M&A Update: Tile, Stone, and Surfaces (1H 2026)

At the risk of sounding like a broken record, our message since late last year has not changed a great deal— and that, in itself, is part of the story. The market remains slower than any of us would like, announced transaction volume is still muted, and the broad-based recovery we have been anticipating has not yet arrived. With limited new ground to cover, we will keep this update brief and focus on what has changed: the early evidence, now increasingly visible, that the strongest operators in the sector are beginning to separate from the pack.

The K-Shaped Recovery is Real

As we shared in our recent updates from TISE and Coverings, the high end of the market remains strong, even as the broader market continues to lag. The “K-shaped” recovery widely discussed in the financial press is playing out in our sector as well: companies with real exposure to the upper end of residential and to commercial and specialty segments are reporting growth and improved profitability, while the broad middle and lower end of the market remains under pressure.

One important clarification. When we say high end, we mean the truly high end. A great many companies describe themselves as high end; comparatively few have the performance to support the label. The distinction matters enormously in today’s environment. Buyers are increasingly distinguishing between companies that market themselves as premium and those that have actually performed like premium businesses. Genuine premium positioning is demonstrated through resilient revenue, durable margins, and a defensible customer base — not simply branding. Operators that have actually outperformed through this downturn are the ones drawing attention.

Strategic Buyers Remain Active, but Highly Selective

Strategic buyers continue to look, and we maintain active, constructive dialogue with a number of the sector’s most acquisitive platforms — among them Artivo, Lowe’s, Paramount Global Surfaces, The Home Depot, and TileBar — as well as others actively seeking tile and stone assets. The consistent theme across these conversations is selectivity. That selectivity does not mean inactivity. For example, Lowe’s continues to evaluate opportunities that complement its Artisan Design Group platform and strengthen its position across finishing trades. Similar themes are evident across several strategic buyers actively seeking specific capabilities, geographies, and end markets. These buyers are not pursuing scale for its own sake; they are looking to fill specific gaps in their portfolios — whether geographic, product, or channel — and they are disciplined.

For owners of well-positioned businesses, this is a more encouraging backdrop than it may first appear. A selective buyer universe rewards companies that fill a clear strategic need and can demonstrate they are the right asset rather than merely an available one. That is precisely where premium, outperforming operators have an advantage.

Private Equity is Behind Schedule - and Increasingly Motivated

Private equity sponsors readily acknowledge that they are behind their acquisition and capital deployment timelines. Two longstanding factors continued to weigh on activity in the first half of the year: persistently elevated interest rates, which constrain leverage and financing capacity, and a significant bid-ask spread between buyers and sellers, with many sellers continuing to anchor to peak-cycle valuations while buyers remain disciplined in their underwriting assumptions. More recently, the conflict with Iran introduced an additional headwind, disrupting global energy markets, driving oil prices higher, and injecting fresh uncertainty into an already cautious market.

Notably, the underlying economy has remained largely resilient through this period, and as the energy shock eases and conditions stabilize, we expect that pause to give way to renewed urgency. Sponsors with sector portfolios still want to scale, their investment theses are running further behind with each passing quarter, and the pressure to put capital to work has not diminished. If anything, it has intensified.

Why Now is a Compelling Time for High-End Owners to Engage

We have already been engaged by a couple high-end players, and the conversations we are having give us confidence that more will follow. We would argue there is a strong case that now is an especially attractive moment to do so. Consider the position a truly high-end operator can present to a buyer today:

• Demonstrated resilience. You have outperformed the broader market through a genuinely challenging period — compelling, credible evidence of the quality and durability of the business.

• Incremental upside. As the overall market recovers, there is meaningful additional growth still ahead, and buyers underwrite — and pay for — that future upside today.

• Scarcity. In a selective buyer market where the alternative to a growth story is often no transaction at all, a business that is both proven and positioned for the upcycle is exactly the profile buyers find irresistible.

Put simply, the combination of a proven track record through the downturn and clear runway as the market turns is a rare and powerful one. Owners who can tell that story — and tell it through a competitive, well-run process — are positioned to command premium outcomes.

Outlook

We will not pretend the market has fully turned; it has not. But the signals we are watching are pointing in the right direction. The high end is leading, strategic buyers remain engaged, private equity is increasingly motivated, and the macro overhang that defined the first half is beginning to lift.

We continue to believe the foundation is being laid for the next upcycle. History suggests that transaction windows rarely announce themselves in advance; by the time a recovery becomes obvious, valuations and buyer competition have often already adjusted. For owners who have outperformed through the downturn, the opportunity may not be to wait for perfect conditions, but rather to engage buyers while the field remains relatively thin and differentiation remains highly valued.

TwinShore Advisors

TwinShore Advisors remains deeply engaged across the tile, stone, and broader surfaces ecosystem, working with founders, family-owned businesses, and management teams as they evaluate growth strategies, acquisitions, and long-term exit planning. As a trusted advisor to owners and executives in the space, we leverage our industry knowledge and M&A expertise to achieve best-in-class outcomes. We welcome confidential conversations with owners considering their next chapter.

Please reach out to Chobun Hieblinger (chieblinger@twinshoreadvisors.com) or Wade Bennett (wbennett@twinshoreadvisors.com) to discuss these themes further or explore strategic opportunities.