A week that included two major announcements of sales in the LBM industry is a sign of good things to come – especially if you’re a seller.
A Reuters News Service report released late Thursday indicates that US LBM is exploring a sale that could place its value at close to $1 billion, including debt.
Thursday’s US LBM news comes on the heels of an announcement earlier this week that Builders FirstSource has agreed to buy ProBuild for approximately $1.63 billion. The combination creates a diversified national pro dealer with 2014 combined revenues of approximately $6.1 billion.
Christy Sadler, managing partner of the mergers and acquisitions advisory firm Anchor Peabody says that similar news can be expected throughout 2015 as the LBM market sees its best year in a decade.
Sadler says the US LBM news comes about because the market is in “the perfect storm” for mergers and acquisitions. A combination of the number of years of good performance since the economic downturn, low interest rates and banks willing to lend has created an environment that is receptive to buyers and sellers.
“We’re talking with our clients actively about taking advantage of this marketplace. We’re saying to our clients, ‘if you know you’re going to sell your company in the next 10 years, you should consider selling now,’” Sadler says. “These markets come around about every 10 years. The last market like this was 2004-2005.”
The marketplace is ripe for more transactions to come, Sadler says. “This is just the tip of the iceberg. We’re going to see other LBM dealers transact in 2015.”
Sadler reminds anyone looking to buy or sell in the LBM industry that US LBM was formed by investors in 2009 at a low point in the economic downturn. Now the Green Bay, Wis.-based distributor of building and construction materials to homebuilders, remodelers and specialty contractors has added $512 million in revenue and about 1,100 employees in 2014 and has 97 locations in 19 states.
“Here we are, after the downturn and they’re selling,” Sadler says. “These are smart, sophisticated investors, and we’re in a cyclical industry. The time to buy is at the bottom. The time to sell is at the top. The smart guys are showing us that.”