Strategic Alternatives
How Construction Defied Every Gloomy Prediction
Oct 6, 2023
Discussing the impact of the housing market on building product cycle, increasing average hold period for portfolio companies, competitiveness of private equity and corporate buyers in acquiring carve outs, and the outlook for transformative M&A transactions in the coming years.
09:50
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Quick takeaways
- Customized deals may help private equity bridge the bidding gap in M&A opportunities in industrials.
- Private equity firms are adapting by structuring deals creatively to remain competitive in acquiring assets.
Deep dives
Strong Performance of Home Builders in the Housing Market
Despite high mortgage rates, the housing market and home builders have been performing exceptionally well. The usual correlation between interest rates and the construction sector seems to have been disrupted, as low unemployment and high demand compensate for the high rates. The scarcity of housing supply has further driven up prices, with homeowners reluctant to sell their properties due to locked-in mortgage rates. As unemployment remains low and people can afford their payments, the activity in the residential construction space is expected to continue.
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