If the latest results of the quarterly survey MDM does with Robert W. Baird & Co. are any indication, distribution M&A continues to be strong going into the second half of 2011. (Read the results of that benchmarking survey.)
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As one respondent in industrial supply said, "it's a pretty vibrant market." The quality of companies up for acquisition is also attractive to consolidators. And some respondents said they were encouraged that there were opportunities to sell their businesses to other good businesses right now, as well.
Peter McCausland, CEO of the acquisitive Airgas, said recently in the gases and hardgoods distributor's earnings call for its first quarter fiscal 2012: "Our acquisition pipeline is far more active than it was last year, reflecting the improved business climate." McCausland discussed Airgas' approach to M&A in this recent interview with MDM.
Electrical distributor WESCO International's CEO John Engel echoed that sentiment in the distributor's second quarter 2011 earnings call: "Our acquisition pipeline is the largest that it has ever been, and we see excellent opportunities to contribute to strengthen our portfolio in 2011."
Arrow Electronics made three acquisitions in the second quarter 2011. "Value-creating M&A remains an important focus for us, particularly those acquisitions which fit well with our strategy to expand into faster growing, high-margin products and services that span the full life-cycle of technology and complement our core business," said CEO Michael Long in the electronics distributor's latest earnings call.
After a slow couple of years, consolidation in independent distribution channels certainly has heated up again; MDM tracks deals at our M&A page. With record amounts of cash on public company balance sheets and the desire to reach new geographic and product markets, strategic buyers such as those above will continue to pursue growth by acquisition. The recent uncertainty in the economy seems to have had little impact on distributor plans.
MDM's 2011 M&A Special Report looked at trends and the players in distribution M&A markets. Non-subscribers: Click to access report. Subscriber? Access the articles in the special report here.
Listen to the MDM interview with Airgas’ Peter McCausland, in which he talks about the Air Products’ bid to buy Airgas, below.
