Product Supply, Pricing Power Drive Mergers and Acquisitions
Capstone Partners released its December 2021 Value-Added Reseller Industry Update, reporting that although industry growth was initially capped by supply chain woes and long lead times, the rapid adoption of vendor managed inventory services solidified value-added resellers’ place in the supply chain through the provision of product procurement, supply base rationalizations, and price review mechanisms. Industry participants have prioritized inventory management, with large public players leveraging healthy balance sheets to standardize procurement processes and private businesses developing tools to enhance visibility and shipment tracking.
The Value-Added Reseller merger and acquisition (M&A) market experienced record deal volume in 2021 to-date, outpacing 2020 full year levels. Led by strategics, buyers have returned to the M&A market to acquire competitors and gain access to supply networks, labor forces, and expand distribution footprints. Notable deal activity includes the Capstone-advised sale of Nest-Gen Supply Group to Envoy Solutions in December.
Also included in this report:
- How ongoing economic recovery has impacted industry revenue growth
- What supply chain disruptions have necessitated value-added resellers’ product procurement services
- Which value-added services private equity groups have been rolling up to bolster portfolio companies
- How Fastenal has been able to capture revenue gains and sustain profit margins despite site closings
- Forward-looking projections on cost synergies derived from Wesco’s acquisition of Anixter International
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