2Q 2023 M&A Report: Another Busy Quarter Despite Economic Uncertainty - Modern Distribution Management

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2Q 2023 M&A Report: Another Busy Quarter Despite Economic Uncertainty

An expected slowdown in deals did set in during the quarter’s final month, but June was still busy by recent historical standards.
On June 30, industrial blade manufacturer Valley Grinding & Manufacturing announced the acquisition of Quality Edge, a  knife manufacturer with specialization in the food industry.

With much of the news cycle focused on the state of the economy — understandable given the amount of industrial red flags — one might assume that mergers and acquisitions activity would’ve taken a considerable slowdown during 2023’s second quarter.

Not so much.

In the industries MDM covers — markets within industrial, commercial and building/construction supplies — dealmaking activity remained robust throughout 2Q23. An expected slowdown did set in during the quarter’s final month, but June was still busy by recent historical standards. Covering deals between distributors, relevant manufacturers and other industry firms, MDM reported 104 total transactions during April-June. That’s actually slightly ahead of the 101 we covered during 1Q, and that quarter included a colossal 50 deals in January. By 2Q, we reported on 40 M&A announcements in April, 37 in May and 27 in June.

For context, I’ve always considered 20 deals to be the standard for a “healthy” M&A month since I started covering the distribution sector in 2014, and the past two years has me tempted to revise that threshold higher.

With that, MDM’s second quarter M&A coverage is summed up in our just-published 2Q23 M&A Report, which is now available for Premium subscribers to download.

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 June. 

Reed Anderson, Managing Director and Head of Houlihan Lokey’s Specialty Distribution Practice, told MDM: “While M&A activity — and particularly announcements — has declined over the last 18 months, we are seeing more activity in the market today. Buyer appetite is increasing for both strategic and private equity buyers, and the macroeconomic variables are stabilizing. These dynamics create a better environment for M&A going forward.”

Beyond that, our M&A report includes our MDM Premium articles that shared behind-the-scenes details of BlackHawk Industrial’s acquisition of Stock’d Supply; Global Industrial Company’s purchase of Indoff; and our breakdown of Distribution Solutions Group’s acquisition of Hisco for a potential total price of $319 million.

MDM Premium members can download and read the 2Q 2023 M&A Report here.

Switching gears, MDM just hosted its first-ever Virtual Profitability Summit on July 19, which provided a wealth of best practices and thought leadership on margin strategy, pricing and more. Next up is MDM’s biggest event of the year: our in-person SHIFT | The Future of Distribution Conference, to be held Sept. 18-20 in downtown Denver. We have a stocked roster of distribution executives, consultants and other industry experts to discuss topics in sales, digital transformation, analytics and talent. We want to see you there! Find details, agenda and registration at mdm.com/shift-2023.

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