Specialty Distribution Practice Overview

Introduction

Harris Williams is pleased to present our Specialty Distribution Industry Update for July 2020. 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 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

Recent HW Transaction

Harris Williams announced that it advised H.I.G. Capital’s investment affiliate, H.I.G. Advantage (H.I.G.), on its acquisition of Supply Source Enterprises, Inc. (SSE) from Genuine Parts Company (GPC). SSE is a leading manufacturer of branded and private label personal protective equipment and janitorial, safety, hygiene, and sanitation products. The transaction was led by Bob Baltimore and Graham Gillam of the Harris Williams Specialty Distribution Group.

Read the full press release here.

Representative Specialty Distribution Transactions

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What We’re Reading

Lender Q&A – Lending Markets in the COVID-19 Era

Harris Williams Managing Directors and Co-Heads of M&A Bob Baltimore and John Neuner and Managing Director Bill Watkins recently spoke with a range of lenders to get their take on the state of debt markets in the COVID-19 environment. Here we share highlights of those conversations.

Read more here.

The Nuances of the Deal in the COVID-19 World

Here, we distill our most recent experience from transactions the firm has completed since the onset of the COVID-19 crisis into four observations for conducting M&A in this challenging landscape. All of these observations center on transparency, collaboration and flexibility. While clear communication and the willingness to adjust as a deal progresses are long-term hallmarks of how Harris Williams works with clients, they are more critical than ever before.

Read more here.

M&A Activity Poised for Post-Coronavirus Rebound

Modern Distribution Management  07/10/2020

"To no one’s surprise, the roughly three-month stretch of March, April and May proved to be an 'air pocket' for distribution M&A. One, economic uncertainty surrounding COVID-19 complicated deal-making because it’s hard for companies to justify a capital-intensive M&A amid struggling end markets and widespread unemployment. Two, lending dried up, making it near impossible for buyers that maintained an appetite for acquisitions to line up the financing. And three, company executives could no longer hop on a plane, meet with their target’s counterparts and hammer out details of a merger or acquisition in person. The added layer of complexity and risk has somewhat eased, though not entirely with the coronavirus now surging across a country eager to reopen. But it appears that M&A is on the rebound."

Read the full article here.

Welcome to the New Supply Chain

Forbes  07/09/2020

"The global coronavirus pandemic has precipitated some drastic changes in society. Some of the pandemic-driven changes will be temporary, and people will in fact return to concerts, sporting events and churches. However, one aspect of the economy that will see a permanent shift is the supply chain."

Read the full article here.

Know Your Customers from Afar – Leveraging the Power of AI

National Association of Wholesale Distributors  06/18/2020

"The COVID-19 pandemic has complicated the relationship between distributors and customers. Distributors’ sales processes have changed as travel and onsite visits have become all but impossible. Customer behavior has shifted within this new environment too. The combination of these factors means that distributors now face a unique and challenging puzzle: They must figure out how to make personalized sales without actually having personal contact with customers."

Read the full article here.

Public Markets1

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Notes: Sub-sector indices weighted by stock price. Comparable company sets listed in sources.

Public Markets1

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Note: Data presented as 7/8/20

Economic Trends

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Note: A Manufacturing Inventory Index figure greater than 50 indicates expansion;
A Backlog Index figure greater than 50 indicates expansion.

M&A Market Trends1,2,3

Representative Specialty Distribution M&A Transactions

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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

 

The information and views contained in this report were prepared by Harris Williams LLC (“Harris Williams”). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities or financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The securities and financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent. 

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