What We're Reading

What Recession? Don’t Believe the Hype1

Fueled by a group of economists and analysts looking through data for potential recession scenarios, current rumors in the market about a possible economic recession in 2020 could become a self-fulfilling prophecy. However, there are still optimistic voices in the market pointing toward economic indicators suggesting a healthy U.S. economy.

In her article, Just Because There’s a Manufacturing Downturn Does Not Mean a Recession Is Coming, industry expert Laurie Harbour writes that although September produced the worst month of U.S. manufacturing data since the Great Recession, other indicators factor into the health of the U.S. economy. Considering items such as strong consumer confidence, a growing housing market, and rising disposable income, Harbour points out that “[l]ooking at all the indicators it has become clear that as a whole there is a greater focus on the negatives and not the positives. This heightened awareness may be leading to the country believing that we are going into a significant recession when in reality the economy, and specifically the manufacturing industry, is responding to the evolving market.”

Moving into 2020, it should be remembered that much of the economic growth is being carried by the consumer, and factors impacting consumer sentiment should be closely monitored. In the meantime, unemployment is low, the job market is strong, personal incomes are growing, inflation is in check, and the stock market is healthy. Although uncertainty still looms with U.S.-China trade relations and the upcoming presidential election, it is clear there is still strength in this economy to take comfort in.

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September 2019 M&A Roundup: Two Distributors Reshuffle Their Decks2

Two of the nation’s largest distributors announced that they were to split out business units in September. Ferguson PLC, a specialty distributor of plumbing and heating products and parent company to Ferguson Enterprises, the largest plumbing distributor in the U.S., announced intentions to demerge UK operations under Wolseley UK.

Industrial distributor HD Supply Holdings Inc. announced plans to separate its Facilities Maintenance from its Construction and Industrial businesses to form two independent publicly traded companies. According to the company, the separation is expected to be completed by the middle of fiscal year 2020. Each division reports about $3 billion of revenue.

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Walmart Testing a Fulfillment Service for Vendors to Match Amazon3

Looking to generate more profit from its online unit, Walmart Inc. is looking to catch up to rival Amazon.com Inc. and start storing and shipping products for third-party vendors for the first time. For some time, the retail company’s large network of warehouses and private fleet of over 6,500 trucks has prompted speculation of such a service. Now, this move could help Walmart’s e-commerce business stem losses, which Morgan Stanley expects to reach $1.7 billion this year, by transforming the transportation piece of its business into a revenue stream rather than just an expense.

“Fulfilled by Walmart” plans to take advantage of fees that merchants are willing to pay to get their goods to customers faster through more developed distribution networks. However, with 75 million products listed on their online marketplace (vs. Amazon’s 300 million+), Walmart still has a lot of work to do with this new business unit.

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Public Comparables & Trading Valuations

Key Trading Stats

As of November 10, 2019 ($ in millions, except per share amounts)

Specialty Distribution Public Comparables4



Stock Prices

As of November 10, 2019

Trailing Twelve Months Stock Price Performance4


M&A and Public Market Trends

Distribution Trends

LTM EBITDA as of November 10, 2019



M&A Trends

Recent M&A And Private Equity Trends5


  • Data through 3Q 2019 suggests progress towards another $2T+ year
  • Total deal volume increased over the same period last year, however, average deal value decreased
  • Median EV/EBITDA multiples increased compared to the third quarter of 2018
  • US buyout funds have raised north of $246B in 2019, a new record

M&A Transactions

Announced M&A Transactions4


Economic Update

A Snapshot of Key Economic Indicators

As of November 10, 2019




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

Select HW Transactions by Sector


1. Ted Magazine

2. Modern Distribution Management

3. Transport Topics

4. CapIQ

5. PitchBook

6. United States Census

7. U.S. Federal Reserve


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