Recent Transactions

Harris Williams Advises Imperial Dade, a Portfolio Company of Audax Private Equity, on Its Pending Sale to Bain Capital Private Equity

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Harris Williams is advising Imperial Dade on its pending sale to Bain Capital Private Equity, LP (Bain Capital). Imperial Dade, a portfolio company of Audax Private Equity (Audax), is one of the largest pure-play distributors of foodservice disposables and janitorial sanitation products in the U.S. The transaction is being led by Bob Baltimore and Graham Gillam of Harris Williams’ Specialty Distribution Group and Anthony Basmajian of the firm’s Richmond office.  

“Robert and Jason Tillis, in partnership with Audax, have built a company that is a clear market leader and thrives on a culture of innovation and unwavering service to its customers,” said Bob Baltimore, a managing director at Harris Williams. “We are excited to have found a great partner for our client in Bain Capital that shares in management’s strategic vision for the business.”

“Imperial Dade is the latest addition to Harris Williams’ deep resume in the distribution and foodservice sectors,” added Anthony Basmajian, a director at Harris Williams. “Distribution businesses that deliver high free cash flow with a strong value proposition to their customers, and that operate in highly fragmented markets, continue to command tremendous interest.”

“It has been a true pleasure to partner with the Imperial Dade management team and Audax to help them realize their vision for the company. The opportunity ahead, in partnership with Bain Capital, is truly exciting and we look forward to following the company’s continued success,” said Graham Gillam, a vice president at Harris Williams.

Founded in 1935, Imperial Dade is a leading distributor of disposable foodservice and janitorial supplies in the Northeast, Mid-Atlantic, Southeast, Southwest and Midwest regions and Puerto Rico. Since CEO Robert Tillis and President Jason Tillis assumed their roles in 2007, the company has grown both organically and through acquisitions, completing 13 since 2016, to become a leader in the disposable foodservice and janitorial supplies industry.

Read more about Imperial Dade and opportunities in the foodservice value chain here.

Tech Air Shows Opportunity in Specialized Industrial Distribution

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Key Takeaways:

  • The recent sale of Tech Air to Airgas demonstrates strong ongoing strategic and financial buyer interest in specialized industrial distribution assets.
  • As Tech Air exemplifies, leading specialized industrial distributors become indispensable partners to their customers, building strong, profitable, cycle-resistant relationships.
  • Additional opportunities remain to consolidate industrial distribution segments and create market-leading platforms with substantial growth potential.

Read more from this article here.

Select HW Transactions by Sector

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What We’re Reading

The Coming Shakeout in Industrial Distribution1

"Powerful trends that have disrupted industries around the world are now affecting industrial distributors. A few are quickly building scale, making advances in commercial and operational excellence, and digitizing to create the seamless, omnichannel experiences that customers now demand. But McKinsey expects slower-moving distributors to struggle—and some to go the way of Blockbuster and Borders.

McKinsey also expects the disruption to accelerate. Fast-moving digital players eyeing the industry’s trillion-dollar revenue pools are offering best-in-class customer convenience and more price transparency. Sophisticated customers, armed with new data, are demanding deeper discounts and better promotions on more commoditized products. As manufacturers and customers gain leverage through consolidation, some are forging strong relationships that leave distributors in the cold.

These and other challenges come at a difficult time for the industry, whose returns have lagged those of the overall industrials sector for 15 years. Margins have remained narrow even in the recent economic recovery, and the pressure may rise. We expect many industrial distributors to lose strong customer relationships in the next few years and become mere links in supply chains, rather than business partners who add value."

Read more from this article here.

Increasingly Sophisticated AI is Enhancing Business Operations for Distributors2

"Distributors are using artificial intelligence to drive sales, improve marketing, personalize the customer’s experience and keep their assets safer. In a recent webcast, Ian Heller, president of MDM, discussed various ways businesses can benefit from evolving technology. One place to start is to develop an understanding of the four categories of AI:

Internet AI: Personalization (such as knowing your preferences) and recommendation engines (e.g., if you bought this heater part, you may be interested in this correlating product);

Perceptual AI: Voice ordering (such as though Siri or Alexa), and image recognition (using a picture to identify a product);

Autonomous AI: Machines performing actions without input from a human operator (e.g., warehouse robots and delivery drones handling packages); and

Business AI: Using data to enhance demand forecasting, fraud detection and pricing decisions."

Read more from this article here.

The Analysis of Operation Efficiency in Distribution1

"Back in the olden days (the ’80s), the industry used to talk a lot about “efficiency.” It was all the rage before it got into “quality,” “kaizen” and lot of other things that have marked changes in philosophy and priorities.

Over the past two years, Randy MacLean of WayPoint Analytics noticed the emergence of certain super-performing companies that have posted profit rates beyond what conventional wisdom thought possible. On closer examination, it seems the advent of sophisticated analytics in these companies has brought them full-circle, back to a focus on efficiency.

At his firm, WayPoint Analytics, they provide an online service where distribution and manufacturing companies maintain several years of invoice and financial data that our system costs out in minute detail, showing precisely where money is made and lost. Overseeing tens of billions in industry activity, the firm can see the common factors shared by the market-leading companies. MacLean shares several of them in this article."

Read more from this article here.

Public Comparables & Trading Valuations

Key Trading Stats

As of May 12, 2019
($ in millions, except per share amounts)

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Stock Prices

As of May 12, 2019

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M&A and Public Market Trends

Distribution Trends

LTM EBITDA as of May 12, 2019

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M&A Trends

Recent M&A And Private Equity Trends5

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  • Average buyout fund in 2019 has raised nearly $1.7B, up ~70% compared to all of 2018
  • Average for private equity funds of all kinds is sitting just below $1.6B, also up ~70% compared to 2018
  • Firms raised $45.5B across 29 vehicles in the US during 1Q 2019, compared to $180.7B across 194 funds for all of 2018
  • Several PE firms expect to close on funds of $10B or more in the coming months

M&A Transactions

Announced M&A Transactions3

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Source: Capital IQ, Modern Distribution Management, Industrial Distribution, NAW, and TEDMagazine.

Economic Update

A Snapshot of Key Economic Indicators

As of May 12, 2019

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

1. McKinsey & Company

2. Modern Distribution Management

3. Factset

4. FactSet Transcripts

5. Pitchbook

6. United States Census

7. U.S. Federal Reserve

 

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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