A takeover battle has been raging for years in the installation sector. Driven by the hunger of large businesses and investors for scale, but also by the quest of selling entrepreneurs for affiliation. "It is a challenge for smaller businesses to keep up with all the market developments.
The installation sector is the backbone of the construction and energy sectors and plays a key role in making society more sustainable. Whether for homes, offices, hospitals, factories or infrastructures such as bridges and tunnels, installers and technical service providers ensure that the technical systems essential to the functioning of these buildings and infrastructures are safe, reliable and sustainable.
According to the Central Bureau of Statistics (CBS), in the fourth quarter of 2024 there will be more than 41 thousand businesses active in the installation sector. And industry association Techniek Nederland estimates that there are about 173 thousand employed in the sector, including 5,900 director-major shareholders. With a total revenue of 28.7 billion euros, the installation sector is a crucial part of the Dutch economy.
'The installers within our association design, supply, install and maintain technical installations within residential, commercial, industrial and infrastructure construction. The members focus on climate, refrigeration, electrical and plumbing technology,' lists Rolf Duindam, adviser Management and Entrepreneurship at Techniek Nederland. 'From housing construction to utility construction and from industry to infrastructure, everywhere our members provide the smart technology that the Netherlands runs on.'
Takeover wave
The installation sector has seen a significant increase in the number of acquisitions and mergers in recent years. This phenomenon is driven by several factors, including the need to grow, achieve economies of scale and bring in technological expertise. Many smaller and medium-sized installation companies are being acquired by larger players looking to increase their market share or gain access to specialist knowledge in renewable energy or smart technologies. This is leading to market consolidation, with a handful of large businesses gaining increasing influence.
VDK Groep (part of the British investor EMK) is one of the most active buyers. This installation company has annual sales of some 800 million euros and more than 3,000 employees. VDK Groep aims to become the market leader in the Dutch installation sector and has already made more than 45 acquisitions between the period 2019 and 2024. Unica - backed by investment company Triton - is also a well-known player in the acquisition market for installation companies. This year alone, this company (843 million euros in revenue, over 4,000 employees) accounted for six acquisitions; and since its founding in 1933, there are more than 370 acquisitions on the counter.
Hoppenbrouwers is also a frequent buyer in the takeover market. This is a technical service provider for the design, installation and maintenance of electrical and mechanical installations and operate for both private individuals and businesses. But the big difference with other players is that this Brabant-based family business is thriving without the support of private equity. Hoppenbrouwers - with revenues of 350 million euros and about 1,850 employees - finances each acquisition largely out of its own pocket.
'We also have investors knocking on our door,' says Bas Ceelen, director of Acquisitions and Integration at Hoppenbrouwers. 'But we kindly say 'no' to that. We are a true family business, with a long-term vision and mission. We want to grow to national coverage by 2030 with €1 billion in revenue and 5,000 employees. Among other things, the growth strategy focuses on opening multiple branches. The starting point here is to grow ten percent organically each year and ten percent through acquisitions.'
Bigger, more complex, earlier
A major driver behind the consolidation battle is the increasing complexity of installations. Installers must be increasingly knowledgeable about advanced technologies, such as heat pumps, solar and energy storage techniques. Larger businesses can meet these challenges more easily than smaller players because they have the resources to invest in training, innovation and new technologies. By acquiring smaller businesses, larger companies can expand their service offerings and respond to the growing demand for sustainable and smart installations.
The world for small and medium-sized installers is thus becoming more complex, and developments such as digitalization and the energy transition are forcing entrepreneurs to make quick choices about the continuity of their businesses. Because with the current transition to renewable energy and the tightening of regulations regarding CO2 emissions, the installation sector is at a crossroads of major changes. Add to that the staff shortage, which has a restraining effect on business growth.
One choice made Marcel Vittali and Karen Blanken, former owners of Elektrotechnisch Buro Marcel Vittali. The duo sold their business to Hoppenbrouwers in September. 'In the current market it is a challenge for smaller organizations to keep up with market developments and all laws and regulations,' Vittali gives as the reason for the company sale. 'With the growing scope of projects and a limited number of employees, it became increasingly difficult to meet demand.' With acquisitions of this kind, the technical service provider opts for a complete takeover and integration, from buying phase and implementation, from systems and work processes to one brand name on all vans, workwear and tools: Hoppenbrouwers.
The starting point is to grow each year by ten percent organically and ten percent through acquisitions
In 2023, one hundred installation technology companies changed hands, according to CBS. And for 2024 - if we continue the line of the first three quarters - between 150 and 200 mergers and acquisitions are in the pipeline in the installation sector. Ceelen: 'You do see that the reason why entrepreneurs sell is changing more and more. In the past it was often because there was no successor available. Now the continuation of a business is no longer automatic. Especially the somewhat younger entrepreneurs are now choosing for themselves more often. They sell their business much earlier than previous generations. Duindam agrees with him: 'There is also a lot of emotion in installation companies. It is not uncommon in this industry for the business to be passed down from grandfather to father to son. But that family succession is no longer a matter of course. Succession from personnel is a solution that we see more and more often.'
Predictive maintenance
Installation companies are busy at the moment. The installation sector depends in part on new construction and renovations in the construction industry for orders. The Netherlands gained 32,700 new homes in the first six months of this year, according to CBS. At that rate, the shortage of some 400,000 homes will not be solved in the next few years and there will be plenty of additional construction, provided the space is found.
In terms of renovations, the installation sector had its hands full making existing homes more sustainable. Energy transition plays an important role here. By 2030, all office buildings must have energy label A, the most economical label. In addition, the Dutch government has set the ambitious goal that all buildings must be climate neutral by 2050. This means that a building will generate as much energy as it consumes. Installation companies must constantly update the knowledge level and skills of their staff to meet the growing demand for sustainable solutions such as solar panels, heat pumps, energy storage and smart grids. Whereas plumbing and electrics used to be primarily important, installers are now increasingly expected to have knowledge of energy management, insulation techniques and smart technologies.
One of the most promising applications of digitization in the installation industry is "predictive maintenance. Through sensors and data monitoring, installers can remotely monitor plant performance and predict when maintenance is needed. This reduces the chance of unexpected breakdowns and saves time and costs. This development offers new opportunities for installation companies, but it also requires a change in the way they work. Traditionally, the industry focused on reactive maintenance: intervening only when there was a problem. With predictive maintenance, the focus shifts to prevention and optimization.
Cabinet-Schoof
After years of strong growth, the production volume in the installation sector is down 0.7 percent this year. The decline in residential new construction and a dip in non-residential construction are the main causes of the decline. Starting next year, a slight recovery seems to set in. A total growth of 1.7 percent is expected for 2025, and a growth of 2.4 percent in 2026. Those results were published by Techniek Nederland on July 16, about two weeks after the swearing in of the Schoof administration. Whether those growth figures are feasible for the next two years will have to be seen. Because with the new government also comes uncertainty, despite the creation of a new Ministry of Climate and Green Growth.
One important change is the abolition of the solar panel net-metering scheme as of Jan. 1, 2027, which is forcing installers to prepare for a future in which con sumers place greater emphasis on their own energy consumption rather than feed-in to the grid. This could lead to increased demand for solutions such as home batteries and other smart energy storage systems. It also drops the requirement to install hybrid heat pumps when replacing central heating boilers starting in 2026. This creates uncertainty in the sector, as it is still unclear what other incentives the government will introduce to promote more sustainable heating solutions. Also, the subsidy on small-power hybrid heat pumps will be reduced from next year, even though the industry has built up a lot of capacity to meet the immense demand due to the previous administration's policy plans.
The Schoof administration says it is opting for green growth, a combination of economic growth and a clean environment. But there is little of that yet,' says Duindam. 'Cutting subsidies on heat pumps is bad news for businesses, bad news for the climate and bad news for the green economy of the future. Businesses that are badly needed in the coming years to meet the climate goals are now at risk of being hit hard. While they make a substantial contribution to the energy transition, a social interest.'
Clustering of businesses
The result of all these developments will be an even greater wave of consolidation in the installation sector. In addition, private equity parties often dive into a fragmented market, which is the installation industry with over 40,000 businesses. Because investment companies are very interested in businesses that are easily scalable with recurring revenue streams. Thereby, the rise of predictive maintenance will have an even greater appeal to the installation industry by private equity because of the recurring revenue aspect on a subscription basis.
In the sector, small installation companies focus on the private market, facing competition mainly from similar, roughly equal-sized installation companies. Medium-sized installation companies focus mainly on the construction industry and face a lot of competition, including from construction companies that do their own installation work. And large installation companies focus mainly on the non-residential construction, industrial and infrastructure sectors.
Duindam foresees a further clustering of these three categories. 'I think we are moving towards more of a dichotomy, partly due to assignments becoming larger, more complex and more knowledge-intensive. But also prompted by digitalization and ever-changing laws and regulations. I expect medium-sized businesses to increasingly belong to either small or large businesses. By putting more focus on a particular activity or niche or that they will be taken over by a larger installation company.'
Every year, some 40 to 50 small and medium-sized businesses apply to Hoppenbrouwers , making very selective acquisitions. An acquisition target must offer qualitative added value, such as employees, knowledge, customers, business unit, geographic location and must fit within the culture and family values. 'We notice that the takeover market is also being taken up more often by private equity parties,' Ceelen explains. 'But we are simply building on our long-term strategy and want above all to integrate well and expand our expertise. After all, we are building the business of the future, on our way to that €1 billion in revenue.'
