The cadence of home building merger and acquisition (M&A) activity has been steady for the past several years, with each passing year bringing more transactions than the previous one.
As Margaret Whelan shared on the 2025 Builder 100 stage, there are more buyers with more capital than ever before. Public and private buyers, as well as foreign companies, are all looking to grow market share via acquisition. The appetite to grow via merger is particularly important amid a slower than typical spring selling season and an environment where organic growth is challenging.
In the past week and a half, three home builder deals have been announced: the merger between Keystone Custom Homes and Southern Development Homes, the acquisition of Olivia Clarke Homes by Scott Felder Homes, and the acquisition of Landsea Homes by New Home Co.
The latter deal—a $1.2 billion transaction funded by a private equity firm aiding the acquisition of a public home building company—is particularly noteworthy. New Home Co.’s transaction is supported by Apollo Global Management and the purchase price represents a 61% premium to Landsea Homes’ closing share price on May 12. Apollo also purchased the then-public New Home Co. in 2021.
“This is the second builder that Apollo has bought. They bought New Home Co. for 40% of book value and now they are buying Landsea for 60% of book value. That’s a really low multiple,” Whelan explains to BUILDER. “[At Builder 100] I was saying there are too many public builders and the ones that are underperforming the way that Landsea had been since it went public, no one is going to buy the stock.”
“Apollo needs to feel like they can turn it around. New Home Co. and Landsea both failed to launch as public vehicles,” Whelan continues. “Matthew Zaist [president and CEO of New Home Co.] is a fantastic leader in our industry and I think he will have really good success at cleaning it up.”
Carl Reichardt, managing director of research and home building analyst for BTIG, says the deal underscores the notion that being subscale is becoming more difficult in an environment where the large public builders have more than 50% market share.
“Being subscale, particularly if you are public, is difficult,” Reichardt says. “I think it is also difficult when you are in metro markets where market share has already been sopped up by other larger players versus being public but having a significant amount of exposure to smaller markets that aren’t overly occupied by other large publics.
The Combined New Home Co.-Landsea Homes
The deal brings together the No. 33 (Landsea Homes) and No. 62 (New Home Co.) companies on the 2025 Builder 100 list. In 2024, Landsea Homes closed 2,831 homes, while New Home Co. closed 1,123 homes. The combination of the two companies will create an asset-light home builder with nearly 4,000 annual closings, which would rank 25th on the 2025 Builder 100 list.
Landsea Homes has expanded its portfolio rapidly since it went public in 2021. The builder, originally headquartered in California before relocating to Dallas in 2023, has previously acquired Vintage Estate Homes (2021), Hanover Family Builders (2022), Richfield Homes (2023), and Antares Homes (2024). The builder has operations in California, Arizona, Colorado, Texas, and Florida
Since 2021, New Home Co. acquired Epic Homes in Denver and Hamilton Thomas Homes in Texas and expanded organically into the Pacific Northwest in Oregon. The company has operations in Washington, Oregon, California, Colorado, Arizona, and Texas.
Private Equity in Home Building Sector
The scope of the deal also adds another layer into the complex M&A landscape: private equity firms. Large public companies, private companies, and foreign companies have all been active participants in the M&A market in the past two years.
Reichardt believes the presence of Apollo Global Management changes the lens in which the acquisition is viewed from an industry perspective.
“I don’t think about New Home Co. as a ‘private builder’ in the same way I would with a company where the equity is controlled by the entrepreneurial founder and it continues to be a private entity,” Reichardt says. “This is a significantly well-backed operation with likely ambitions to grow rapidly. Just because New Home Co. is not ‘public’ does not mean that structurally it won’t behave like a public with Apollo’s backing.”
The acquisition by Apollo Global Management is the second private equity deal in the home building space to date in 2025. In March, Rival Holdings-backed Defy Investments purchased Indianapolis-based home builder Davis Homes. Defy Investments was launched in November 2024 with the mission of acquiring and growing commercial and residential construction companies.
“[The New Home Co.-Landsea merger] is the second private equity deal that’s been announced this year,” Whelan says. “What it’s showing you is that Apollo is really committed to the housing space, and buying these low performing public companies at a big discount to book value is a good strategy.”
Activist Investor Involvement
The unusual sale of a public builder to a non-public company was catalyzed by the presence of an activist investor—an individual or a group that buys a significant stake in a company with the intention of influencing or changing how it is managed to increase shareholder value. The activist, Mill Road Capital, submitted a notice to Landsea Homes in March indicating its intention to nominate three director candidates and steered the company toward strategic alternatives.
“The activist is saying you have to do something,” Whelan says. “Once we knew that the activist [Mill Road Capital] was there, Landsea knew that they had to do something and [the sale] was their choice.”
The presence of the activist investor is particularly unique. Reichardt says in his career, such investors have not historically been involved in the home building space.
“I think the reason for [the lack of involvement] is the concern that home building is a cyclical business and catching a downturn if one is attempting to enforce a change in management strategy [is difficult],” Reichardt says. “If you are long or get long at the wrong time, you can see value get wiped out pretty quickly. That said, it is possible that this transaction might encourage other investors of an activist bent to think about the space.”
The success of Mill Road Capital monetizing their stake and achieving their stated goal in their letter to Landsea’s board may suggest activists can achieve successful outcomes in the space. Whelan concurs, suggesting that the sale of Landsea Homes may not be an anomaly given the current housing landscape.
“There are way too many mid-sized public builders that are all going to be gone in a couple of years,” Whelan says. “In general the big companies get most of their growth from acquisitions. To move the needle, big companies need to buy big companies.”
Larger M&A Picture
Moving forward, M&A activity is showing no signs of slowing down. To date this year, 10 deals have been announced, with more likely to come throughout the remainder of the year. Tertiary markets where large public builders do not currently have portfolios or exposure will likely remain important areas to watch for future expansion activity.
“This will be a record year for M&A again,” says Whelan. “You’re going to see some publics selling and you are going to see a lot of privates selling. In part it is because the biggest builders need units to grow because spring selling season was a bust. Part is because the smaller companies are finding it harder to navigate, their cost of capital has gone up with higher rates, [and] they don’t have any access to cash because their business is slow.”
