Industry Report: Building Products Q1 2025 [Balmoral Advisors]

Key Report Highlights

• Construction Activity Stabilizes Amid Tailwinds
  The U.S. building products sector entered 2025 on firm footing, with Q1 construction spending reaching $6.57 trillion, supported by robust home improvement activity and federal infrastructure projects like the Gordie Howe International Bridge and California High-Speed Rail. Federal programs (IIJA, CHIPS, IRA) are unlocking additional momentum as disbursements accelerate.

• M&A Activity Refocuses on Technology and Scalability
  Companies are shifting M&A strategies from short-term synergies to acquiring capabilities that define future business models—like smart building systems, digital tools, modular construction, and sustainability expertise. Firms that pursue frequent, strategic acquisitions see 3x higher shareholder returns than less acquisitive peers (9.6% vs. 2.7%).

• Interest Rates and Tariffs Shape Demand and Costs
  While 2024 rate cuts have unleashed pent-up housing demand, recent tariffs on steel, appliances, and other imports are adding $7,500–$10,000 in cost per new home, straining affordability and builder margins. Mid-market players relying on imports face margin pressure and may need to reconfigure supply chains rapidly.

• Private Equity Holds Steady Despite Uncertainty
  Private equity firms entered 2025 with over $1 trillion in dry powder, but are navigating cautiously due to extended holding periods and market volatility. Most funds are opting to hold rather than sell, waiting for improved valuations. Middle market companies with differentiated tech, regional scale, or ESG capabilities remain highly attractive targets.
• Market Fragmentation Fuels Consolidation Wave
  All four major sub-sectors—construction materials, equipment, distribution, and fixtures—remain highly fragmented, dominated by regional players. This sets the stage for accelerating consolidation, as both strategic and financial buyers pursue regional scale, supply chain control, and multi-product integration in response to regulatory and trade pressures.

Balmoral Advisors is a boutique investment bank based in Chicago, specializing in M&A, capital raising, and financial restructuring for middle-market companies. The firm serves both private and public clients across industrial, healthcare, consumer, and business services sectors.

Focused on companies with $25–$500 million in enterprise value, Balmoral provides tailored, partner-led advisory with deep expertise in areas like building products, manufacturing, and distribution. The firm is active in consolidating markets and supports clients through buy-side, sell-side, and special situations transactions.

With cross-border capabilities and strong sponsor relationships, Balmoral delivers strategic outcomes aligned with long-term goals. Securities are offered through Jordan Knauff & Company, LLC, member FINRA and SIPC.

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