ID's April Industrial Supply M&A Recap: Slowdown Before Acceleration?

M&A activity in the industrial supply sector hasn't matched the pace of US economic growth the past few months, but is likely to rebound soon.

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As the US economy continues to make strong headway in its recovery from the COVID-19 pandemic — posting a robust 6.4 percent annual GDP growth rate in Q1 — one could assume that merger & acquisition acquisition activity would follow suit as businesses resume capital spending plans and return to sales and profit growth. 

Not so fast.

In tracking the number of M&A announcements we cover each month here on Industrial Distribution, we saw a mild slowdown from 15 items in February to 14 in March — both down from 16 in January and 20 each in December and November 2020. April was significantly even slower, with only eight M&A news items on ID.

However, this by no means is reflective of the strengthening health of the industrial supply market. It's more likely that capital spending just hasn't caught up with the pace of the greater US — as well as industrial products — economy. We're currently in the middle of another earnings reporting season for publicly-traded companies, and a handful of major industrial distributors and manufacturers have already noted plans to actively seek acquisitions in the near-term or have considerably raised their full-year 2021 sales outlook. It bodes well for M&A activity in this sector — we just have to wait it out as distributors and suppliers get their ducks in a row before pulling the trigger on deals. 

It's also possible that a decent portion of the still-strong number of M&A deals announced throughout the second half of 2020 and into this past March were deals already in the works at the time the pandemic set in, while new M&A prospecting was largely frozen once the pandemic took hold in earnest. Thus, I wouldn't be surprised to see another couple of months of subdued M&A activity before things start ramping up again.

Below, see what we covered in April in reverse chronological order of their company announcement:

B&F Fastener Supply Makes Acquisition Near Minneapolis - April 30

See our March M&A recap here

See our February M&A recap here

Of course, despite our best efforts, there’s always deals announced that either weren’t on our radar, or that weren’t made public. But, this list should provide a good idea of most M&A activity applicable to the industrial supply market.

If your company has news to share, M&A or otherwise, contact me at at mhockett@ien.com.

As always, the best way to stay on top of industrial supply M&A news is to make sure you're subscribed to ID's free daily e-newsletter.

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