• About Us
    • Careers
  • M&A Services
    • Buy Side Advisory
    • Capital Raising
    • Sell Side Advisory
    • Transaction Planning & Readiness Review
  • Industry Expertise
    • Business Services & Technology
    • Consumer, Food & Retail
    • Healthcare
    • Industrials
    • Plastics & Packaging
  • Transactions
  • Team
  • News & Insights
    • Events
    • Industry Updates
    • News
    • Perspectives
Menu
  • About Us
    • Careers
  • M&A Services
    • Buy Side Advisory
    • Capital Raising
    • Sell Side Advisory
    • Transaction Planning & Readiness Review
  • Industry Expertise
    • Business Services & Technology
    • Consumer, Food & Retail
    • Healthcare
    • Industrials
    • Plastics & Packaging
  • Transactions
  • Team
  • News & Insights
    • Events
    • Industry Updates
    • News
    • Perspectives
Contact

Industry Updates

  • Back to News & Insights

Industrial Distributor M&A Pulse – Q2 2016

  • July 28, 2016
  • Industry Updates
  • Industrial Distribution, Industrials
Share on facebook
Share on twitter
Share on linkedin
Featured Pulse Industrial Distributor

Following a sixth year of consecutive growth in transaction volume, the M&A market for industrial distributors experienced a softer than expected first half in 2016, registering only 337 completed transactions in the PMCF Industrial Distribution Index – a 15 percent decline from the same period in 2015. This trend also has proven true for the broader M&A environment, with strategic and private equity activity down throughout the middle market and elsewhere.

Several key variables in H1 served to subdue general market activity. In January, the threat of a continued rise in U.S. interest rates and weak Chinese growth prospects contributed to a contraction in the global credit and equity markets, sending debt issuances to historic lows and virtually halting the availability of second lien financing. In addition, increasing clarity with regard to the outcome of political elections in Britain and the U.S. generated unrest among investors worldwide. The high risk profile of the market was enough to keep many would-be acquirers from committing capital, and interest was further tempered due to the dearth of quality deals being brought to market.

Despite these headwinds early in the year, equity markets have rebounded and credit availability has returned to levels suitable for deal making in the middle market. Leverage multiples employed by U.S. private equity groups remained elevated at 5.5x EBITDA and deals valued below $100 million continue to attract significant interest, accounting for nearly 70 percent of H1 2016 activity. Fundamentally, the economy appears to be trending to the positive, especially for distributors. Indicators such as the ISM Production Index, Purchasing Managers Index (“PMI”), and ISA Distributor’s Index suggest a period of expansion in the first half of the year. The ISM Production Index registered 54.7 in June, well above the 12-month low of 49.9 in December. The PMI reached a YTD high of 53.2, indicating a fourth straight month of expansion in the manufacturing sector. Housing starts continue to trend upwards and distributors in the building products space are benefitting from a prolonged period of growth in residential construction.

Amid various global uncertainties many economic data points relevant to the M&A cycle show support for healthy levels of continued acquisition activity. The availability of cheap debt and robust levels of equity capital favor both buyers and sellers, as do improving business metrics across the manufacturing and distribution industries. Although current deal volumes suggest the market has peaked, PMCF maintains its position that differentiated sellers in the middle market will benefit from strong industry fundamentals and can realize attractive value outcomes at current financing levels.

Read Industrial Distributor M&A Pulse Q2 2016 Full Report

PMCF-Pulse-Industrial-Distributor-2016-Q2

File size: 3.85 MB
Download Preview

Stay Informed

Subscribe to our newsletter for the latest industry updates

Subscribe

Recent Publications

Plastics & Packaging M&A Update – November 2020
Industrial Distributor M&A Pulse – Q3 2020
Food & Beverage M&A Pulse – Q3 2020
Plastics & Packaging M&A Update – October 2020
Medical Technology M&A Pulse – Q3 2020
Contact

Follow Us On

Securities offered through P&M Corporate Finance, LLC. Member of FINRA and SIPC.

blank
Cfi Logo White 94x94 On About

Home

  • About
  • Team
  • Careers

M&A Services

  • Buy Side Advisory
  • Capital Raising
  • Sell Side Advisory
  • Transaction Planning & Readiness Review

Industry Expertise

  • Business Services & Technology
  • Consumer, Food & Retail
  • Healthcare
  • Industrials
  • Plastics & Packaging

News & Insights

  • Transactions
  • News
  • Industry Updates
  • Perspectives
  • Events

©2020 PMCF

  • Member SIPC​
  • Member FINRA
  • FINRA Broker Check
  • Business Continuity Plan​
  • Disclaimer​
  • Privacy Policy​
Cookie Notice: This site uses cookies to provide you with a more responsive and personalized service. By using this site you agree to our use of cookies. Please read our Privacy Policy for more information on the cookies we use.AgreePrivacy policy