With headwinds creating overall economic softness in 2016, companies that focus on strengthening their core business can increase efficiencies and earnings, says Reed Anderson, head of Houlihan Lokey’s industrial distribution practice, in M&A in Distribution, Part 1: M&A Mirrors Economy.
According to the most recent MDM-Baird Distribution Survey, the current economic climate has many potential strategic buyers looking at bolstering their existing businesses instead of targeting new assets.
“They’ve been saying, ‘I need to focus within my four walls, execute my strategy and find efficiencies to maximize my earnings in what is a softer end market,’” Anderson says.
Distributors are even looking to shed underperforming divisions or adjacent businesses where they simply no longer want to spend time and energy. “Boards are looking more closely at lower-priority items when things aren’t going up and to the right,” Anderson says.
Reinforcing and reinvigorating the core will help companies focus on the most important areas of their business.
Read more about how strengthening core businesses can help improve investment decisions in M&A in Distribution, Part 1: M&A Mirrors Economy.
