Industrial Distribution Insights

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.

After analyzing over 300 transactions using PitchBook (restricted to sales price between $5M and $30M) in industrial supplies which happened since the beginning of 2018, we found that the number of deals fell slightly in 2022 to 65 from a high point in 2018 of 99.
Median deal size for those transactions held close to the median post deal valuation, demonstrating that the sales prices for these transactions were closely related to the valuations.

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

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Tully Ryan

Managing Director & Senior M&A Advisor

Tully Ryan, a recognized industry leader, serves as the firm’s managing director. A Certified M&A Advisor and licensed real estate broker, Tully has over 30 years of experience leading companies in all facets of business including business development, go-to-market planning and execution, financial controls, capital raises, and acquisitions. Tully has also served on various boards including the East Carolina University Board of Visitors and the Carolina Virginia Business Brokers Board of Directors.

Dennis Barber III, PHD

Senior M&A Advisor

Dennis Barber III leads the firm’s data analytics process that pairs our clients’ businesses with the right strategic buyers, private equity groups, family offices, or high net worth individuals. A Galliard Institute Certified Family Business Advisor with over 15 years of experience in business and data analysis. Dennis holds a PhD and an MA, both in Economics from the University of New Mexico and a BS in Business Administration (Management) from East Carolina University.

Jason Rowe, PHD

Senior M&A Advisor

Jason Rowe has over 25 years of business-to-business sales and marketing experience. Jason specializes in the use of historical databases and predictive analytics to maximize business valuation across all industry sectors. He holds a PhD in Business Administration (Marketing) from the University of Kentucky and an MBA and BBA in Marketing, both from Marshall University.