The surest way to leverage today’s complex but improving economic landscape is to borrow money, invest in your business and reap the benefits.
By taking the proceeds from any number of low-interest loans out there and pursuing new acquisitions, adding new technologies, hiring new talent or installing new equipment — or perhaps a combination of all these initiatives — your company’s growth will mirror what’s about to happen with the U.S. economy.
That was the message from Alan Beaulieu of ITR Economics during his annual address to the National Association of Wholesaler-Distributors’ Executive Summit (this year renamed with more proper nomenclature, the NAW Digital Summit.)
His 45-minute presentation, “Signs of Things to Come,” looked at the macroeconomic conditions but also drilled down to trends specific to wholesale distribution. The verdict: This industry fared better than many during the pandemic and should continue to prosper in 2021 — and there are moves you can make to tap into those trends.
“Make sure you invest in your business,” Beaulieu said. “Make sure that you invest in how you do business, the services that you’re offering, along with the distribution of goods. Make sure that you’re investing in your processes to get maximum efficiency gains. You need this. You cannot afford not to do this, because the labor market is only going to get tighter as we go forward, not looser. So, make sure you’re investing today.”
One key stat Beaulieu pointed to was unemployment. The rate is dropping as lockdowns are lifted, and the biggest job losses are in industries not directly related to manufacturing and distribution, such as hospitality.
“Unless you’re in the foodservice business, that’s not bad news for you,” he said. “And don’t take it as bad news for the economy. It just means that there’s a segment of the economy that’s still feeling some pain. This means that people are going back to work. And as people are going back to work by the millions, wages are going up. Hopefully, you’re planning on that. Hopefully, you’re planning on paying more. Hopefully, you’re working to keep the people that you have, because when this passes, they’ll be ready to go somewhere else again. And it also means good things for the economy, because as people are working, it means that they can do all the things we need them to do.”
Pursue Acquisitions — Now
As Beaulieu stressed, distributors should invest in their companies in several ways, including adding new technologies (ERP, e-commerce, analytics tools, etc.), enhancing services and hiring top talent.
But one of his strongest directives involved the opportunities surrounding M&A. He said distributors can grow considerably through consolidation as the economy makes its way through the final phase of the pandemic.
“Make sure you’re making acquisitions — now,” Beaulieu said. “You have a year to do it, but now is when there’s the most uncertainty; now is when people don’t know what’s going on; now is when you’re going to find people who are just tired; now is when you’re finding people are running out of cash and they don’t know what to do. Help them out, buy their business and grow yours. It’s the most opportune time you’ve seen in a very long time. Don’t be afraid of what’s going on.”
Beaulieu likened navigating the current market — whether that’s pursuing M&A or making some other business-savvy investment — to a pilot who flies by instrument rules rather than visual rules. Just because what you see isn’t clear, the data says otherwise.
“The instruments are all green,” he said. “The instruments are all ‘go.’ Go spend money on yourself, make sure you have the inventory, make sure you have the infrastructure, make sure that you’re doing the things that you need to do. Go, go, go.”
On that note, don’t forget to go register for MDM’s Virtual M&A Summit on Feb. 25. The event will be an informative and engaging look at the entire M&A landscape, including considerations for buyers and sellers, advice on performing due diligence in a pandemic and a macro look at which sectors are projected to see the most consolidation in 2021.
The agenda has been updated, and our latest lineup of presenters and panelists will show you that we’ve gathered the industry’s smartest M&A advisers and operators for a one-day intensive workshop on essential strategies and tactics whether you’re buying or selling.
By attending this virtual event, you’ll become a master deal-maker — and feel more comfortable taking Beaulieu’s acquisition advice to “go, go, go.”