If the news of all the recent merger and acquisition activity in the roofing and construction industries is any indication, company owners and executives must have spent the pandemic planning their long-range strategies. Or are they just working plans that have been forming for years?

Consolidation in roofing-oriented distribution began after years of M&A activity in the roofing products manufacturing sector. That was over 35-years ago and continues to this day. The consolidation of commercial roofing contractors started almost 25-years ago and continues to pick up momentum. The next wave of consolidation, residential roofing and remodeling companies, has already begun and is set to move to the next level.

How do you either take advantage of this trend given the current state of your roofing company, or how do you configure your business to compete in this changing world with new, larger competitors? I think the first thing to do is pay attention to the trend.

The good news is roofing is not the first industry where consolidation came bringing significant structural changes. So, you have examples to see how this developing trend may play out. On my short list of examples are the plumbing/HVAC industries. Still, like roofing, many hometown firms in this space, but they operate alongside large regional and national firms.

The modern roofing industry in The U.S. is around 150 years old and is clearly in the “mature industry” stage in all of its various sectors of manufacturing, distribution, and contracting. It has gone through all of the classic phases of industrial growth. In the beginning, commercial roofing was developed, processed, manufactured, delivered, and installed by one firm.

As the nascent industry matured, manufacturing became a specialty to itself and was allowed to grow by partnering with contractors who could install much more product than any one firm ever could. Later, distribution was established to bring roofing products to an even broader geographical territory while providing financing and delivery services to many roofing contractors.

The roofing industry has gone through other phases of growth including product improvements, more than a few product failures, and improvements in equipment and safety technologies. With each of these improvements, business growth eventually begins to slow as the various elements of the industry take less by way of expertise or capital or both.

So, if your business is at the point where it can no longer get better, or if you have reached a saturation point in your home market, the only thing to do to grow is to either diversify, get bigger, or both. The choice to invest with new partners, or with someone else’s money (capital investment firms) is often more attractive to owners as opposed to investing more on their own.

Where is your roofing company in the scheme of things? If you have been way too busy to think about this lately, maybe this would be a good time to sit down with your trusted advisors to have a look at your mid to long-range plans. If you are satisfied with the growth trajectory you are on, then good on you! If you are not, it should be reassuring to know you have plenty of options.