Last year was a big year in flooring in terms of financial performance and transaction activity. Nearly halfway into 2022, many signs point to a strong year – but economic drivers causing uncertainty should not be overlooked. 

As the pandemic inches closer to our rearview mirrors, increased market stability has been stalled by war in Europe, among other factors. Inflation is an ongoing concern, especially with oil (an essential component of vinyl flooring products). Add in rising interest rates, which are threatening to drive up mortgage and home improvement financing rates (and therefore slow growth in new home construction), and it comes as no surprise that consumer confidence currently sits below pre-pandemic levels.

However, 2022 is still shaping up to be a strong year for flooring, with many avenues leading to opportunity.

For starters, many companies are continuing to codify permanent fully remote or hybrid work options for employees, a factor likely to drive remodeling projects. Harvard’s Joint Center for Housing Studies Leading Indicator of Remodeling Activity projects that year-over-year increases in residential renovation and maintenance spending will reach 19.7% in the third quarter of 2022 and may reach nearly $450 billion by the beginning of 2023.

Additionally, applications for building permits continue to rise. U.S. building permits were up 0.3% from February to March of 2022 and were up 6.72% from one year ago. This is a sign that the massive underbuild from the Great Recession is still correcting itself and points to continued growth.

Supply chain disruption also seems to be slowly resolving. To compensate for demand they were unable to meet in 2021, many market participants have preemptively added inventory to ensure they can meet an anticipated higher demand in 2022.


Despite any uncertainty, key flooring industry players are bullish and looking to make acquisitions. Two years of record performance have made large strategic buyers cash rich, and platform companies funded by private equity are seeking expansion through acquisition as well as via organic growth.

Recent, notable deals include the acquisition of Stone Source by Paramount Global Surfaces, a Platinum Equity portfolio company, in early April, as well as the announcement on May 2 of Swiss-based Bauwerk Group acquiring Somerset Hardwood Flooring. There are several other assets either currently in or coming to market this quarter, so expect to see additional deal announcements.

In my view, the secular tailwinds mentioned previously outweigh the current headwinds facing the flooring industry. Large purchasers are apt to be treated more fairly than smaller dealers due to their advantage when it comes to mitigating uncertainty and market volatility, which provides fertile ground for ongoing consolidation and more M&A. After all, companies with expansive facilities networks can more quickly respond to local market volatility and serve a broader customer base. When it comes to expectations for specific industries, be on the lookout for the following.

  • Distribution: Anticipate continued, rapid consolidation, especially in distribution, with an emphasis on serving the professional customer with a one-stop-shop for flooring across multiple regions.
  • Manufacturing: Expect further investment in onshore LVT/LVP capacity, with some larger manufacturers exploring downstream distribution and services integration.
  • Retail: Existing large format/big box retailers are forecasting continued greenfield growth, which will intensify competition among smaller local dealers. Buying groups, industry associations, and M&A will all play integral roles in this continued dynamic, and you can expect to see local and regional companies relying more heavily on all three. A number of private equity backed platforms continue to actively and aggressively roll up independent retailers.


Flooring companies looking to capture top value in today’s market should focus on carving out a narrative inside the larger context of the industry. A key part of this narrative includes the moves that major buyers are making and the reasoning behind them.

For potential sellers, timing is everything. Though likely better, this year looks to be shaping up similarly to the previous two, with strong demand buoying top lines and supply chains starting to detangle. Given the current back log and economic strength, we expect flooring to yield excellent 2022 results.


What comes next, though, is still to be determined. The combination of rising interest rates, inflation, and an upcoming election have the potential to dip the economy into recession in 2023. This makes it imperative for operators to act while conditions are favorable.