Specialty Distribution Practice Overview
Introduction
Harris Williams is pleased to present our Specialty Distribution Industry Update for January 2021. This report provides commentary and analysis on current capital market trends and merger and acquisition dynamics within the global specialty distribution industry.
We hope you find this edition helpful, and we encourage you to contact us directly if you would like to discuss our perspective on current industry trends and M&A opportunities, or our relevant industry experience.
Our Practice
Harris Williams’ Specialty Distribution Group has experience advising companies that provide a range of specialty distribution services.
This particular report focuses on trends and metrics in the following areas:
- Automotive
- Building Products
- Consumer
- Foodservice
- Healthcare
- Industrial
- Specialty Chemicals
- Technology
Pivot Point: Specialty Distribution M&A Outlook
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.
Read more here.
Representative Specialty Distribution Transactions
What We’re Doing
Transaction Spotlight: Brady Industries (December 2020)
Harris Williams advised Brady Industries (Brady), a portfolio company of A&M Capital Partners, on its sale to Individual FoodService, a portfolio company of Kelso & Company. Brady is a full-line janitorial supply, equipment and foodservice distributor.
The transaction closed on December 31, 2020, and adds to HW’s track record of representing marquee specialty distribution assets in the foodservice sector.
Read more here.
Transaction Spotlight: Continental Batteries (January 2021)
Harris Williams advised Continental Batteries (Continental), a portfolio company of Incline Equity Partners (Incline), on its sale to H.I.G. Capital (H.I.G.). Continental is a leading distributor of aftermarket batteries to the electric utility vehicle, automotive, commercial, marine and industrial markets.
The transaction closed on January 20, 2021, and adds to HW’s track record of representing best-in-class specialty distribution assets in the automotive aftermarket.
Read more here.
What We’re Reading
2020 M&A Roundup: Year to Forget Brings Memorable Trends and Deals
Modern Distribution Management
Spanning everything from the entertainment industry to the tech industry, the one factor that impacted the top trends of 2020 is of no surprise: the pandemic. The distribution industry was no exception — with the sudden turn in remote workers, distributors have had to swiftly alter the way they do business within the supply chain. While the pandemic is still alive and well, we are outlining what the resurgence of a new “normal” life in the future will look like. 2021 will see some unique trends in the distribution section that contradict the hype around a slowdown in strategic growth and technology investment.
Read the full article here.
What’s in Store for Distribution M&A in 2021?
Modern Distribution Management
The second half of 2020 saw a resurgence of M&A across wholesale distribution, and that trend is likely to continue next year, according to Jon Doehr and Ashley Gray of the Southfield, Michigan-based private investment and investment banking firm Cascade Partners.
Read the full article here.
Distribution Trends Emerging in 2021
Industrial Distribution
Like everything else in the world, the M&A landscape was upended in 2020 due to the coronavirus. When COVID-19 began disrupting the economy back in March, deals were delayed or scrapped altogether, creating a months-long lull as companies focused solely on their own operations. But activity picked up beginning at the end of the second quarter and has accelerated ever since, with some of the most high-profile deals in history happening across distribution in a year unlike any other. As part of our look back at 2020, MDM has compiled five M&A themes that emerged in the industry and also listed some of the biggest deals of the year.
Read the full article here.
Public Markets1
Historical Stock Prices – Last 5 Years
Historical Median TEV/LTM EBITDA Multiples – Last 5 Years
Notes: Sub-sector indices weighted by stock price. Comparable company sets listed in sources.
Economic Trends
Note: A Manufacturing Inventory Index figure greater than 50 indicates expansion;
A Backlog Index figure greater than 50 indicates expansion.
1. S&P Global Capital IQ
2. Modern Distribution Management
3. Pitchbook
4. St. Louis Fed
5. Institute for Supply Management
Public Comparable Companies:
Automotive & Heavy Duty Aftermarket: AutoZone, O’Reilly Automotive, LKQ Corp., Genuine Parts Company, Dorman Products, Uni-Select
Building & Construction Products: CRH, Watsco, Beacon Roofing Supply, Builders FirstSource, Boise Cascade, GMS, BMC, Ferguson, Hardwoods
Consumer: Fortune Brands Home & Security, Pool Corp., SiteOne Landscape Supply, Central Garden & Pet Co., Colabor Group, AMCON Distributing
Industrial, MRO & Safety: L’Air Liquide, Fastenal, WW Grainger, HD Supply, MSC Industrial, Applied Industrial Tech, MRC Global, SPX Corp., NOW, DXP Enterprises
Healthcare: McKesson, Cardinal Health, AmerisourceBergen, Henry Schein, Patterson Companies, Owens & Minor
Specialty Chemicals: Brenntag, Univar, DKSH Holding, IMCD NV
Technology: Arrow Electronics, Rexel, SYNNEX Corp., Awnet, WESCO International, Anixter International, Tech Data Corp., ScanSource
Foodservice: Sysco, Performance Food Group, Bunzl, US Foods, United Natural Foods, Core-Mark Holdings, SpartanNash, Veritiv