Liquidity is fueling deal making, with B2B Distribution seeing a rising level of merger and acquisition activity that is broad-based, according to the Industrials Insider, an industry report released by Brown Gibbons Lang & Company (BGL). Corporate and private equity buyers are highly active across all distribution sectors, with participants seeking opportunities to build scale and geographic footprint and expand into complementary products and markets.
Corporates have made recent headlines with notable targets in play, including Allied Building Products (Beacon Roofing Supply), the Waterworks Business of HD Supply (Clayton Dubilier & Rice), and Praxair (Linde), setting the stage for continued consolidation in a fragmented market.
Private equity sponsors are actively building value-added distribution platforms demonstrating broad interest across industrial markets. Building Products has seen a high level of acquisition activity, with The Sterling Group (Construction Supply Holdings) and Berkshire Partners (SRS Distribution) among the active consolidators. Fasteners has seen robust platform and add-on activity, notably new growth platform Endries International, acquired by Nautic Partners from Ferguson Enterprises this May, and tuck-in activity by Bolts & Nuts (Nebraska Heavy Industries and Tecum Capital Management) and AFC Industries (Incline Equity Partners), each announcing two acquisitions. Acquisitive platforms in Industrial Gases (CI Capital Partners/Tech Air); Lubricants (Audax Group/Reladyne), and Janitorial and Sanitation Supplies (Imperial Dade/Audax Group) underscore the growing diversity of private equity investment activity in B2B Distribution.
The capital markets environment remains strong with ample equity and debt capacity to finance acquisitions. Liquidity will be the catalyst for an active M&A market as participants look to acquisitions to drive outsized growth.