The 2020 Mid-Year Economic Update_long

M&A Activity Expected to Pick Up

This article is a part of MDM's 2014 Distribution Trends Report. The article addresses consolidation trends and how 2013 activity is affecting the current market.

The annual report was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this report.

The full report is available to download in PDF format to MDM Premium subscribers. Subscribe below for full access. Or log-in if you are already a subscriber.

Trends outlined in the 2014 report include:

  • Leaving Economic Uncertainty Behind
  • Connecting the Dots Online and Offline
  • Need for Access Whenever, Wherever, However Drives Mobile Adoption
  • Avoiding Information Overload Essential with Analytics
  • Making the Case for Millennials in Distribution
  • Training, Technology Take Front Seat in Employee Retention Strategies
  • Better Inventory Management Through Data, Collaboration
  • Distributors Seek More Complete Strategy for Vending
  • Private Equity Consolidating Markets
  • A More Practical Approach to Product Expansion
  • Trend Snapshots for 13 Sectors

The report also includes the following case studies and interviews:

  • 2014 MDM Market Movers
    • Engman-Taylors Cost-Saving Teams
    • Capitol Coffees Proactive Problem-Solving
    • Redwood Plastics Online Success Story
  • MDM Market Leader Profiles
    • DGI Supply: Building on the Core
    • F.W. Webb Takes Diverse View of Market

This is a part of the 2014 Distribution Trends Report. The annual report was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this report.


2014 Distribution Trends Report


This article is a part of MDM's 2014 Distribution Trends Report. The article addresses consolidation trends and how 2013 activity is affecting the current market.

While the last decade has been marked by heavy consolidation across industries, 2013 was a quieter year. Even distributors that have been highly active consolidators, such as Airgas and Sonepar, seemed to be keeping their heads down a little more. But both companies have already picked up the pace in 2014.

“The prevailing slow-growth environment quite possibly limited some of the M&A activity in the last six to nine months,” says Brent Rakers of Wunderlich Securities. “There’s still definitely a consolidation interest. … There’s a lot of interest still in expanding your product set and deals that expand your customer set.”

That said, a few large deals in 2013 changed parts of the landscape for 2014. MSC Industrial Supply’s acquisition of Barnes Group’s North American distribution business realigned a few players on the Top 40 list, and Grainger made further advances into newer categories such as safety.

Industry-watchers expect consolidation trends will accelerate as strategic buyers build on multichannel models and invest in new tools that help them drive relationships with suppliers and customers across multiple locations. “We continue to see strong activity across the distribution space,” says Jason Kliewer, managing director for investment banking firm Robert W. Baird & Co. 

Private equity firms also continue to be active in distribution, Kliewer says.  “Large distributors tend to command a relatively small percentage of their total addressable markets, leaving an opportunity for private equity firms to invest and build consolidation platforms.  These sponsors help to grow these businesses ahead of an eventual sale to another private equity firm, a strategic buyer or an IPO.”

Distributors also continue to look overseas for growth as suppliers and customers focus on building global supply chains. “Around half of our sale assignments in recent years have included an international buyer or seller,” Kliewer says.

Lending markets are strong, Kliewer says, which drive valuations upward. But while M&A markets are generally strong, Kliewer says there’s a scarcity of industry-leading distributors currently available in the market.

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