Waiting to Launch: Will There Be a Second Half Comeback?
By Michael Collins
This year’s International Builders’ Show (IBS) was a definite success, with a reported 81,000 attendees. We attend IBS to see new exhibitors and new products from familiar companies. There were plenty of both this year, but we place an even greater value on dozens of conversations over the three days of exhibits.
As a group, industry participants who shared their 2025 outlook felt that January had started out strong and business had softened perceptibly in February. The consensus view was that the first half of the year will represent a challenge for building products manufacturers and distributors, with business picking up considerably in the second half. Companies weren’t necessarily predicting lower sales, as much as a tough and competitive market in which growth will not be easy to achieve.
In one discussion during IBS, a management recruiter who focuses on the building products industry indicated that the pace of recruiting managers is brisk right now. In addition to the normal motivation to replace managers who leave companies or retire, the tougher market is providing an additional emphasis on management recruiting.
Another highlight of IBS included the World Vision award ceremony, which recognizes companies that have donated building products to World Vision’s Storehouse system. World Vision is an excellent way for building products manufacturers to donate excess product inventory that could be used to make the homes of those in need livable again. One of World Vision’s current areas for outreach include those affected by the fires in Los Angeles. In a related note, we talked to a building products supplier at IBS who had already received their first orders for affected homes.
The Outlook for M&A
We held discussions at IBS and in the days leading up to the show with numerous companies with the size and financial wherewithal to acquire other companies. Without exception, these potential buyers indicated to us that they are interested in pursuing additional acquisitions in the year ahead. While the market hasn’t grown strongly over the past two years, these companies have been profitable and are operating with very reasonable debt levels. These buyers have strategic plans for the desired products and geographic regions they would like to add to their existing businesses. As a group, they are not interested in unprofitable companies that need to be turned around, but there are a very small portion of companies in the market today that are losing money.
Our transaction database includes nearly 500 door and window manufacturers that have been acquired since 2000. At that rate, over the next couple of years we are likely to see large acquirers decide to spin out acquired companies that don’t fulfill the strategic benefits that buyers perceived at the consummation of the transaction. Other companies will be acquired and newly founded companies will become large enough to show up as attractive acquisition candidates to prospective buyers. The cyclical actions of these groups ensure that fenestration M&A activity will continue, albeit at a lower pace driven by the lower number of independent companies in our segment.
Michael Collins is an investment banker and a partner in EquiNova Capital Partners. He specializes in mergers and acquisitions in the door and window industry.
mcollins@buildingia.com
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