Value-added Industrial Distribution remains resilient despite a lull in the broader M&A market, with major sector sub-verticals seeing consistent deal activity, according to a new industry report released by the Industrial Distribution investment banking team from Brown Gibbons Lang & Company (BGL).
Notwithstanding a mixed macroeconomic environment, industrial distribution companies continue to perform as supply chain disruptions have eased and price increases have moderated.
Acquisitions remain a priority for capital deployment and are an important growth lever for product line and geographic expansion, enabling acquirors to take advantage of enhanced operating leverage and buying power achieved through increased scale.
Capital availability is keeping the industrial distribution M&A pipeline active across the major distribution subsectors as strategic and financial buyers display a robust appetite for new platforms and add-on acquisitions, which has carried through the year.
While lenders remain cautious and borrowing criteria have tightened, lenders are continuing to seek opportunities to deploy capital, and high-quality industrial distribution businesses are viewed as attractive borrowers given their fragmented markets, low capital expenditures, and attractive free cash flow characteristics.