Colonnade

Focus. Expertise. Results.

  • Our Services
  • Team
  • Industry Expertise
  • Transactions
  • Industry Reports
  • News
  • Blog
  • Podcast
  • Contact

M&A in Home Warranty Industry

Colonnade publishes industry commentary on home warranty industry.

Investments and M&A activity in the vehicle service contract (VSC) industry continue on a breakneck pace; Colonnade has tracked dozens of transactions over the past three years. With a flood of capital seeking related investment opportunities, we see investor interest expanding into home warranties, a $2.3 billion market.

In many ways, the home warranty industry today mirrors the VSC market a decade ago, providing an interesting growth thesis. Since the mid-2000’s, VSC retail prices have doubled to $3000 from $1500 each; new vehicle penetration rates have doubled to more than 40%; and penetration among used vehicles has exploded with the growth of the direct to consumer channel and the use of payment plans to finance these high ticket consumer purchases. Product innovation, marketing, and capital have grown the industry significantly. Low penetration rates characterize the nascent home warranty market, and we expect significant investment in product marketing and innovation over the next decade.

The home warranty market enjoys similar positive industry fundamentals as other warranty segments, especially the VSC market, including strong growth, margins and cash flow. As consolidators provide a logical and ready exit path, we expect to see interest among financial sponsors increase in this industry in the next three to five years. Such interest can provide growth equity and/or liquidity to owners of promising, established home warranty platforms.

Read the Full Commentary

Back to Press Releases

linkedin

Top 5 Things We Learned in 2020 (+ 1 bonus)

December 29, 2020

Reps & Warranty Insurance

December 21, 2020

Q3 2020 M&A Update

November 5, 2020
Colonnade Advisors LLC
  ·  
500 West Madison Street
  ·  
Suite 3410
  ·  
Chicago, IL 60661
  ·  
312.425.8160
  ·   
Connect with us on LinkedIn
Dataroom Login


Investment banking services provided through Colonnade Securities LLC, Member of FINRA. All other services provided through Colonnade Advisors LLC. Copyright © 2016, Colonnade Advisors, LLC. All rights reserved

Copyright © 2021 Colonnade