Recommended Reading: ‘Mature Markets Consolidate’

What role will you have in the changing supply chain?
jenel-white

Mergers and acquisitions have long played a role in driving growth in distribution, just as it has for many other industries. "No matter the industry, as markets mature they will consolidate," says J. Michael Marks, managing director of Indian River Consulting Group, in Distribution M&A Playbook, pt. 1: Unlocking Shareholder Value.

But as the industry changes, distributors will have to think about what their role will be. Just look at the numbers:

In 2016, there were more than 244,000 wholesaler-distributors in the U.S. with average revenues of just over $21 million, according to U.S. Census data. More than 200,000 of these firms have fewer than 20 employees and fewer than 200 have revenues exceeding $1 billion. The majority are owner-operator entrepreneurial businesses.

The historical role of the distributor is to provide a reliable anchor in a complex supply chain, connecting the manufacturer down to the end user through retailers and contractors. But as technology improves transparency between partners and eases many of the barriers that have existed to selling more directly, you have to ask yourself if the market really needs 244,000 distributors going forward, Marks notes.

"The entire industry is in a shakeout as each distributor grapples with the transition to digital and multichannel. It is too early to determine the ultimate winners and losers, but current size has historically been a poor predictor."

Acquisitions can help strengthen your company and its position, but only if it's approached carefully and correctly. Done right, it can unlock significant value within your organization; done wrong, it can topple even the most established ones. 

Read more about the role M&A will play in changing the distribution landscape in Distribution M&A Playbook, pt. 1: Unlocking Shareholder Value.

Join MDM and IRCG for the first-ever Distribution M&A Executive Workshop, Oct. 9-11, 2017, in Austin, TX. Learn more at distributionMAworkshop.com. Early bird pricing for this event ends July 31!

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.

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

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

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.