DISTRIBUTION M&A MARKET DYNAMICS
- In Q3-25, the market saw 138 Distribution transactions close worldwide. Strategic acquirers continued to lead the industry in terms of volume completing 123 deals in the quarter and accounting for nearly 89% of total deal activity, underscoring their ongoing focus on diversifying offerings and mitigating supply chain risks through M&A.
- US M&A activity experienced similar trends as seen by the global data, with closed Distribution deals declining a comparable ~20% in the year-over-quarter comparison. Strategic buyers continued to dominate with a share of 90%+ of deals. However, optimism for private equity momentum is building amidst the easing interest rates and tariff clarity, setting the stage for accelerated deal flow among financial investors heading into 2026.
- Despite reduced M&A activity in the quarter, macro indicators signal improving economic conditions. The ISM Production Index, which measures economic activity in the domestic manufacturing sector, climbed to 51 in September 2025, indicating expansion in domestic industrial activity. The Federal Reserve also cut rates in Q3 2025, the first reduction of the year, which should drive additional investment and industrial production. Analysts are optimistic that lower interest rates and further tariff resolution will drive a rebound in deal activity heading into 2026.
