Page 18 - TACC 2025 Program

The PE Playbook: Construction – continued
Investors should also consider Silver Spring,
Maryland, which was the fastest-growing city in the
US from 2023-2024. Population surged by 12.9%
year-over-year, which will almost certainly usher in
a new wave of construction projects.
Public Comparables
Generally, the sectors analyzed in our report are
high performers compared to the industry average
across the board.
The commercial segment brings in the most
revenue by a significant margin. With commercial
projects on the rise in populous states like
California, New York, and Texas, as well as the
South, this sector is a strong bet for investors.
One caveat is that, though the space continues to
grow, it sees the second-lowest growth rate of the
sectors analyzed here. It’s also the smallest of the
segments covered.
Dealmakers specifically interested in high-
growth areas should prioritize the residential and
institutional markets, which see average growth
rates of 16.5% and 16.2%, respectively. The
institutional sector also has significant overlap with
the commercial space, offering dealmakers an easy
“in” to the top-earning market.
Private Comparables
In the private sector, industrial construction
companies bring in the most average revenue by
far. Industrial projects typically involve large-scale
infrastructure development, which comes with high
costs for material and labor. This drives up overall
project value and, usually, profit margins.
Companies in this sector can also charge premium-
level prices because industrial construction
requires specialized knowledge and skills for
complex work. Additionally, companies can
focus on specific niches, such as power plants
or manufacturing facilities, and command higher
prices that way.
Private institutional construction companies are
seeing the highest rate of average annual growth
at 71%. Public-use construction projects, including
hospital and educational facilities, are on the rise
in the US.
Healthcare projects, in particular, saw a boost in
demand as a result of the COVID-19 pandemic.
Meanwhile, a significant portion of schools in
the US are aging and in need of major repairs
and renovations. Advances in AI, robotics, and
building information modeling (BIM) technology
are also improving overall efficiency in the sector,
promoting growth.
Top Roll-ups
The construction industry has seen a significant
amount of roll-up activity over the past several years.
API Group and Fidelity Building Services Group lead
the pack with 12 relevant acquisitions each. Most
of API’s acquisitions operate in the commercial,
industrial, and civil & infrastructure sectors. Fidelity
Building Services has primarily targeted commercial
and industrial construction companies.