Over the last several weeks we have had occasion to listen to distributors discuss their business opportunities as all move further into 2012 and look beyond. Many see opportunities to grow, some want to cash in now, and others are determined to ride out the economic downturns regardless of where it goes.
Market Background Noises
At present, there are just under a 1,000 banks that the FDIC reports are still in trouble, yet the cost of borrowing is at an all-time low. Add to that, we have an election year drama, which David Gordon will expound on further in a future Electrical Trends posting. Job creation and decline in some business areas continues to be a problem for all. The light at the end of the tunnel, so to speak, has been a distributor that sold product and services into the industrial channel (manufacturing). Now, that appears to be dropping off.
Platt Sells
What seemed to have gotten a number of distributor’s attention was the purchase by Rexel of Platt Electric Supply for essentially 2011 sales. Platt had focused on getting all the overhead out of transaction. Congratulations to Platt. Job well done!
Since the beginning of 2012, there have been a few mergers, of which few seemed to have raise an eyebrow. But, in the last 90 days, there have been actual sales and tons of rumors. The most recent is Mayer purchasing Mustang Electric in Garland TX. The Texas economy has held up fairly well over the last few years. So who could be next?
Some distributors tell us that they are approached on a quarterly and even monthly basis to sell their businesses. With the Platt sale as a benchmark, disappointment is almost a forgone conclusion.
So, we got to wondering what the general distributor market’s attitude is about the right time to sell (Fold ’em), stand pat (Hold ’em and wait) or start to grow ’em (grow the business). We’ve put together an un-scientific poll on the upper right hand side of this page for distributors to anonymously make a choice. You don’t have to a business owner (answer as if it was your business). There are three choices for you to choose from.
So, take the poll and we’ll publish the results.
3 Comments
we’ve noticed that many of the recent acquisitions, and the distributors we’re friendly with that are interested in selling, are companies that have older ownership and no in the business to inherit it (and they probably don’t trust their management to buy them out or do an ESOP). Some have health issues. Makes sense for them to sell, especially with the coming capital gains tax increase – the extra 5% is better in their pocket than in the US Treasury). We’re young enough and have kids in the business, so we’ll continue to grow and prosper. we like it when Rexel acquires in our area!
Given the current business and political climate and a reasonable offer, I would sell.
But not to the French or CED.
CED has good people, but they are bottom fishing right now. I can’t blame them for trying.
One would expect that former Rexel people that were forced out some 10+ years ago and started their own business will probably be ready to cash in.
I expect to see more buy outs here in CA.
Leave a Reply
Trending Now
Pulse of Switchgear
