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2012 MDM Market Leaders & Distribution Trends Report
An Annual Update for Premium Subscribers from Modern Distribution Management’s Editors
Copyright ©2012 by Gale Media, Inc. All rights reserved. Modern Distribution Management® and mdm® are registered trademarks of Gale Media, Inc. Material may not be reproduced in whole or in part in any form whatsoever without permission from the publisher. To request permission to copy, republish, or quote material, please call 303-443-5060.
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2012 Market Leaders and Distribution Trends Report
Wave of Consolidation Hits Industry
The drivers and impacts of the latest surge in M&A activity
Each year we say the big get bigger. And while that remains the case, we saw the big get much bigger thanks to a wave of mergers and acquisitions in 2011. That’s reflected on the 2012 MDM Market Leaders top distributor lists. The average growth for distributors on this year’s Top 40 Industrial Distributors list was 19.4 percent in 2011, a significant jump from the 10.4 percent average we saw on last year’s list, in part due to acquisitions made throughout the year. Consolidation further ramped up in the first half of 2012. Dozens of deals have been announced in distribution thanks to a perfect storm of contributing factors that include a large number of owners who are ready to retire, significantly improved deal valuations and a group of larger distributors and private equity firms that have cash they need to deploy. “It’s a seller’s market,” says Steve Deist of Indian River Consulting Group. One driver of the most recent consolidation trend is the desire to fill product or service gaps. As we reported last year, more distributors are looking to diversify their offerings to help cushion their businesses against another dramatic downturn like we saw in 2008-2009. “It will be interesting to see how (the acquisitions) impact the channel overall,” says Mike McGuire, editor and publisher of American Fastener Journal. “Most of the
An Annual Update for Premium Subscribers from Modern Distribution Management’s Editors
Copyright ©2012 by Gale Media, Inc. All rights reserved. Modern Distribution Management® and mdm® are registered trademarks of Gale Media, Inc. Material may not be reproduced in whole or in part in any form whatsoever without permission from the publisher. To request permission to copy, republish, or quote material, please call 303-443-5060.
2
2012 Market Leaders and Distribution Trends Report
Wave of Consolidation Hits Industry
The drivers and impacts of the latest surge in M&A activity
Each year we say the big get bigger. And while that remains the case, we saw the big get much bigger thanks to a wave of mergers and acquisitions in 2011. That’s reflected on the 2012 MDM Market Leaders top distributor lists. The average growth for distributors on this year’s Top 40 Industrial Distributors list was 19.4 percent in 2011, a significant jump from the 10.4 percent average we saw on last year’s list, in part due to acquisitions made throughout the year. Consolidation further ramped up in the first half of 2012. Dozens of deals have been announced in distribution thanks to a perfect storm of contributing factors that include a large number of owners who are ready to retire, significantly improved deal valuations and a group of larger distributors and private equity firms that have cash they need to deploy. “It’s a seller’s market,” says Steve Deist of Indian River Consulting Group. One driver of the most recent consolidation trend is the desire to fill product or service gaps. As we reported last year, more distributors are looking to diversify their offerings to help cushion their businesses against another dramatic downturn like we saw in 2008-2009. “It will be interesting to see how (the acquisitions) impact the channel overall,” says Mike McGuire, editor and publisher of American Fastener Journal. “Most of the