Industry Vertical

This industry wholesales general-use supplies for manufacturing and warehousing industries. The industrial distribution vertical includes supplies industrial goods to refineries, plants, construction companies, manufacturers, and industrial facilities of all types.

Supplies include abrasives, barrels, boxes and crates, industrial containers, industrial diamonds, packaging material, printing ink, power transmission supplies, mechanical rubber goods, ropes, valves and welding supplies.

Consolidation

High competition and fluctuating profit have led to company exits.

Larger companies have taken advantage of low profit during the pandemic to acquire struggling smaller wholesalers.

An increasing trend of vertical integration has resulted in some manufacturers undercutting wholesalers in the supply chain.

The chart below shows the regression analysis of industrial distribution company transactions using data from PeerComps. Each diamond represents a company that has sold and its location shows the price that it sold for (left axis) as compared to a financial metric on the bottom axis (EBITDA).

In the equation that describes the line that best fits the observations, “y” is the value and “x” is the financial metric (EBITDA). The number is the multiple. R-squared is a statistical measure that tells how well the equation fits the actual outcomes, it ranges from 0 (uncorrelated) to 1.0 (perfectly correlated).

Actual company multiples and value achieved in a transaction depend on a number of factors and will be determined in an arms-length transaction and will be subject to market and economic fluctuations during the year as well as Company specific performance