(Disclosure: Rose Law Group represents Landsea Homes and Taylor Morrison.)
By Vincent Salandro | Builder
Despite persistent affordability issues and a challenging housing market, the merger and acquisition (M&A) market has remained active. More importantly, the character of that activity is changing. Recent transactions point to an industry increasingly driven by consolidation, with well-capitalized buyers pursuing scale through acquisitions of both private and publicly traded builders.
Sumitomo Forestry’s $4.5 billion purchase of Tri Pointe Homes and Berkshire Hathaway’s $8.5 billion purchase of Taylor Morrison represent several trends that have emerged in the M&A market: public companies being taken private, rapid market consolidation, and the race for scale. The past two years has seen five public companies sold—M.D.C Holdings, Landsea Homes, United Homes Group, Tri Pointe Homes, and Taylor Morrison—with another, Beazer Homes, being publicly pursued by Dream Finders Homes.
Margaret Whelan, founder and CEO of Whelan Advisory, says those deals reflect a broader shift in how builders are thinking about growth.
“Big industries consolidate very quickly because there are real benefits to scale,” Whelan tells BUILDER. “It’s no longer about being public versus being private as a builder. It’s about the best capital structure you can realize.”
