The current distribution merger and acquisition market is unlike any in recent history. Strategic buyers and private equity firms are competing for many of the same targets, while at the same time the market has characteristics of both a buyer's and a seller's market.

The M&A market in distribution is “incredibly strong right now” because of the industry’s financial strength and stability, says Jason Kliewer, co-head of Baird’s distribution group, in M&A Competition Heating Up.

On the strategic buyer side, slower-than-desired economic growth in the U.S. is hampering organic growth for many of the key players. As a result, companies that haven’t historically been known as acquisitive are looking for ways to augment their balance sheets, while at the same time, historically acquisitive strategics are picking up the pace of investment.

And private equity firms have an abundance of cash on hand from investors and financing is cheap – meaning more money is available for larger deals. And distributors have proven to be valuable targets.

This “unique confluence” of factors – strong financing markets, high cash availability and strategic buyers looking for growth – is keeping the M&A market hot for distribution, says Reed Anderson, head of Houlihan Lokey’s industrial distribution practice.

Because they know they're in demand, sellers have high expectations for valuations. But at the same time, many owners are reaching the point where they're ready to sell. They're still concerned with their legacy and getting the right value, but they're more open to discussions about selling than they have been in the past.

Read more about the current distribution M&A market in M&A Competition Heating Up.