The last several years have seen a significant amount of deal activity, but a careful analysis of merger and acquisition (M&A) transactions in the LBM industry reveal some interesting trends. Since 2006, PROSALES has tracked 325 separate LBM acquisitions in the U.S. That’s an average of roughly 36 transactions per year, counting 2014's year-to-date activity as a whole year. This means that, while there has been significant activity over the past several years, the M&A activity in 2012, at 22 deals, was actually below the long-term trend. The 39 deals completed in 2013 represented a return to above-trend deal levels. Given this year’s frothy pace of deals, we are on track to exceed the recent peak of 49 acquisitions seen in 2010.
So where are these deals taking place? The top five states that were home to the greatest number of acquired LBM companies (but that weren’t necessarily the home state of all their facilities) were North Carolina, California, Texas, Florida, and Colorado. Of these, only Colorado garnered a significantly larger portion of LBM acquisitions than would be predicted based on its population. While it was the fifth busiest state for LBM deals, it is only the 22nd largest by population.
Maine, Wisconsin, Alabama, and Kansas also garnered an outsized share of LBM deals based on population. Clearly, industry participants expect strong growth from these states over the next several years. Georgia, Pennsylvania, Wisconsin, Illinois and Massachusetts rounded out the top 10 most active states, which together accounted for fully half of all deals.
Breaking the country down into seven regions, we find that almost a third of deals since 2006 have taken place on the East Coast and one of five acquired companies were located in the Midwest. The Southeast, West Coast and South Central regions each garnered 12% to 13% of total LBM deals and the Mountain and Southwest regions were the least active in terms of recent reported M&A activity.
The most active buyers in the PROSALES database were SRS Distribution, ProBuild and Stock Building Supply. Each of these companies has completed over 20 acquisitions since 2006. Clearly, these companies have developed acquisition integration as a core competence, in addition to their normal business activities. The timing of the acquisitions by these buyers was quite different, with SRS having made acquisitions both during and after the recession and ProBuild and Stock having made most of their acquisitions prior to the downturn. Many of those locations acquired prior to the downturn have since been shed or closed.
Among the next most active group of buyers, BMHC (now reorganized and known as BMC) and Builders FirstSource completed most of their acquisitions prior to the downturn. Allied Building Products, Beacon Roofing Supply, and Bradco became active as buyers during the downturn and after the downturn. Finally, the most active buyers in the post-recession period have been ABC Supply (whose acquisitions included Bradco), CNRG, Roofing Supply Group, and US LBM.
Of the 325 deals tracked, 138 of them were undertaken by buyers who acquired only one company from 2006 to the present. Another 28 deals were completed by buyers who acquired only two companies each during that period.
Regardless of where the deal took place or whether the buyer is a serial acquirer or a first timer, the numbers confirm that acquisitions are accelerating and a banner year for M&A in the LBM space is unfolding.
Visit PROSALES' Deals page for stories on particular acquisitions and mergers.