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© 2018 Copyright Key Media and Research All rights reserved. 
No reproduction of any type without expressed written permission.

10
Door & Window Market www.dwmmag.com
2017 was a Slow Year for M&A Activity
The Industry Isn’t Struggling, Though. Far From It.
BY MICHAEL COLLINS
L
ast year represented a period of
somewhat tepid activity in merg
-
ers and acquisitions (M&A) for
door and window manufacturers.
In 2017, only nine transactions were
completed, vs. 21 and 16 transactions
in 2015 and 2016, respectively. Looking
back, 2015 represented a breakout
year of door and window M&A activ
-
ity following a steady decline in the
number of deals from 2007 to 2014.
It would be easy to assume that the
decline is a sign that the door and win
-
dow industry is not performing well or
is not viewed favorably by the capital
markets. Fortunately, that could not be
further from the truth.
Most door and window manufac
-
turers experienced solid earnings in
2017 and posted strong, albeit not
record-setting, growth last year. The
start of 2018 was marked by the his
-
toric acquisition and merger of Ply
Gem and Atrium Windows, creating a
powerhouse with $2.4 billion in 2017
revenue. (See story on page 12.) The
PE fund behind this deal, Clayton,
Dubilier & Rice, has a great track record
of success in investing and works with
some of the most successful executive
operating partners in the PE industry.
In other words, a great source of smart
money just made an enormous bet
that the future of the door and window
manufacturing industry looks bright
and profitable.
So where is the disconnect between
the expected – vs. actual – level of deal
activity? We believe the answer lies in
a lack of qualified companies coming
to market. Strategic and PE buyers
have ample capital and want to make
investments in the building prod
-
ucts segment. The problem is that
the business owners with the greatest
desire to sell did so in the market
strength of 2014 to 2016. This leads to
a strong buying environment in which
quality companies that are brought to
market are greeted with interest.
In the door and window segment,
that buying interest comes from stra
-
tegic buyers (those already in the
industry) and PE buyers in a relatively
predictable way. We have tracked 410
acquisitions, mergers or IPOs since
2000 in which either the buyer or sell
-
er was a U.S.-based door or window
manufacturer. Of these, 76 percent
of the deals were consummated by a
strategic buyer and the remaining 24
percent were completed by private
equity funds. Interestingly, this pro
-
portion of strategic to PE buyers has
not changed by more than a percent or
two when analyzing deals from 2005
through 2017 against all prior years
back to 2000 (e.g., 2000-2005, 2000-
2006, etc.). The acquisition activity of
2017 illustrated two continuing trends
in fenestration M&A: window man
-
ufacturers account for the majority
of acquired companies, and luxury
window manufacturers, in particular,
remain of interest to buyers.
The recent tax cuts and reforms
have made certain aspects of selling
companies more attractive. PE funds
ended 2017 with a year-end cash over
-
hang of more than $900 billion, per
Bloomberg estimates. All of these fac
-
tors should result in a very favorable
M&A environment in 2018.
y
Michael Collins is an investment banker
and a partner in Building Industry Advisors.
He specializes in mergers and acquisitions in
the door and window industry.
T R E N D T R A C K E R
mcollins@buildingia.com
0
5
10
15
20
25
30
35
40
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Financial
Strategic
M&A Activity Among U.S.-Based Door and
Window Manufacturers (2000-2017)
Mergers and acquisitions in the industry have slowed in recent years.
Source: Building Industry Advisors research

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© 2018 Copyright Key Media and Research All rights reserved. 
No reproduction of any type without expressed written permission.