Inside the Deal: Defy Investments’ Acquisition of Davis Homes

In a 2025 homebuilding mergers and acquisitions landscape increasingly shaped by high borrowing costs, capital constraints, and intensifying competition, the acquisition of Davis Homes by Defy Investments signals a different kind of strategic play.

Unlike the recent wave of homebuilder M&A deals, where large public and multi-regional private firms seek to deepen local market scale, capture incremental volume, and expand their product offerings, Defy’s move reflects a long-term, private investment approach. At the helm of that strategy is David McDonald, president of Defy Investments. McDonald's background in M&A and focus on operational innovation set the stage for this unique acquisition.

The M&A Boom in Homebuilding: What’s Driving It?

Over the past 18 months, U.S. homebuilding has been undergoing an aggressive M&A cycle fueled by a mix of strategic necessity and financial realities. For acquirers, the calculus is straightforward: Homebuilding is a capital-intensive business, and public and well-funded private operators are leveraging their access to capital to scale up, deepen local market share, and secure their lot pipeline in a deeply constrained housing supply environment.

Larger homebuilders see acquisitions as a way to consolidate land positions, enhance operational efficiencies, and grow volume to maximize fixed overhead investments.

For sellers, the decision to sell often depends on a combination of capital constraints, market volatility, and long-term succession planning. Higher-for-longer borrowing costs have made land acquisition and development riskier, while intensifying competition for lot supply has made it harder for smaller and mid-sized private builders to compete with well-capitalized public builders and large private players.

At the same time, many senior homebuilding principals face succession dilemmas, with no clear next-generation leadership to transition their business. For these sellers, partnering with a strategic buyer or private equity firm can provide a capital purse for expansion while ensuring their company’s legacy and team remain intact.

Against this backdrop, Defy Investments’ acquisition of Davis Homes stands apart from the usual public-builder-driven M&A playbook. It signals that private capital is not just targeting homebuilding as a financial asset class but actively looking to modernize and innovate within the sector.

What’s Different About This Deal?

Most homebuilding mergers fit a familiar script: public builders scale up, acquire market share, and absorb local players into their systems. But Defy Investments’ acquisition of Davis Homes introduces two significant twists.

First, this is private equity — not a strategic buyer — stepping into homebuilding operations with a buy-and-hold mentality rather than the short-term flip model that defines most private capital plays. Defy isn’t looking for a quick return. Instead, the firm sees Davis Homes as a long-term asset, positioning itself to capitalize on the enduring demand for housing while exploring ways to modernize homebuilding’s notoriously labor- and materials-intensive model.

Second, Defy’s leadership brings a track record in construction innovation, including an active push into robotic manufacturing and other forms of advanced construction technology. This signals a broader agenda: modernizing homebuilding from the ground up while preserving the local expertise and reputation that makes Davis Homes a force in the Indianapolis market.

The Builder’s Daily had an exclusive opportunity to speak with David McDonald one-on-one about the strategic thinking behind Defy Investments’ acquisition of Davis Homes. In this discussion, McDonald offers a candid look at the motivations driving the deal, why Defy sees Davis as a perfect fit for its long-term vision, and how the firm’s investment approach differs from typical homebuilding M&A activity.

McDonald also credited Currey Cornelius of Whelan Advisory Group for his role in identifying the right match between Defy and Davis Homes.

Currey and his team did an exceptional job in bringing us together with Davis,” McDonald said. “It was critical to find a company with strong leadership, an operational foundation we could build on, and a shared vision for long-term success. Whelan helped us navigate that process, and we couldn’t be more pleased with the outcome.”

Below is our conversation, lightly edited for clarity.

The Q&A:

John McManus: "What led Defy Investments to pursue homebuilding acquisitions, and why Davis Homes?"

David McDonald:

We built Defy last year with a vision to create a portfolio of construction companies—both commercial and residential—under the umbrella of Rival Holdings. Our mission is twofold: compress the supply chain and introduce disruptive technology into construction.

Davis Homes stood out not just because of its Indianapolis footprint but because of its strategic leadership. It’s a well-run, sophisticated organization with a deep bench of experience across multiple generations. That’s rare in middle-market acquisitions."

McManus: "Unlike most private equity firms, you describe Defy as a long-term buy-and-hold investor. How does that change your approach?"

David McDonald:

That’s a key distinction. We’re not following the typical PE playbook of quick flips, high-leverage financing, and rapid operational overhauls. We’re here for the long game.

Our goal is to strengthen Davis Homes, not break it apart or force it into a rigid system. There’s no top-down integration into some larger corporate model. Instead, we see ourselves as active partners—providing capital, strategic guidance, and access to innovative construction methods that can help Davis grow organically."

McManus: "You mentioned innovation, particularly robotic manufacturing. What’s the vision there?"

David McDonald:

We’re convinced homebuilding is on the cusp of major disruption. The industry is one of the last holdouts in automation, and we see an opportunity to lead that shift rather than react to it.

We’re already working on robotic manufacturing initiatives through Rival Holdings, and our goal is to test and scale these technologies in real-world applications. But we’re not forcing anything on Davis Homes. We’ll present options, and if they align with Davis’ operational needs, we’ll integrate them. If not, we have other avenues to pursue innovation without disrupting what’s already working."

McManus: "How does Davis Homes fit into Defy’s broader construction investment strategy?"

David McDonald:

Indiana is an attractive market for us. We love the business climate here, and we see long-term opportunities in residential construction.

Davis Homes provides an ideal platform—not just for growth in its existing markets but as a model for how private capital can work with builders to drive sustainable expansion. The company already has strong local relationships, deep expertise in homebuyer needs, and a leadership team that’s open to continuous improvement. That’s a perfect fit for us."

McManus: "Where do you see Davis Homes five years from now under Defy’s ownership?"

David McDonald:

First and foremost, still thriving as a respected, independently run homebuilder. But with more capital, more operational flexibility, and—if it makes sense—new technology-enhanced construction methods.

We’re not in the business of fixing what isn’t broken. Our role is to provide the resources and strategic backing to help Davis do what it does best—only better."

What This Means for the Industry

Defy’s acquisition of Davis Homes signals that private equity is taking a more hands-on, innovation-driven approach to homebuilding. With a focus on long-term stability, local expertise, and supply chain modernization, this deal suggests that homebuilding’s next evolution might come from outside the usual circle of public builders and traditional M&A players.

For homebuilding leaders navigating capital constraints, labor shortages, and rising costs, deals like this could hint at new ways forward—where private capital isn’t just a financial lifeline but a strategic force for industry transformation.