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With 2024 shaping up to be another big year in distribution M&A, we spoke with several investment banks on the state of industry dealmaking, what’s driving it, best practices and the outlook for 2025.
Acquisition broadens 3Ms ceramic platform.
Pace of industrial-added growth fell to 9.5 percent, compared with 14 percent in 2011.
The distributor spent $64 million on acquisitions and stock repurchases during the quarter which more than offset strong revenues.
Downgrade from the second estimate reflects a slowdown in spending across several categories.
Stoneway will continue to operate under its existing name from its headquarters in Spokane, WA.
The plants in Missouri and Oklahoma will expand Eagle’s U.S. cement capacity by roughly 60 percent.
Organic sales for the quarter increased 5 percent.
The lawsuit, filed by the Circos last year, alleged breach of contract related to the acquisition of Precision Industries.
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Sophisticated buyers with the same information often come to different conclusions about the value of a company. This article presents a case study that illustrates the wide spread of valuations in a transaction; it also examines why these buyers view companies so differently.
Any distribution company owner considering a sale asks himself a fundamental question: “What is my business worth?” For those companies sold in a one-off transaction, no one will ever know how the result might have been different had the competitive tension of a process with multiple parties been present – though the result is unlikely to have been worse. That genie cannot be put back in the bottle.
On the flip side, as an M&A advisor, I am regularly brought into failed situations where owners that thought they had a “full and fair value” with that one-off buyer become disappointed that the deal drags out or never yields a transaction as they had expected. These owners often turn to …
Uncertainty permeates today’s business environment. In fact, I’ve spoken with a number of distributors over the past couple of months who are holding off on expansions or hiring because of it. As National Association of Manufacturers chief economist Chad Moutray told MDM last month: “There really has been a sitting-on-the-hands mentality both on the part of consumers on businesses.”
That said, there are always …
Middle-market distributors are growing, but that growth and the optimism that accompanies it is tempered by a number of factors including weakness in Europe, rising commodity prices, continued housing crisis, and uncertainties connected with the upcoming election and policy issues, including health care.
These are the findings from a newly released Distribution Monitor report, sponsored by the NAW Institute for Distribution Excellence and McGladrey, a provider of assurance, tax and consulting services. The NAW Institute is the research arm of the National Association of Wholesaler-Distributors.
“Despite their concerns, distributors are generally …
Each hurricane season, there’s a renewed effort by many businesses to implement disaster plans, but most still do not have a formal, updated plan for business continuity. This article looks at the first steps a distributor should take to ensure that its business can keep running should the unplanned happen.
F&F Industrial Equipment, a one-branch industrial distributor in Middletown, NY, has been proactive about developing a business continuity plan in the case of disaster.
While the distributor itself has never been affected by a natural disaster or other major disruption, it has witnessed customers’ experiences with storms and other unplanned events and the havoc those can wreak if a business is not prepared.
“Knock on wood nothing happens here,” says Frank Fasano Jr., vice president of operations. But, he says, “you really never know.”
As recent events have shown, a disaster can hit anywhere. Consider …
MDM recently conducted a survey with Steve Epner and Brent Grover on how distributors manage their software applications. This article provides an overview of the results, with a focus on why many distributors have been slow to bring their software applications up to speed.
Every once in a while, we get a stark reminder that time flies. This happens often in the world of application software. All of the sudden, a company gets a notice that its current software will no longer be supported. What do you do? Upgrade? Change? Hope for a …
Sales and inventories data for wholesaler-distributors in July 2012.
News briefs from Sept. 11-25, 2012.
This is the PDF of this issue of Modern Distribution Management.
Table of Contents:
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Sixty percent of ISA members, including Wright, use Epicor software.
Sales for Alabama-based GM in 2011 were $44 million.
March 2007 sales of merchant wholesalers, except manufacturers’sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $346.3 billion, up 1.8 percent from the revised February level and were up 8.4 percent from the March 2006 level. The February preliminary estimate was revised downward $0.6 billion or 0.2 percent. March sales of durable goods were up 2.1 percent from last month and were up 6.6 percent from a year ago. Compared to last month, sales of computer and computer peripheral equipment and supplies were up 6.1 percent and sales of lumber and other construction materials increased 5.9 percent. March sales of nondurable goods were up 1.5 percent (+/-0.7%) from last month and were up 10.1 percent (+/-2.0%) …
Industrial Lubricants represented a market in 2006 of $3.2 billion, according to estimates by Industrial Market Information, Minneapolis.
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These charts show the top ten industries, by SIC code, consuming these products; and the 2005 end-user consumption of these groups sorted by the nine government market regions. …
When a distributor loses focus on its relationships with core customers and suppliers, the company opens a door to competitors, new and old. It’s often not a case of mistreatment as much as benign neglect or not keeping up with shifting needs at the customer.
Increasingly, new competitors from different product sectors have found some good growth in other distributors’back yards with tangential products. And in some cases they can pick up some of the longstanding business that wasn’t in their core by packaging a better value proposition. But too often distributors tee up those opportunities and don’t recognize that it’s happening.
That model is at full force as more cross-channel competition grows, and consolidators look to package as much volume as possible into their …
Economic growth in the U.S. is sustainable throughout the remainder of 2007, say the nation’s purchasing and supply executives in their spring 2007 Semiannual Economic Forecast. Expectations for the remainder of 2007 are encouraging in both the manufacturing and non-manufacturing sectors.
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These projections are part of the forecast issued by the Business Survey Committee of the Institute for Supply Management.
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Manufacturing Summary
The survey panel of purchasing and supply management executives remains optimistic with 62 percent of respondents predicting revenues to be greater in 2007 than in 2006. This is reflected in their expectations of a 5.6 percent net increase in revenues for the period. To support the revenue growth expectations, …
Sales
March 2007 sales of merchant wholesalers, except manufacturers’sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $346.3 billion, up 1.8 percent (+/-0.5%) from the revised February level and were up 8.4 percent (+/-1.3%) from the March 2006 level. The February preliminary estimate was revised downward $0.6 billion or 0.2 percent.  ;
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March sales of durable goods were up 2.1 percent (+/-1.0%) from last month and were up 6.6 percent (+/-2.0%) from a year ago.  ; Compared to last month, sales of computer and computer peripheral equipment and supplies were up 6.1 percent and sales of lumber and other construction materials increased 5.9 percent.  ;
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March …
Prices for petroleum and primary metal products caused prices for manufactured goods to surge in March. Raw material prices were pushed up mainly by prices for non-ferrous metals.
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From February to March, prices charged by manufacturers, as measured by the Industrial Product Price Index (IPPI), registered a fifth consecutive monthly increase. The  ; 1.3% rise in the index mainly reflected the strength of prices for petroleum and coal products and primary metal products.
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On a 12-month basis, the IPPI rose by  ; 4.8%, the strongest advance since October  ; 2004. The upward pressure came largely from higher prices for primary metal products and petroleum and coal products. The upward movement was tempered by a drop in prices for lumber and …
Real gross domestic product -the output of goods and services produced by labor and property in the U.S. -increased at an annual rate of 1.3% in the first quarter of 2007, according to advance estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.5%.
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The first-quarter preliminary” estimates, based on more comprehensive data, will be released May 31, 2007.
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The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE) and state and local government spending.
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The deceleration in real GDP growth in the first quarter primarily reflected a downturn in exports, an upturn in imports, a deceleration in PCE for nondurable goods, and a …
Construction spending during March 2007 was estimated at a seasonally adjusted annual rate of $1,187.8 billion, 0.2 percent (& plusmn; 1.3%) …
Economic activity in the manufacturing sector expanded in April for the third consecutive month, while the overall economy grew for the 66th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.
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Manufacturing activity increased in April; the PMI reflects accelerating growth for the month. New Orders and Production improved significantly as did Employment.
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Manufacturers are now in their ninth month of inventory reduction, so supply chains are generally in balance. On the negative side, prices continue to rise at a rapid rate with metals and energy being the areas of greatest concern to buyers.
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The 11 industries reporting growth in April & mdash; listed in order & mdash; are: Wood …
The number of electrical distributors reporting sales growth continued to decline during the first quarter of 2007, however they look for a strong upturn in the second quarter, according to National Association of Electrical Distributors’ newly released Quarterly Sales Change Expectation Survey.
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For the quarter ended March 31, 61.2% of distributors indicated their sales had grown. This marked the third consecutive quarter in which the percentage of distributors reporting growth had declined. The portion of distributors estimating increases of 10% or more remained virtually unchanged from the prior quarter at 29.5%. The number of distributors whose sales declined grew to 31.7%. Among regions, the Northeast experienced a difficult quarter as only 32.4% of distributors …
Release taken from Statistics Canada, www.statcan.ca
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Manufacturers were more upbeat about their current situation and prospects for production and employment for the second quarter of  ; 2007, according to the April Business Conditions Survey.
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The Business Conditions Survey is a quarterly survey that requests manufacturers’ opinions on production impediments, finished product inventory levels, new and unfilled order levels and production and employment prospects in the coming three months. The voluntary survey was conducted in the first two weeks of April and attracted over  ; 3,000  ; responses from manufacturers.
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Manufacturers positive about production prospects
In April, 22% of manufacturers stated they would …
Industrial production decreased 0.2 percent in March after an increase of 0.8 percent in February. Output in the manufacturing sector moved up 0.7 percent in March; the increase was led by advances in the production of durable goods.
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The output of utilities dropped 7.0 percent, largely reversing its February jump of 7.6 percent, as temperatures swung from below seasonal norms in February to above seasonal norms in March.
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Mining output edged up 0.1 percent in March. At 112.5 percent of its 2002 average, overall industrial production for March was 2.3 percent above its year-earlier level.
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The rate of capacity utilization for total industry fell 0.2 percentage point, to 81.4 percent, a level 0.4 percentage point above its 1972-2006 …
Channel dynamics, as our lead article explores, have arguably never been more complex or more fluid. One of the core concepts as this article came together was the need to have a clear line of visibility from manufacturer to end-user customer. With so many variables at play, visibility seems to be one of the few constants.
Channel conflict appears when clarity disappears, whether in communication, policies, discount structures or behaviors. There is no right answer, yet there are great examples of consistent and clear approaches that are working.
Ten years ago, the hot issue was how integrated supply was radically altering traditional channel relationships. Power was shifting to the customer. The redundancies and inefficiencies of traditional channels were ripe for …
Modern Distribution Management’s March Inflation Index, which measures a cross-section of industrial supplies, was up 0.07% from the previous month, and up 2.88% from March 2006.
Summary of  ; MDM Inflation Index for the past 12 months:
March 2007 Index 269.6
February 2007 Index 269.4
January 2007 Index 268.7
December 2006 Index  ; 267.1
November 2006 Index 266.5
October 2006 Index 265.9
September 2006 Index 265.6
August 2006 Index 265.2
July 2006 Index 264.0
June 2006 Index 263.0
May 2006 Index 262.1
April 2006 Index 262.1
March 2006 Index 262.1
Please click below to view a print-ready pdf of the  ; MDM Inflation Index for March 2007, listing the ten individual product categories …
This table  ; highlights key financial metrics and trading multiples for 30 publicly traded distributors in the industrial and building products industries. Click here to see the data. Also find graphic illustrating median EBIDTA multiples for the same distribution companies.
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These materials,  ; prepared by Robert W. Baird & Co. for MDM,  ; are for informational purposes …
Following a lackluster start to the year, wholesaling activity in Canada picked up in February with higher sales of food and personal and household products accounting for much of the increase.
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Wholesale sales rose by  ; 0.8% to  ; $43.0  ; billion in February, reversing all of the  ; 0.7% decline posted in January. The most significant increase came in the personal and household goods sector (+4.0%), which resumed its upward momentum after a significant drop in January. The food, beverages and tobacco products sector also had a solid month (+2.4%), as did the automotive products (+1.9%) sector.
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These gains were partially offset by declines in the building materials (-2.2%) and other products” (-1.5%) sectors.
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Wholesalers in …
After a four-month decline in U.S. distributors’sales of Power Transmission/Motion Control products at the end of 2006, this year’s sales continued to show positive growth with a 9.3 percent jump in sales for February, according to the most recent trend data report from the Power Transmission Distributors Association.
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When matched up against February 2006 sales, sales in February 2007 were up 8.8 percent. Accounts receivable collection days were up 0.5 percent in February after a steep decline the previous month; accounts receivable collection days were up 1.5 percent compared to the same period last year.
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Following a drop in December 2006 sales, Canadian distributors’sales in PT/MC products posted its second consecutive month of gains, rising 8.5 percent …
A few follow-up thoughts on the global industrial products trade fair in Hannover, Germany last week. I came away with two very distinct, very different thoughts about what is happening in industrial markets, how customers are sourcing, and the impact on distributors.
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First the mind-boggling news. Some end-user customers and distributors I interviewed there were looking for the next source of product beyond China. Why? China pricing will be too expensive in a year or two. It’s hard to exaggerate how many times I had to process that thought: China pricing is too high& hellip; “
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Of course, it is no surprise except for the speed at which the search for the next lowest-price source of product is happening. India, Turkey and other low labor-cost countries are in …
This article is available to non-subscribers through online access below, or by purchasing the series, Changing Channels, in the MDM Store.
As reported in Part 1, tension between manufacturers and distributors has always been there -but the reasons for that tension have changed. Channel partners are navigating a new frontier that includes private-label branding, converging channels, pricing conflicts, the push of big-box retailers and national accounts into their back yards, and a changing customer base. In Part 2 of this article, we address best practices in manufacturer-distributor relationships.
One answer to manufacturer-distributor conflicts, MDM found in interviews for this article, is that distributors must focus on creating value for the customer and the supplier by homing in on core competencies. And manufacturers must find a balance of trade between high-volume distributors, integrated …
These 16 select product groups provide a snapshot of inflation trends. First quarter 2006 is compared with first quarter 2007, and the fourth quarter 2006 with the first quarter 2007.
Metals & Metal Products
Plumbing Fixtures & Fittings
Fasteners
Hardware
Hand & Edge Tools
Chemicals & Allied Products
Adhesives & Sealants
Industrial Gases
Machinery & Equipment
Mechanical Power Transmission Equipment
Pumps, Compressors & Equipment
Electrical Machinery & Equipment
Ball and Roller Bearings
Metal Valves, Except Fluid Power
Industrial Material Handling Equipment
Fluid Power Equipment
Welding Machines & Equipment
Cutting …
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