MDM's 1Q M&A Report Highlights Strong but Slower Period - Modern Distribution Management

MDM’s 1Q M&A Report Highlights Strong but Slower Period

Our first-quarter M&A Report is now available to download, providing in-depth data and analysis of the January-March 2022 period that followed a record 4Q 2021.

No one expected 2021’s breakneck pace of distribution mergers & acquisitions to last forever. Largely fueled by private equity that had substantial capital to spend that was built up during the market’s holding pattern from 2Q 2020-1Q 2021 amid all the shutdowns. That led to a spending spree throughout 2021 once distributors returned to growth/recovery mode. You can read much more about the factors involved in my “Why Private Investment is Driving So Much of Distribution M&A” MDM Premium series.

As for the January-March 2022 period, while the pace of M&A was noticeably cooler, it was very strong by recent historical standards. As you’ll see in transaction data provided to MDM by investment bank Houlihan Lokey in MDM’s 2022 1st Quarter Distribution M&A Report, domestic M&A activity across all industries was close behind that of 1Q-3Q 2021 and outpaced all of 2019. A record 4Q makes anything else look slow by comparison, but 1Q was still quite healthy.

Besides total deal activity, the Houlihan Lokey (HL) data in our 1Q M&A Report also provides a look at average deal value, and it shows the value for the 12 months trailing March 31 right on par with that of 2019. Likewise, HL’s data for 1Q distribution median EBITDA Trading Multiples shows that the January-March period considerably outpaced anything from 2019, though was a sizable step down the record-setting 4Q 2021.

The final piece of data from HL is a chart of distributor’s financial metrics and trading multiples, which provides a March 31 snapshot of 26 publicly-traded distributors’ historical median EBITDA multples using their trailing 12 months. It highlights key financial metrics for many of the biggest market movers in this sector across diverse end markets.

Beyond data, our 1Q report highlights MDM blogs that covered key M&A developments that happened in the quarter and shortly thereafter. Those blogs focus on activity out of OEM parts distributor Parts Town, automation distributor Kele and energy products distributor DXP Enterprises.

Of course, our report also recaps all the deals MDM covered during 2022’s first quarter. While activity was lighter, it included a handful of major deals that included Motion completing its $1.3 billion buy of Kaman Distribution Group; Builders FirstSource adding National Lumber; Owens & Minor buying Apria for $1.6 billion; and Sonepar selling its Vallen Distribution subsidiary. You can find monthly recaps of each 1Q month in the report.

Deal activity has continued at a strong pace now into the second half of May, so 2Q 2020 is already shaping up to be another robust period. Several of the investment banks I spoke with for the aforementioned “Why Private Investment…” series mentioned how they’ve seen the “quality” of late 1Q and 2Q deals less than that of 2021, but they largely attribute that to a smaller pool of distributors left to acquire and the most attractive ones already being spoken for.

In the meantime, it’s always worthwhile to take a look back at the most recent quarter.

Check out our 1Q M&A Report here.

Related Posts

Share this article

About the Author
Recommended Reading
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

Get the MDM Update Newsletter

Wholesale distribution news and trends delivered right to your inbox.

Sign-up for our free newsletter and get:

  • Up-to-date news in a quick-to-read format
  • Free access to webcasts, podcasts and live events
  • Exclusive whitepapers, research and reports
  • And more!

2

articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to mdm.com, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

Subscribe to continue reading

MDM Premium Subscribers get:

  • Unlimited access to MDM.com
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events

1

article
left

You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on mdm.com
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.

Join other distribution executives who use MDM Premium to optimize their business. Our insights and analysis help you enter the right new markets, turbocharge your sales and marketing efforts, identify business partners that help you scale, and stay ahead of your competitors.

Register for full access

By providing your email, you agree to receive announcements from us and our partners for our newsletter, events, surveys, and partner resources per MDM Terms & Conditions. You can withdraw consent at any time.

Learn More about Custom Reports

Request a Market Prospector Demo

  • This field is for validation purposes and should be left unchanged.