Building Products and Materials Industry Insights-Q3 2016

M&A activity in the building products and materials sector was strong in 1H 2016, particularly in the second quarter with 59 completed transactions involving target companies headquartered in the U.S. or Canada. While existing home sales reached the highest annual pace since 2007 and starts remained strong, building permits declined in 1H 2016, an indication that construction activity may slow in the future.

Key Highlights Include:

  • Valuation multiples for the industry as a whole have trended upward over the last few years due to rising stock prices and anticipation of higher earnings in the future as housing starts, building permits, remodeling and repair activity, and other industry drivers remain strong.
  • U.S. housing starts were up 6.7% in the first half of 2016 and have remained above the million mark for 15 consecutive months.
  • Permits for single-family homes rose 10.1% in the first half of 2016 compared to a year ago, while permits for multi-family homes declined 16.5%.
  • Existing home sales rose for the fourth straight month in June to a seasonally adjusted annual rate of 5,570,000, reaching a nine-year high.

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