1Q M&A: DSG’s Hisco Deal Ends Quarter With a Bang - Modern Distribution Management

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1Q M&A: DSG’s Hisco Deal Ends Quarter With a Bang

Houlihan Lokey and MDM's quarterly M&A report highlights merger and acquisition activity that occurred during the year's first 3 months.

While merger and acquisition activity remained strong in 2023’s first quarter, nearly all deals involving distributors involved relatively small, tuck-in acquisitions. It had been that way essentially since Motion’s landmark $1.3 billion buy of Kaman Distribution Group at the start of 2022.

That was, until March 31, when Distribution Solutions Group (DSG) announced its pending $269 million acquisition of Houston-based Hisco — a distributor of specialty chemical and industrial products that serves the industrial technology market. The news came a year and a day after Lawson Products, TestEquity and GexPro Services announced their merger in what would eventually become DSG. (Read more in Houlihan Lokey and MDM’s 1Q 2023 M&A Report.)

DSG may pay end up paying an additional $50 million in compensation in the transaction, which is expected to complete during this second quarter. The year started with a remarkable 49 M&A announcements covered by MDM during January involving distributors or manufacturers of industrial, commercial and building supplies. The rest of 1Q wasn’t nearly as robust — though still healthy — with February registering 29 items and March netting 22. 

It appeared activity was headed for a pronounced slowdown, but before we published this 1Q M&A report, we had already posted news of 30 deals announced during the first three weeks of April. As always, this report includes charts compiled by investment bank and financial services firm Houlihan Lokey that illustrate broader domestic M&A activity and median EBITDA transaction multiples for the past 12 months through March. Beyond that, find my MDM Premium pieces providing takeaways and plenty of commentary from the final session of our Virtual M&A Summit held back in February and my analysis of Distribution Solutions Group’s pending acquisition of Hisco.

Houlihan Lokey noted that it has updated its “Distribution Financial Metrics and Trading Multiples” chart to include distributors Diploma, Distribution Solutions Group, Performance Food Group, Reece, RS Group, Sysco and US Foods, while removing Hillman and Park-Ohio. These changes also impact the “Distribution Median Multiples Chart” included in the report.

I also am compelled to promote a couple of great upcoming MDM events. During April, we announced our 2023 Virtual Profitability Summit — a free event to be held July 19 from 10 am to 4 pm ET. Attendees will learn the best practices, emerging innovations, impacts of AI and other technologies that their peers are leveraging to expand margins today. And did I mention, it’s free!

Further out, I’m excited about MDM’s 2023 SHIFT | The Future of Distribution conference, to be held Sept. 18-20 in Denver. While the focus remains on bringing together the best minds in distribution to share best practices across sales, digital and data analytics transformation, we’re looking to make it bigger and better than last year’s inaugural version. 

Click here to download the 1Q 2023 M&A Report.

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