Services sector has seen a significant increase in deal activity in the last 12 months, according to accountancy and business advisory firm BDO LLP.

The UK market saw a 51 per cent uplift in transactions in 2021, with 375 deals completed last year, compared with 249 in 2020. This included the sale of Redditch-based Mikrofill to Stuart Turner Group and the sale of Techncover by Solihull-headquartered, Hill & Smith Holdings PLC.

Of the UK deals, 41 per cent were backed by private equity ( “PE ”), which included additional funding into existing PE investments (31 per cent in 2020). The builders merchants sector was particularly active, with the likes of Cairngorm and Clayton Dubilier & Rice further building out their platforms.

In total, more than 1,000 deals have been completed in the UK market in the last four years. The capital markets were also active in the sector with a number of IPOs including the merchant, Lords Group Trading.

John Stephan (pictured), mergers and acquisitions partner at BDO, said: “The Building Products & Services sector has performed strongly during 2021, compared with the market as a whole, rebounding 43 per cent last year following a challenging 2020.

“That performance was underpinned by a clear appetite from businesses to pursue ambitious growth strategies through M&A, with investors following suit with first-time capital and follow-on funding. Unsurprisingly, private equity has played a major part in the market 's eagerness to do business during 2021. ”

Globally, 213 deals were by BDO 's Building Products & Services team, a rise of 33 per cent on 2020. Following the market trend, 30 per cent of BDO deals involved private equity.

Although cross-border deals dipped as a proportion during 2021, high-profile transactions included the sale of Solatube International, Inc. (USA) to Kingspan Group (Ireland); the acquisition of Fiora Bath Collections (Spain) by The Engineered Stone Group (UK); the sale of 63 per cent share capital of Electrozemper (Spain) to FW Thorpe (UK); and the acquisition of Energent Oy (Finland) by Volution (UK).

Stephan added: “The Building Products & Services sector has developed a very global feel in recent years, with transactions transcending boundaries as overseas and domestic companies look to widen their international footprint through acquisition.

“With supply chains coming under pressure due to the pandemic and Brexit, and further disruption expected as a result of the invasion of Ukraine, businesses are increasingly targeting strategic add-ons that enable them to strengthen their position in key overseas territories. ”