In the merger and acquisition market there have been many flavors of the month, but the demand for industrial companies is the equivalent of chocolate: almost universally and consistently liked by acquirers. Industrial companies including, manufacturing, distribution and services, are a significant portion of the American economy and will remain so well into the future. At one time, the demise of the industrial sector was predicted as low cost manufacturing transitioned overseas. In recent years the demand for industrial products produced in the U.S. has expanded. Throughout these differing viewpoints M&A activity in the industrial sector has remained strong.
The recent events in Ukraine are likely to have significant effects on the global market for natural gas with the likely winners being non-Russian companies that fulfill the demand for this commodity. Current events have proven that Russia, whose credibility in this sector was marginal to begin with, cannot be counted on as a partner that can reliably deliver natural gas to customers. Today, Russia is the dominant provider of natural gas to many European countries, due to their abundant supply. Although there is great economic incentive for Russia to build a consistent and reliable supply chain, this natural resource has become a political weapon for the Russian government.
The industrial services sector is undergoing a resurgence as merger and acquisition activity continues to grow. As with most sectors, transaction activity decreased substantially after the economic downturn in 2008. The industrial services sector was hit particularly hard due to cutbacks in spending by the private and public sectors.
PCE recently participated on a panel regarding “Capital Markets Trends in Distribution” at the Strategic Pricing Associates Distribution Strategy Seminar in Fort Lauderdale, Florida. In attendance were owners and senior executives from over 70 different distributors and manufacturers across all major industries.
Orlando, FL – PCE Investment Bankers announces the recent recapitalization of Crane Rental Corp., one of the country’s leading crane rental, hauling and rigging services. The partnership with Hammond, Kennedy, Whitney & Co. Inc. (HKW), a private equity firm, will enable Crane Rental, a family-owned and operated business, to continue to expand and grow in response to increasing demand.
The economic slowdown continues to provide challenges and opportunities to distributors of all descriptions. While a limited group of distributors have proved to be immune to the current downturn, by and large most participants within the marketplace are affected by an uneasy environment. With no signs of the weakness abating, it is critical to consider all options available to most successfully maintain and/or add value during these turbulent times.
During the recent National Association of Wholesale Distributors Annual Executive Summit in Washington, D.C., I was fortunate enough to hear the outlooks given by economists Alan Beaulieu and Steve Moore. Unfortunately, their economic outlooks were not particularly positive in nature. These presentations seemed to set the tone for the rest of the summit. Most conversations I had with distribution business owners surrounded the softening economy and the status of the M&A environment relating to the economic slowdown and stressed capital markets.
Ongoing M&A activity within the wholesale distribution industry has an increasing number of owner’s contemplating the sale of their business. Those who properly prepare and consider the criteria buyers use for an acquisition consistently achieve more favorable outcomes.
Capital from financial institutions, strategic buyers, private equity firms and individuals continues to flow into the wholesale distribution industry. This influx has led to strong valuations for publicly traded distributors and solid transaction multiples for operators who sold businesses. In our opinion, two main fundamental drivers lead this charge – the attractiveness of the distribution industry and the current availability of capital.
The optics and photonics industry has been important to Central Florida ever since efforts by state leaders to expand Florida’s economy beyond its dependence on tourism and citrus in the 1980s. Initiatives by visionaries such as Bill Schwartz led to the founding of Florida’s laser industry and the 1986 establishment of the Center for Research in Electro-Optics and Lasers (CREOL) in Orlando.