M&A and B2B Distribution

In the last two years mergers and acquisitions announcements have dominated the business news, as a wide array of private equity groups and strategic players have snapped up companies. Despite the feverish pitch of today's M&A activity I believe that significant consolidation is still on the horizon in the MRO supply and distribution sectors.

Grainger's (GWW) President and COO Jim Ryan recently told a group of analysts that Grainger is poised to take a greater share of the $145 billion MRO market in North America. Grainger is the current market leader in the industry with only 4% of the market share ($5.9 billion in revenues in '06). Given the fragmented nature of the MRO market it is likely that a good deal of Grainger's growth will come through acquisitions. However, with attractive gross profits margins ranging between 40-46% for large MRO distributors (Grainger,MSC, McMaster-Carr) Grainger will likely be competing with other strategic and institutional investors for potential acquisition targets.

This blog will follow M&A activity within the the B2B distribution sector. Additionally the blog will follow interesting trends in distribution, supply chain management, and manufacturing. I welcome your comments and hope to foster a constructive dialogue about this unique market sector.