Building Products M&A Update – September 2025

Building Products M&A Normalizes, Large-Scale Consolidation Continues to Headline Sector Deal Flow

Recent trade policy uncertainty and input cost inflation have delayed many transaction efforts, causing softened building products merger and acquisition (M&A) activity and pressured profit margins through year-to-date (YTD) 2025. Despite the recent market weakness weighing on year-over-year (YOY) M&A activity, deal flow has been upheld by booming data center construction and long-term growth levers such as pent-up demand for affordable housing. Tailwinds have propelled a flurry of large-scale acquisitions that have characterized building products M&A over the past couple of years. Public sector participants have spearheaded this activity but have faced increasing competition for quality assets from new entrants and private equity (PE) firms. A recent acceleration in commercial and institutional construction planning is expected to further prop-up sector deal flow into 2026, particularly if interest rate cuts materialize and project financing becomes cheaper for developers.

Developers Forge Ahead with Institutional and Commercial Projects Despite Headwinds

A surge in project planning activity within Commercial and Institutional markets has supported sector growth expectations leading into 2026 despite trade policy volatility that has subdued construction spending and profit margin expectations. As of July 2025, construction input prices have risen 2.2% YOY, with nonresidential input prices up 5.8% at an annualized rate since January, according to the Bureau of Labor Statistics (BLS).¹ Recent tariff hikes have underscored the acceleration, with copper input prices up 4.9% month-over-month (MoM) and 12.2% YOY due to the 50% tariff imposed on August 1, according to the BLS and a White House press release.² Tariff-induced price inflation is expected to continue pushing input costs higher, evidenced by additional copper tariffs of 15% and 30% scheduled for 2027 and 2028, respectively. In July, 80% of Associated Builders and Contractors (ABC) members reported that they have been notified of impending tariff-related price increases, according to a recent ABC report.³ As a result of this recent input cost inflation, more than one-fourth of contractors expect profit margins to shrink over the next six months.

Institutional and commercial construction activity accelerated in July as developers started to embrace the volatile, higher-cost environment. While construction spending fell 0.4% MoM (-2.9% YOY) in June, the Dodge Momentum Index (DMI)—a measure of the value of nonresidential building projects entering the planning stage—rose 20.8% MoM (+41% YOY) in July of 2025, according to reports from the U.S. Census Bureau and the Dodge Construction Network.^4,5 Planning growth has continued to be underscored by booming data center construction activity as the artificial intelligence (AI) race heats up. A flurry of new, large-scale data center, research & development laboratory, hospital, warehouse, and education construction projects spearheaded the July gain. Of note, July DMI readings for commercial planning grew 14.2% MoM and 24% YOY while institutional planning increased 35.1% MoM and 85% YOY. The current macroeconomic environment has begun to take its toll on commercial developers, with many choosing to eat cost inflation and forge ahead with debt-intensive projects. This momentum will likely persist into 2026, with expectations that pent-up demand for new residential construction will further propel sustained growth across the sector.

Building Products M&A Normalizes Amid Tariff Uncertainty-Induced Deal Delays

After surging in 2024, YTD 2025 building products M&A activity has normalized to historical levels due to recent tariff-based uncertainty. Sector deal volume has fallen 20.8% YOY, down from 265 transactions in YTD 2024 to 210 in YTD 2025. However, YTD 2025 activity has remained in-line with the seven-year historical average (207 transactions) across the same period. Despite a sector-wide M&A slowdown, public building products players have continued to showcase a strong appetite for inorganic growth. Public strategic M&A increased by three deals YOY, with 56 transactions announced or completed in YTD 2025. The fragmented nature of the Building Products market has underpinned public sector participants’ steady appetite for roll-ups. Moreover, competition with new entrants over quality targets has propelled public buyers’ aggressive consolidation tactics to date. New entrants, namely PE firms and large-scale consumer-facing sector retailers, have accelerated sector M&A activity in an effort to bolster market share in preparation for an eventual rebound in residential construction. As a result, large-scale transactions have increasingly headlined building products M&A activity, increasing in proportion YOY from 29.2% of total disclosed transactions in YTD 2024 to 45.8% in YTD 2025. Expectations for a residential construction rebound will likely uphold large-scale dealmaking and public buyer appetite.

The YOY M&A reversion has largely stemmed from a pull-back in PE add-on transactions amid recent macroeconomic volatility. Sponsor-backed deal flow has fallen 49.4% YOY from 85 deals in YTD 2024 to 43 in YTD 2025. Softening interest rates and long-term construction tailwinds helped propel two-years of surging PE add-on activity through 2024. Stagnant interest rate levels coupled with recent tariff headwinds have underscored the YOY deceleration in YTD 2025. However, strong underlying growth levers—such as AI-driven data center demand and the affordable housing shortage—will likely continue attracting PE sector investments. This enduring sponsor confidence has been demonstrated by steady platform formation activity. Platform M&A fell by only one deal YOY to 25 transactions in YTD 2025. Tariff pressures will likely remain intact, but expectations for additional interest rate cuts could help ease barriers to PE deal flow for the remainder of 2025.

Shrinking margins—due to tariff-induced input price hikes and broader market uncertainty—has mitigated recent private strategic M&A activity. To date, private strategic M&A volume has fallen by 15 deals YOY, representing a 14.9% drop compared to YTD 2024. Private buyers have remained cautious within the shifting trade policy landscape, prioritizing the navigation of tariff-based input price volatility. Private strategics, particularly smaller-scale operations or those reliant on heavily tariff-exposed materials, have struggled the most in this environment. As a result, shrinking margins have pushed private owners to pause or delay selling their building products business. “I think everyone thought M&A was going to take off screaming in the first half of the calendar year. But then with some of the larger macro issues, the tariff environment, interest rates staying elevated, that has been slow going…I think sellers have been a little bit more cautious about wanting to make sure that they enter the market and they’re still going to get a good valuation,” noted Ty Silberhorn, Apogee Enterprises (Nasdaq:APOG) President and CEO, in a June earnings call.⁶ Capstone expects private strategic deal flow to pick-up pace as buyers look to resume inorganic growth strategies once valuation conditions and margin pressures ease.

M&A activity in the Building Products sector remains strong. With the help of lower interest rates, activity and valuations should increase In 2026.

Darin GoodHead of Building Products & Construction Services, Managing Director, Capstone Partners

Public Buyers, New Entrants Lead Ongoing Large-Scale Deal Flurry in Preparation for Residential Construction Rebound

Large-scale deals have continued to characterize Building Products sector M&A activity through YTD 2025. This trend has been driven by new entrants and existing public sector participants that have battled for market share within the fragmented space in response to expectations that residential construction activity will soon rebound. Blockbuster acquisitions from consumer-facing retailers looking to enter the Professional Contractor (Pro) end market have headlined recent activity. Since Home Depot’s (NYSE:HD) acquisition of SRS Distribution (June 2024, $18.6 billion, 1.9x EV/Revenue, 17x EV/EBITDA), the retailer has engaged in 11 acquisitions of building products operators across the U.S. Among those deals, nine have been rolled up into the SRS platform. This includes the announced acquisition of building products distributor GMS (NYSE:GMS) for $5.8 billion or 1.1x EV/Revenue and 10.2x EV/EBITDA. The deal further expands Home Depot’s presence within the Building Products Distribution space, particularly among residential pros which have been the cornerstone of its recent growth strategy.

The affordable housing crisis has underpinned recent efforts to bolster market share and capabilities via large-scale consolidations. Pent-up demand has largely been attributed to the significant decline in headship rates (the rate at which the population forms households) among those aged 18-44 over the past decade, according to a Realtor.com article.⁷ Rising home prices—propelled by tight inventory, restrictive zoning rules, high mortgage rates, and tariff-induced cost inflation—have fostered this decline. The median list price ($422,933 as of July 31, 2025) has outpaced this group’s homebuying power, with the majority (70%) of U.S. households unable to afford a $400,000 home, according to the Zillow (Nasdaq:ZG) Home Value Index and research from the National Association of Home Builders.^8,9 While these conditions have subdued current demand and homebuilding activity, underlying demand has remained strong. Public sector participants and new entrants have ramped-up roll-up acquisition activity to capitalize on the market’s favorable long-term outlook. Lowe’s Companies (NYSE:LOW) followed Home Depot’s entry into the Residential Pro market with two large-scale acquisitions of building products distributors: Artisan Design Group (April 2025, $1.3 billion, 0.7x EV/Revenue) and Foundation Building Materials (August 2025, $8.8 billion, 1.4x EV/Revenue, 13.4x EV/EBITDA).  “[The Real Estate market is] going to need roughly 18 million homes by 2033. We want to be positioned in this Planned Pro Spend area that we virtually, today, do zero dollars in revenue, and that’s a $50 billion target market in Residential Construction and Multifamily. [Artisan Design Group] gives us a really nice foothold in that space,” noted Marvin Ellison, Lowe’s President and CEO, at the June Oppenheimer Consumer Growth and E-Commerce Virtual Conference Fireside Chat.¹⁰

Large-scale consolidation tactics in the Residential Construction space will likely persist as competition for quality targets accelerates. Average deal size within the Building Products sector has risen since 2023—up 23.9% YOY from $1.5 billion to $1.8 billion in YTD 2025. These buyers are expected to continue targeting scalable businesses with established operations that expand regional market share and/or product offerings. Notable large-scale Building Products sector M&A transactions are detailed below.

• MasterBrand Announces Acquisition of American Woodmark (August 2025, $1.3 Billion, 0.8x EV/Revenue, 6.2x EV/EBITDA) – MasterBrand (NYSE:MBC) announced its intent to merge with fellow residential cabinet manufacturer, American Woodmark (Nasdaq:AMWD), for an enterprise value of $1.3 billion, equivalent to 0.8x EV/Revenue and 6.2x EV/EBITDA (August 2025). The all-stock merger proposal would see the largest North American cabinet maker—MasterBrand—join operations with American WoodMark, creating a combined entity with an enterprise value of $3.6 billion, according to a press release.¹¹ Upon closing, MasterBrand and American Woodmark shareholders will own 63% and 37% of the merged entity, respectively, with American Woodmark to become a wholly owned subsidiary of MasterBrand. Both companies cited expanded channel partnership opportunities, geographic reach, and operating efficiencies as key deal motivation. “MasterBrand and American Woodmark bring unique but complementary strengths—strong and broad portfolios and streamlined low-cost manufacturing profiles—and in leveraging them, the combination will help us accelerate our strategies and create enhanced value for both companies’ shareholders,” noted Dave Banyard, MasterBrand President and CEO, in the press release.

• Foundation Building Materials Acquires KCG (April 2025, $600 Million) – In April 2025, Foundation Building Materials (FBM), previously backed by PE firm American Securities, acquired building products distributor, KCG, for an enterprise value of $600 million. FBM’s building products distribution operations cover wallboard, suspended ceiling systems, metal framing, and other complementary products. KCG, operating as Rew Materials, distributes interior and exterior building materials across 23 states, according to a press release.¹² As part of the deal, FBM will gain 800 employees and further strengthen its national market share and product offering with the addition of KCG’s 45 distribution branches. The deal follows a spate of acquisitions from FBM in 2024: Inland Empire Dry Wall Company (December, undisclosed), Unified Door and Hardware Group (September, undisclosed), and Stucco Master Supply (January, undisclosed).
• QXO Acquires Beacon Roofing Supply (January 2025, $11.3 Billion, 1.2x EV/Revenue, 10.7x EV/EBITDA) – In January 2025, QXO (NYSE:QXO) acquired Beacon Roofing Supply (Nasdaq:BECN) for an enterprise value of $11.3 billion, equivalent to 1.2x EV/Revenue and 10.7x EV/EBITDA. Serial roll-up entrepreneur Brad Jacobs became CEO and Chairman of QXO after his firm, Jacobs Private Equity, invested $1 billion of PE growth capital (June 2024) into the technology and software consulting company previously known as SilverSun Technologies. Soon after, Jacobs announced his intent to turn the now rebranded QXO into a global, technology-enabled building products distributor and secured additional PE growth equity investments of $3.5 billion (June 2024) and $620 million (July 2024).

Flush with more than $5 billion in financing, QXO quickly searched for an avenue into the Building Products market via an acquisition of an existing large-scale operator. This included a failed bid to acquire the French building products distributor, Rexel (ENXTPA:RXL) (September 2024, $13.9 Billion, 0.7x EV/Revenue, 8.6x EV/EBITDA). Shortly thereafter, QXO turned its attention towards Beacon—submitting two bids, with shareholders accepting the latter at $124.4 per share, according to a press release.¹³ QXO plans to further scale and solidify its market-leading position in the Building Products Distribution market by rolling-up other large-scale sector participants.

Capstone expects large-scale building products M&A to persist for the foreseeable future despite trade policy volatility pressuring sector profit margins. Ongoing strength from booming data center construction will likely uphold this momentum for the near-term. Accelerated planning within Institutional, Commercial end-markets and pent-up demand for new residential construction is expected to further support sector M&A into 2026.

To discuss large-scale consolidation trends, provide an update on your business, or learn about Capstone’s wide range of advisory services and building products M&A knowledge, please contact us.

Izzy Jack, Associate, was the lead Market Intelligence contributor to this article.

Endnotes

1. Bureau of Labor Statistics, “Producer Price Indexes,” https://www.bls.gov/ppi/, accessed August 22, 2025.

2. The White House, “Adjusting Imports of Copper Into the United States,” https://www.whitehouse.gov/presidential-actions/2025/07/adjusting-imports-of-copper-into-the-united-states/, accessed August 22, 2025.

3. Associated Builders and Contractors, “ABC: Construction Backlog Indicator Rises, Contractor Optimism Slips in July,” https://www.abc.org/News-Media/News-Releases/abc-construction-backlog-indicator-rises-contractor-optimism-slips-in-july, accessed August 22, 2025.

4. U.S. Census Bureau, “Monthly Construction Spending, June 2025,” https://www.census.gov/construction/c30/current/index.html, accessed August 22, 2025.

5. Dodge Construction Network, “Dodge Momentum Index Surges 21% in July,” https://www.construction.com/company-news/dodge-momentum-index-surges-21-in-july/, accessed August 22, 2025.

6. Apogee Enterprises, “Apogee Enterprises (Q1 2026 Earnings) June 27, 2025,” https://www.apog.com/static-files/5a40a022-1d0d-44a5-a618-49f080244aa8, accessed August 22, 2025.

7. Realtor.com, “Housing Supply Gap Reaches Nearly 4 Million in 2024,” https://www.realtor.com/research/us-housing-supply-gap-2025/, accessed August 22, 2025.

8. Zillow, “United States Housing Market,” https://www.zillow.com/home-values/102001/united-states/, accessed August 22, 2025.

9. National Association of Home Builders, “Affordability Pyramid Shows 94 Million Households Cannot Buy a $400,000 Home,” https://eyeonhousing.org/2025/03/affordability-pyramid-shows-94-million-households-cannot-buy-a-400000-home/, accessed August 22, 2025.

10. Lowe’s Companies, “Oppenheimer 25th Annual Consumer Growth and E-Commerce Conference,” https://wsw.com/webcast/oppenheimer42/register.aspx?conf=oppenheimer42&page=low&url=https://wsw.com/webcast/oppenheimer42/low/2579492, accessed August 25, 2025.

11. American Woodmark, “MasterBrand and American Woodmark to Combine in an All-Stock Transaction to Accelerate Value Delivery Through:,” https://americanwoodmark.com/investors/press-releases/2025/masterbrand-and-american-woodmark-to-combine-in-all-stock-transaction-to-accelerate-value-delivery-through, accessed August 2025.

12. Foundation Building Materials, “KCG/Rew Materials Join Foundation Building Materials (FBM),” https://www.fbmsales.com/kcg-rew-materials-join-foundation-building-materials-fbm/, accessed August 25, 2025.

13. QXO, “QXO Completes Acquisition of Beacon Roofing Supply,” https://investors.qxo.com/news/news-details/2025/QXO-Completes-Acquisition-of-Beacon-Roofing-Supply/default.aspx, accessed August 22, 2025.