Building Products & Services: the sectors to watch in 2025
Building Products & Services: the sectors to watch in 2025
2024 was a busy year for mergers & acquisitions (M&A) in the Building Products & Services industry. With 20 deals completed by our team in the UK and many more globally, we’ve seen market sentiment improve during the year. As we look forward to 2025, several key sectors are poised for continued momentum and new opportunities are emerging. Here are just some of the themes we expect to drive M&A in the coming year.
Housebuilding: consolidation and growth
The housebuilding sector saw notable consolidation last year. Key deals include Barratt's merger with Redrow in a £2.5bn transaction and Legal & General's sale of Cala Group to private equity for £1.35bn. Although Bellway's move for Crest Nicholson was retracted, the sector remains active.
The Construction Products Association (CPA) forecasts an 8% rise in private housing output in 2025, following two years of decline. The Government's increased housebuilding targets, despite affordability challenges, are expected to stimulate the market. Measures in the new housing strategy, set to be announced in the summer, should bring growth and opportunities across the supply chain.
Renewables: accelerating M&A activity
The adoption of decarbonising technologies by consumers and businesses has accelerated M&A activity in the renewables sector. Hometree emerged as a major player in the market, having raised substantial debt and equity facilities to back deals, including the acquisitions of regional installation businesses, including The Little Green Energy Company and IMS Heat Pumps, and BeWarm, a renewables leasing business.
The government aims to upgrade 300,000 homes in 2025-26 and has pledged a Warm Homes Plan which will invest £6.6bn in grants and low-interest loans over the next five years to insulate homes, install solar panels and low-carbon heating. High levels of M&A activity are expected to continue, particularly in the installation, servicing, and maintenance of heat pumps, solar PV, and EV infrastructure.
Fire Safety: a market in the spotlight
Following the Grenfell tragedy, fire safety has become a critical focus, with tightening regulations driving a surge in M&A. We advised on LDC's investment in Integrated Doorset Solutions and Fire Door Inspection Solutions, with more acquisitions anticipated. The sale of Sunray Engineering to Assa Abloy was another notable deal.
Private equity firms have rapidly entered the market, backing platforms to consolidate and quickly build market position. Hyperion Equity Partners launched Ranger Services, a £20m investment vehicle, in February 2024, which has since acquired six businesses. We anticipate this trend to continue as the market evolves.
Security: innovation and regulation
The security sector is heating up, driven by innovative advancements and increased regulatory requirements for access control in residential and commercial markets. Major players like Allegion, Assa Abloy, and Dormakaba are making multiple acquisitions to expand internationally and incorporate new technologies. Following Quanex's $1.1bn takeover of Tyman, further consolidation is anticipated.
Keyless locks are a significant innovation, with integrated solutions becoming more prevalent in holistic building management systems and smart home solutions.
Windows & Doors: resurgence in activity
The windows and doors sector is experiencing a resurgence, aligned with improving prospects in private housing and repair, maintenance, and improvement. Despite challenges in 2024, such as Everest and Euramax falling into administration, the sector is now attracting investment.
Origin Frames invested £10m in a powder coating facility to boost its annual output to 150,000 frames, while Elliotts Builders Merchants acquired Futuremost Group to become a one-stop shop for window manufacturing and installation. And at the larger end of the market, PAI Partners is exploring options to exit StellaGroup, a France-based window manufacturer, in a deal potentially worth at least EUR 1.6bn.
Infrastructure Services: anticipated boom
Infrastructure services in the UK are set for a boom in the coming years. Activity remains strong on projects like HS2 and Hinkley Point C, alongside energy transition initiatives. The Autumn Budget revealed a 50% increase in funding for local roads maintenance and a broader commitment to capital investment and maintenance programmes for transport infrastructure.
The water sector is gearing up for growth, with the highest AMP settlement ever announced, injecting £88bn into the market over five years from 2026. This will create opportunities for manufacturers and service providers in treatment, distribution, remote monitoring and control, and smart meters, alongside consultancies.
The Government's ten-year infrastructure and new housing strategy, to be announced in summer 2025, should provide clearer guidance on key initiatives in the medium to long term. As commitments are revealed, we can expect increasing M&A activity as market participants prepare for growth.
The sectors to watch
2024 was a dynamic year for the Building Products & Services sector, with significant M&A activity across various markets. As we move into 2025, the housebuilding, renewables, fire safety, security, windows & doors, and infrastructure services sectors are all poised for continued growth and new opportunities. Stay tuned for further updates and insights as we navigate the evolving landscape of this vibrant industry.
For more detailed insights, download the full 2024-25 sector report for Building Products & Services.