M&A activity in construction and building products remained mostly stable in 2025 after a brief rebound in 2024, underscoring still-fragile construction demand and an uncertain outlook. Over the first nine months of the year, North America saw positive deal momentum and the bulk of the largest deals, with a 33% increase in deal value (see Figure 1). Europe, the Middle East, and Africa and the Asia-Pacific regions saw drops in deal value of 48% and 44%, respectively.

Figure 1

The center of gravity in building products M&A is continuing its shift from scale toward scope and capability plays (see Figure 2). It’s a trend that’s reflected in some of the largest deals in 2025. Lowe’s acquired Foundation Building Materials for $8.8 billion to extend its reach into professional customers and specialty distribution. Home Depot bought GMS to continue its expansion into the professional channel it made with its SRS acquisition in 2024. And CRH bought Eco Material Technologies for $2.1 billion, giving it significantly more scale in fly ash and pozzolans.

Figure 2

Scope deals are not only strategic in building products but necessary given the levels of industry concentration. Consider the highly consolidated cement category, in which traditional scale plays have largely run their course. In the US, the top six players control about 65% to 70% of capacity, with Europe showing a similar picture. As a result, M&A among cement companies increasingly targets scope or capability expansion. Holcim’s bid for Xella is aimed at helping expand into complementary building materials.

Indeed, opportunities for scale deals are mixed. The sanitary and plumbing category remains fragmented. Even after the Georg Fischer–Uponor  deal of 2023, the top five players in Europe hold only about 25% of market share. In Europe, the country-by-country competitive landscapes look largely different, making large M&A moves less likely across categories. The US is more concentrated, reflecting a broader trend across categories where North America is further along the consolidation curve than Europe.

For leaders, the imperative is to first understand where your core segment sits on the consolidation curve. Is there still room for scale deals or not? If not, pivot your M&A strategy toward adjacent categories or other scope moves such as capability acquisitions.

In addition, as deal activity shifts from traditional scale transactions toward scope and capability plays, the focus of due diligence is moving from primarily identifying cost levers to commercial levers aimed at boosting top-line growth, such as cross-selling and diversification. The emphasis on revenue synergies is especially critical in Europe, which is not expected to see high underlying market growth.

The building products industry is inherently cyclical, particularly in new construction–exposed categories. While a few markets, such as parts of Europe, show signs of stabilization, many corporate acquirers are sticking with their wait-and-see stance. But when we last analyzed long-term deal performance in building products in 2024, we found companies that make frequent and material acquisitions outpace inactive companies in total shareholder returns, 9.6% vs. 2.7%. That’s why forward-looking companies are turning to M&A, even in a downcycle.

Winners invest through the cycle, which is why some are taking a long-term perspective and benefiting from lower multiples now. Be aware, however, that winning in today’s environment requires a refined approach. In particular, that means using the due diligence process to clearly separate temporary cyclical softness from structural weakness—that is, identifying whether a target is underperforming because of market headwinds or because its setup is fundamentally flawed.

Comparing a target’s performance to peers and the market is a good starting point. If results move in line with the market, softness is likely cyclical. However, in today’s environment it is essential to dig deeper. Low Net Promoter System^® scores, poor performance on key purchasing criteria, or repeated “missed moments of truth” with customers (e.g., failed deliveries) often point to company-level issues. If such issues exist, assess how easily they can be resolved. Depending on the answer, the asset may still be attractive and can be positioned to rebound with or even above the market as conditions improve.