Insights
2019 Outlook for the Construction Industry
April 15, 2019
The outlook for the global construction market for the year of 2019 remains positive, with an expected five-percent sector-wide growth in revenue. Robust economies, low interest rates, and increased infrastructure spending are key factors behind the increased confidence. The world’s fastest growing market is the Asia Pacific region, due to growing investments in China and India’s construction sectors. In North America and Europe, growth is being driven by new technologies in already strong construction markets. Also, a number of South American and Middle Eastern countries may see their markets recover in the coming year and have the potential for growth in the future.
M&A Momentum
Mergers and acquisitions for the construction industry are poised to follow the vigorous deal activity of 2018. Construction tech startups raised $1.27 billion in venture funding in the first three quarters of 2018 alone. Public companies were seeking growth. There was increased interest in individual sectors such as energy. Private equity firms were actively buying and selling. Another significant factor was a need for ownership changes due to a growing retirement-age population. These trends are predicted to continue throughout 2019.
Tech Startups
Construction technology startups are expected to continue to have a considerable impact this year. This industry segment has seen more than $10 billion in funding over the past 10 years, with most of the money coming from early-stage venture capital deals. As these tech companies evolve, bigger firms are making full acquisitions. One strategic reason behind these large acquisitions is for companies to procure more talent in a more efficient manner, which in turn is anticipated to drive business growth.
Smart Cities
Society is seeing a heightened focus on infrastructure upgrades and the creation of smart cities. In 2016, smart-city tech spending reached $80 billion globally. By 2021, spending is expected to grow to $135 billion. Smart cities use Internet sensors and other technologies to connect elements across a city to gather data and enhance the lives of its residents. Partnerships between private and public companies are helping governments incorporate new technologies in an increasingly urbanized world. The advent of smart cities was initially seen in Europe, and now the U.S. has begun to integrate technology into urban infrastructure.
Offsite Construction
The quickly growing modular construction market is projected to reach $157 billion by 2023. The capability to build taller modular buildings is reaching new heights, with some buildings stacking up to almost 20 stories. This offsite type of construction is addressing certain industry needs, such as the need for skilled labor, the need for affordable housing, and the need to complete projects more quickly.
Connected Construction
A rapidly emerging trend that many investors are watching closely is connected construction. Companies are incorporating technology into construction sites to save time and money. Bluetooth connectivity is driving the emergence of new worksite tools that can be tracked, monitored, and even deactivated. Mesh networks are enabling sites to be fully connected to wireless networks in order to streamline processes around obstacles in the way of man-hours, status updates, supply deliveries, blueprint consultations, and more.
These emerging technologies have prompted several recent acquisitions, just to name a few.
- Autodesk Inc. purchased construction productivity software company PlanGrid for $875 million.
- Autodesk also spent $275 million to buy BuildingConnected, a networking platform of more than 700,000 construction professionals.
- Trimble bought construction software company Viewpoint from Bain Capital for $1.2 billion.
Enlist Our Expertise
If you are interested in buying, selling, creating a growth strategy, or even devising an exit plan for your business, contact Benchmark International to get the expertise that is proven to make successful deals happen around the world every day.
Share This Post
Categories
Get These Insights Delivered Directly To Your Email
Explore our curated collection today and stay ahead of the curve in M&A.
Related Posts
Why Negotiating the Tough Stuff Upfront in a Letter of Intent is Crucial in M&A TransactionsWhen you're selling your business, the most challenging negotiations are the ones that often get pushed aside, but they are the ones that should be tackled upfront. The ESOP Advantage in M&A: What Buyers and Sellers Need to KnowESOPs have a special place in the business world. There's a bit of mystery around them as they are outside of typical business structures, and many need to understand how they work, much less their role in an M&A transaction. Some ESOPs seeking to sell are curious if they can do so with an ESOP in place. Others looking to buy or be bought out by an ESOP aren't sure of the proceedings. Fortunately, Benchmark has managed both situations and can navigate deals with these added layers of complexity.