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MDM just published a three-part series for MDM Premium on current conditions for distribution mergers and acquisitions. It was the right time to provide an update.
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Take the following factors:
- Financial buyers have reentered the market in a strong way after a couple of nearly dead deal years. They are eager to acquire quality platform companies.
- High cash balances on the strategic side (mostly public companies or large family-owned companies), as well as market share opportunities, have driven some distributors back into the market for outside growth. Grainger, for one, has become more active again over the past couple of years.
- Thanks to improved credit markets and improving economic conditions, valuations have come back up, and buyer and seller expectations are coming back in line.
Most distribution sectors remain highly fragmented, and will for some time despite an increased pace in M&A. But the above three factors will undoubtedly drive deal volume and change competitive dynamics as companies divest non-core businesses and sharpen their focus on product and geographic expansion, or strengthening their services expertise.
Premium online and print subscribers can access the three articles by clicking on the links below:
- A More Favorable Environment for M&A
- Private Equity Drives Deal Demand - Financial buyers return to market, focused on platforms for growth
- Strategic Acquirers Pick Up the Pace - Growth expectations, cash stockpiles, market opportunities spur activity