ID's January M&A Recap: 2021 Ends, and 2022 Begins, With M&A Onslaught

Despite the ongoing pandemic and supply chain snarls, the industrial supply market is awash in deals. Here's all the deals we covered in January.

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2021 ended with an unprecedented volume of merger & acquisition announcements in or impacting the industrial supply sector, and 2022 opened with a near-identical flurry.

Despite all the ongoing supply chain and labor constraints, we at Industrial Distribution published 41 news items regarding M&A activity during January, covering announcements of completed or pending mergers, acquisitions and divestments impacting distributors relevant to the industrial products space in North America. That 41 figure was a new single-month record since I joined this publication in 2014, and likely is the best mark since the 2008-2009 Great Recession — and maybe ever.

RELATED: ID's 2021 M&A Recap: Breakneck December Closes Major Rebound Year - published Jan. 4

That figure includes 10 deals that were announced during December — nearly all in the second half — that didn't end up posted on ID until early January due to our offices being closed over the holiday stretch of Dec. 24-Jan. Still, even when subtracting those, the 31 deals we covered that were announced within January put it among the most active M&A months I've ever seen. December's 38 set a new record, besting September's 33. November likewise had a very active 28 M&A news announcements.

We posted a total of 234 M&A news announcements during 2021, a whopping 68 percent increase over a forgetful 2020 that was severely hamstrung by the COVID-19 pandemic that financially crippled many manufacturers — at least temporarily. Nearly half of 2021’s deals — 49.1 percent — occurred during the year’s final four months.

RELATED: Why Industrial Manufacturing M&A Volume Will Continue to Rise in 2022 - published Dec. 23, 2021

January M&A Recap

Here is all the M&A-related news we covered during January, listed in reverse chronological order of their announcement date, rather than their ID publication date. As always, a decent portion of these didn’t involve an industrial distributor or supplier, but all were worthy of news coverage due to how the companies involved impact this market.

What’s Fueling It?

There’s surely a number of factors behind this. Primarily, the industrial economy is significantly improved since late 2020. The Institute for Supply Management’s Manufacturing Purchasing Managers Index held in solid expansion territory all of 2021. Baker Hughes’ North America active rig count on Jan. 28 was up 48.2 percent from a year earlier. Perhaps as well, growth-hungry industrial distributors and suppliers are looking to gain as much market share they can ahead of funds rolling out from the Biden administration's $1.2 trillion infrastructure deal that was signed into law on Nov. 15.

And, perhaps most importantly, there have been no major COVID-caused factory shutdowns since late 2020 (*knocks on wood).

This isn’t to say distributors and suppliers have it smooth-sailing right now. Not at all. This market is still dealing with a considerable labor shortage — especially in warehouses and on plant floors; backlogs at ports that are gradually easing but still historically high; and persistent shortages of various materials that are fueling inflated prices that are looking more and more permanent. Still, business conditions began 2022 very favorable from a demand standpoint.

2020 was a very hard year financially for many small- and mid-sized industrial distributors and suppliers that don’t have the credit facilities and investor-backing of their publicly-traded counterparts that dominate the top half of ID’s Big 50 List.

With that, 2020 likely left a number of small companies looking for a buyer just so they could stay in business — even if that meant no longer being independently-owned and operated. This left larger distributors and private equity firms with plenty of options to gain market share with as the market began and continued to recover throughout 2021 and into this year.

On Our/Your Radar

Of course, the figures mentioned in this column don’t encapsulate EVERY deal made in the industrial supply sector. There are always going to be deals made that weren’t on our radar — especially among small, independent firms. But our website and daily e-newsletter is going to be your best way of keeping up with the rapid pace of bolt-ons happening in this market.

So, when will this breakneck pace of M&A slow down? There’s surely no way it can keep going at this rate throughout 2022. But as long as the industrial economy keeps churning with solid expansion, I would expect February and March to remain very busy.

As for December, the holidays naturally make it one of the slowest M&A months of the year, so I'm expecting this month's deals count to be considerably lower than November's, but the first half of the month figures to still be pretty active. I'm expecting January to be a much stronger month.

See our full-year 2021 and December M&A recap here

See our November M&A recap here

See our October M&A recap here

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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