Window of Opportunity for M&A

While the evolving tariff environment has slowed deal flow as investors evaluate the potential implications, the long-term thesis in the housing industry continues to build. The affordable housing crisis in the U.S. must be solved, and for suppliers in the residential building products market, it will serve as a multi-year tailwind as new housing supply and repair and remodel of existing home stock catches up with pent-up demand.

• Initiatives are being implemented to address the existing supply and demand imbalance of new construction, such as mortgage rate buydowns, smaller home sizes, zoning reform and deregulation.
• U.S. housing stock is aging. The typical U.S. home purchased in 2024 reached a record age of 36 years—the oldest median age since 2012, according to Redfin—with nearly 1.7 million more homes expected to reach the prime remodeling ages of 20 to 39 years old by 2027 per data from the S&P Capital IQ. R&R spending levels, albeit projected to moderate into early next year, are still above historical averages at more than $500 billion, according to the Harvard Joint Center for Housing Studies, and home equity levels just hit a new high.
• As many watch economic, unemployment and inflation indicators, interest rates are a bit of a wild card as pressure mounts on the Federal Reserve to initiate rate cuts, thereby relieving pressure on mortgage rates and stimulating new construction and R&R activity. In a July 2025 economic forecast, the National Association of Home Builders projected mortgage rates will decline from 6.7% to 5.99% by 2027.

Although tariffs have brought uncertainty in the mergers and acquisitions market, the appetite for high-quality businesses remains strong. A deeper dive into year-to-date building products transaction activity reveals the announcement of several marquee strategic deals in the residential building products market—notably Azek (JamesHardie), Beacon (QXO) and Artisan Design Group (Lowe’s)—multibillion dollar deals executed at attractive valuation multiples, underscoring investor optimism in the long-term industry outlook.

To be sure, quality is king in the current environment as fierce competition is driving scarcity premiums for companies that can demonstrate revenue and margin growth and forward visibility, a healthy mix of new construction and R&R exposure, leading market position, and diverse customer base, among the key value drivers. Pella’s acquisition of Weather Shield in July 2025, a company with a history of growth through innovation that deepens its penetration in the premium window and door market, illustrates this theme and demonstrates that quality companies can and are coming to market and commanding significant attention from buyers and lenders.

U.S. private equity dry powder is accumulating faster than it can be deployed as firms navigate a more selective deal environment. Equity capital now tops a record $1 trillion, which equates to buying power of more than $2 trillion inclusive of leverage as sponsors tap a robust direct lending market to finance acquisitions. Private equity has a long history of investing in building products companies and a proven track record in the window and door sector with more than 40 businesses currently held in portfolios that have average hold periods reaching or nearing six years—above the typical five-year industry average.

The need to return capital to limited partners will lead sponsors to more aggressively pursue exit opportunities. Taken together, private equity is poised to play an increasing role as buyers and sellers in the market, according to PitchBook.

While today there may be more discerning conditions for M&A, with additional clarity on the market, we expect activity to increase measurably, driving down the scarcity premium that quality businesses are garnering today. However, for innovative companies with actionable growth opportunities, there is still good value in the future. 

Learn more

Watch Current State of the M&A Market and Future Outlook, a webinar from the National Glass Association, presented by Andrew Petryk.