Investment banker sees 2021 ushering fertile merger & acquisition conditions

Sources: FMI Capital Advisors, Raleigh, N.C.; CP staff

Investment banking services provider FMI Capital Advisors analyzes key economic factors affecting cement, aggregate, concrete and asphalt producers last year as well as their implications for this year in “Capturing the Momentum: Construction Materials Review of 2020 and Outlook for M&A in 2021.”

The report is posted here.

“Throughout 2020, market sentiment operated like a pendulum, swinging back and forth between certainty and uncertainty,” says FMI Construction Materials Group Managing Director George Reddin, report co-author. “By the end of the year, optimism, earnings, and merger & acquisition activity all began picking up, allowing the construction materials industry to finish strong. FMI expects this trend to continue into 2021, driven by new potential for funding, vaccine progress, and a surprisingly robust residential market.”

In “Capturing Momentum,” he and FMI Managing Director Scott Duncan observe: 

  • Beyond the global health crisis, 2020 was already set to be a pivotal year for construction materials, as federal infrastructure funding was in the spotlight with the Fixing America’s Surface Transportation (FAST) Act set to expire in September.
  • Questions and uncertainty created an anemic merger & acquisitions market for construction materials in the first half of 2020. As the year progressed, activity picked up, ultimately ending with a strong fourth quarter.
  • Many buyers have started 2021 with well-structured balance sheets and access to low-interest debt. Election results are signaling the anticipation of new federal infrastructure funding, with construction materials operators poised to benefit. Public companies in the sector are seeing boosts in their stock values, encouraging an acquisitive atmosphere.
  • The promise of capturing future earnings through solid economic fundamentals creates an attractive landscape for construction materials mergers & acquisitions. FMI is bullish on the current market for both buyers and sellers.

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