DEAL Roundup
BUILDING MOMENTUM The COVID-19 pandemic and other market headwinds drive flurry of building products deals, as large PE-backed platforms gobble up smaller regional players
BY A N A STA SI A D O N D E
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he technology and health care sectors have enjoyed a boost in activity in recent years as existing trends—spurred by the coronavirus pandemic—pushed deal activity and valuations to record levels. Investors have been tapping into cybersecurity and online learning companies, as those businesses flourished during lockdowns and workfrom-home environments. In health care, pharma services and telehealth have also enjoyed an M&A boom. Meanwhile, in a less glamorous part of the market, industrials investors have been quite busy buying up building products companies, both large and small. Investment activity tied to new home construction or “housing starts” tends to be cyclical and before the pandemic, “private equity firms were worried about the next downturn and investing so late in the cycle,” says Tim Webb, managing director in the industrials group at investment bank Harris Williams. “By leading to a brief downturn, COVID-19 has essentially reset the
conversation,” Webb adds. “The other positive dynamic is the fact that building products helped bring us out of that downturn and has been very strong ever since.” Activity in the sector was boosted by a migration away from cities, with many offices going remote and the virus initially spreading quickly in large, heavily populated urban areas. Millennials are buying their first homes and existing homeowners are reinvesting in their houses after spending a year at home, Webb explains. “The fundamental factors that make building products so interesting—millennials buying their first house and an aging housing stock— have been building for quite a while,” says Ajay Kumar, principal at Bain Capital Private Equity. The firm purchased US LBM, a large specialty building materials company at the end of last year. Since then, US LBM has made many add-on acquisitions under Bain’s roof. The Buffalo Grove, Illinois-based company
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