Modern Distribution Management
3/25/2008
Byline Article from Brad Yates, Managing Director
Worldwide M&A activity reached a record $3.8 trillion over
the first nine months of 2007, according to Dealogic. Much of the
activity was directly attributed to private equity firms, which
raised nearly $200 billion worldwide during the year. In
particular, industrial distribution experienced unprecedented
private equity investment. Over the last two years, 21 private
equity firms have made 46 platform and add-on investments in
numerous sub-sectors of industrial distribution including general
mill supply, tool shop/construction supply, electrical, industrial
rubber, industrial gases, industrial lubricants, safety, fluid
power, wire & cable, integrated supply, waterworks/utility, and
industrial PVF. Today, nearly every sub-sector of industrial
distribution has at least one private equity-owned competitor.
Increased private equity ownership in industrial distribution
has fundamentally changed the corporate and strategic landscape of
our industry. Traditional strategic, entrepreneurial or
family-owned companies will need to adapt to successfully compete
with the resources and capital available to PE-backed businesses.
Addressing this uneven playing field will be essential for
continued viability in this increasingly competitive environment,
especially as the industry approaches a period of less robust
growth in 2008 and 2009.
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