As we embark on a new year, our Industry Group leaders reflect on the changes spurred by 2020 — stories of novel products and services, shifting market trends, and new M&A strategies — and consider the implications for 2021. Access more industry perspectives in our related insights tab.
Baltimore: Within specialty distribution, any businesses connected to sanitation, hygiene, cleanliness—collectively, “jansan,”—have been thriving. Distribution businesses that serve critical end markets like healthcare and grocery channels have also done well, as have liquor distributors. Conversely, 2020 was a more challenging year for distributors focused solely on restaurants, particularly those that don't provide personal protective equipment.
Lewis: It was also a challenging year for global supply chains, whether simply getting products from point A to point B or figuring out which items were suddenly in desperate need. I'm not sure any of us would have predicted a shortage of paper products or face masks a year ago.
From tariffs to COVID-19 outbreaks in manufacturing facilities, companies have faced plenty of supply chain disruptions. Value-added distributors that have great relationships with manufacturers and with their clients have been able to help overcome those challenges. They've also helped clients build more diversified, resilient supply chains. Looking ahead, we see continued demand for that more consultative approach, especially given some lingering uncertainty about the ongoing impacts of COVID-19 on manufacturing, and how trade with China will evolve under the Biden administration.
Baltimore: And those kinds of distributors will continue to see strong demand among strategic buyers and private equity investors. For strategic buyers, public-market valuations are robust, so they have to continue to find ways to grow, whether organic or inorganic. PEGs still have billions of dollars to put to work, and the critical, recession-resilient role played by specialty distributors will continue to appeal to them. Overall, we're excited by the prospects for a very good 2021.
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