Article - May 5, 2026
Featured Professionals: John Arendale, Chris Toussaint
Featuring resilient and recurring demand, a wide variety of engineered equipment, products, and components are on investors’ radar. While many categories are seeing success, companies specializing in building automation and controls are particularly appealing.
“Because of rising energy costs and consumption, more organizations are seeking ways to make their facilities smarter and more efficient,” says John Arendale, a managing director in our Industrials Group. “Many devices are integral to these efforts, especially with increasing adoption of building analytics, which requires even sharper automation control and measurement.”
Demand for building automation and controls is further bolstered by sustained data center and electrification growth as well as aging commercial infrastructure needing refurbishment, remodeling, and retrofit activity. And due to ongoing labor shortages across these areas, cost-effective, trustworthy devices are more important than ever.
“With nearly 50% of the building stock in the U.S. built before 1980, building automation improvement and expansion has shifted from discretionary to critical in many end markets, from commercial, manufacturing, and transportation facilities to data centers, hospitals, and utilities,” adds Chris Toussaint, a managing director.1 “These are low-cost products in high-cost-of-failure applications, making them vital to customers and attractive to investors.”
Our recent client Functional Devices—which we advised on its sale to L Squared Capital Partners—is a prime example of the segment’s M&A potential.
Functional Devices: Enabling Intelligent, Efficient Buildings
Functional Devices designs and manufactures essential devices for power, sensing, and control in building automation systems. With its expansive product portfolio—including relays, sensors, power supplies, transformers, enclosures, and wireless devices—the company has become a preferred partner across mission-critical applications.
“Functional Devices is one of the most recognized brands in the building automation space, and its Relay in a Box® products are widely accepted by building automation integrators and technicians as the industry standard thanks to their quality and reliability,” says Arendale. “Leveraging its deep customer relationships and access, Functional Devices continues to push the envelope on new product development and technical expertise. The company’s innovative solutions solve pain points for building owners as they look to reduce operational costs and ensure vital uptime requirements in critical segments like data centers and hospitals.”
The company’s range of turnkey building automation components streamlines installation, saving time and effort for customers. “Functional Devices tests every product on the manufacturing floor, delivering trusted, durable devices that allow installers to work confidently without concerns about costly failures, diagnostics, or replacements,” says Toussaint. “The growing shortage of qualified electricians puts a premium on solutions that are easy to install and don’t fail. This is where Functional Devices stands apart, making them the go-to provider for building automation components in North America.”
And by pairing its innovative solutions with valuable service, the business has achieved long-term growth, strong margins, and consistent cash flow. “With Functional Device’s partnership with L Squared, the company is poised to keep investing in its people, processes, and new technology to drive further expansion in the years to come,” adds Toussaint.
Low Cost, High Impact
Due to higher energy prices and usage, more organizations are seeking ways to enhance their building automation systems. As a result, a wide range of devices are seeing greater demand and investor interest.
“Power, sensing, and control devices are necessary to support vital energy efficiency initiatives for facilities across many attractive end markets,” says Arendale. “We look forward to seeing companies like Functional Devices continue to grow and capture investor attention.”
To further discuss the M&A potential throughout engineered equipment, products, and components, please contact our senior professionals.
