Value-Added Distribution - Coverage Report February 2021

Published on: 02/18/2021

Capstone has published its February 2021 Value-Added Distribution report, available for free download below.

Despite the sharp slowdown in 2020 deal volume, 2021 presents favorable tailwinds as the economic recovery continues. Strategic buyers, accounting for 58% of total deal activity, have displayed increasing appetite to resume M&A initiatives to bolster geographic reach and value-added distribution capabilities. Private equity firms accounted for 42% of deal activity in 2020, largely consisting of add-on transactions to stimulate inorganic growth in existing portfolio companies.

Key highlights include:

  • U.S. economic indicators for the Manufacturing and Services industries have displayed a recovery and are poised for further growth in 2021.
  • Distribution companies that offer valued added services such as supply management, product assembly, product bundling, among others, are viewed favorably relative to their peers. 
  • Distributors with specialized products and services often operate as a low-run, high margin business and are expected to receive strong interest among strategic and private equity buyers.
  • Capstone expects M&A activity to normalize in 2021 as sellers that placed prospective exits on hold in 2020 resume sale processes and buyers reengage in inorganic growth initiatives.

To learn more about the report or our range of advisory, please contact Head of Investment Banking, Todd McMahon.

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Key Contacts

Todd McMahon

Head of Investment Banking