Mergers and Acquisitions

A Window of Opportunity for Sellers?
By Andrew K. Petryk
December 1, 2015
THE TALK... | Markets & Trends

Merger and acquisition activity in the window and door industry is accelerating. Participants are seeking consolidation opportunities to expand manufacturing footprints and capabilities, broaden product portfolios, and enhance margins. And, today’s perfect storm of pent up demand, cheap financing and surplus capital is driving up valuations. All of this creates a particularly advantageous window for sellers contemplating exits.

Investors have considerable buying power and are responding in kind using acquisitions to accelerate growth. Corporates are looking to mergers and acquisitions over organic expansion as they face increased pressure to match acquisitive competitors, despite rising purchase prices.

Also, financial buyers are bidding at levels comparable to strategic buyers—the continued pressure to put dollars to work forces private equity groups to be aggressive in auctions and bid up purchase multiples for the right assets. With industry fragmentation a draw, we expect to see funds aggressively pursuing acquisitive growth in order to create value.

How long will today’s elevated pricing environment last? Looming interest rate hikes have the potential to dampen valuations, but not investor appetite—especially given the billions in unspent capital available for acquisitions.

Ultimately, company quality drives purchase price multiples. Behind every premium multiple you will find a seasoned, forward-thinking management team, a culture of innovation, strong financial performance, and visible and quantifiable growth opportunities.

What do you think all the recent activity in mergers and acquisitions means for your company and for the industry at large? Review this week’s poll, post a comment, and/or email your thoughts on the subject.

Survey Results for 12/02/2015 :

Over the next 12 months, do you believe that valuations in the window and door industry will:

Increase

  

 

58.97%

 

Remain at the same level

  

 

23.08%

 

Decrease

  

 

17.95%

 

Andrew K. Petryk is Managing Director and Principal of Brown Gibbons Lang & Co. LLC, an investment bank serving the middle market. BGL served as the exclusive advisor to GED Integrated Solutions (Altus Capital Partners) and Edgetech I.G. (Quanex Building Products Corporation), manufacturers of insulating glass and window and door production systems, which together represent nearly 100 percent of the North American vinyl residential window market. Contact Andrew at 216/920-6613 or apetryk@bglco.com.