Specialty Distribution Practice Overview
Introduction
Harris Williams is pleased to present our Specialty Distribution Industry Update for September 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
What We’re Reading
Private Equity Sentiment Update: Key Takeaways from Recent Conversations
For nearly 30 years, Harris Williams has forged strong and deep relationships with the world’s leading private equity groups (PEGs). In today’s virtual environment, our senior bankers have made intensive efforts to stay closely connected with their private equity colleagues, offering advice and soliciting input on current market conditions. Here, we share the key takeaways from our most recent conversations with leading global PEGs.
Read more here.
Foodservice Suppliers: Four Approaches to Differentiation in the COVID-19 World
Despite COVID-19-related disruptions, many foodservice suppliers have strong fundamentals and good long-term prospects. Several have even used this time to build new product and packaging capabilities. Buoyed by these strengths, the most innovative foodservice suppliers will emerge more efficient, effective and diversified as the economy rebuilds, further strengthening their positions while becoming more attractive targets for acquisition. Here, we discuss why now is a great time to participate in the foodservice sector, and which attributes set great assets apart.
Read more here.
The Eight Traits of Resilient Distributors
Modern Distribution Management 09/15/2020
Learning about the stellar results companies get from implementing best practices often sparks inspiration for distributors. Best practices that get a lot of attention include strategic pricing, inventory stratification, customer stratification, supplier management, digital marketing or any one of the 47 best practices we’ve identified in our optimizing distributor profitability framework as game-changers in distribution. However, as the industry faces a major change due to COVID-19, catching inspiration can seem as challenging as the road ahead. Plus, it takes more than inspiration to successfully implement a best practice. Do you have what it takes to identify, implement and be successful with a new best practice? Will your efforts build in long-lasting resilience or simply sustain short-term viability?
Read the full article here.
Companies Step Up Distribution Automation under Pandemic Strains
Wall Street Journal 08/12/2020
Upheaval from the coronavirus pandemic is pushing more companies to consider automating distribution and fulfillment, as the consumer rush to online shopping and social distancing practices within warehouse operations add to the challenges in strained logistics networks. Although fulfillment operations still rely largely on human labor, companies have been incorporating more technology in recent years as they seek to boost output and handle swings in demand more efficiently.
Read the full article here.
Distributor Pandemic Lessons and a Silver Lining
Industrial Distribution 08/07/2020
COVID-19 has hammered manufacturing on an unprecedented scale. And yet, it's effectively shown the dire need for technology in distribution. News of the negative impacts of the coronavirus are impossible to ignore, no matter what form of news or social media you browse. In this column, Mike Hockett sheds light on the lessons distributors can learn as they try to crawl out of this mess.
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