Behind the materials handling M&A boom

Why is materials handling hot? An investment banker explains all

By ·

On Friday, I wrote a column about the M&A boom in the materials handling industry.

I also had a chance to talk to Robin Bear, vice president of the DAK Group, an investment bank that specializes in mergers and acquisitions for the mid-market. Although Bear did not discuss specifics of the recent acquisition of Retrotech by Savoye, the DAK Group was involved in that deal.

Bear identified five trends for the recent interest in our space, which she expects to continue.

The deal is strategic: By that, Bear is referring to a combination of products, services or geography where the two companies together are greater than the sum of their parts. “A strategic acquirer will pay more for your company than a private equity shop because there’s more intrinsic value and the return is so much better for both companies,” Bear says.

The world is flat: With apologies to Thomas Friedman, the globalization of business is having an effect on our industry. “You’ve got foreign companies that are keenly interested in investing in US companies,” says Bear. “The US firm gains access to foreign capital and the foreign acquirer gains immediate access to the US market without having to send someone over to open a US office. That’s really important to them.”

Service is king: Bear sees a continued interest by manufacturing companies in acquiring service-oriented businesses to create new streams of revenue and to become even more important to their customers.

Niche expertise is a close second to service: According to Bear, companies with a niche expertise that can open up new areas of business for the acquiring company are valued. “Companies that have significant market share in a segmented portion of the market are valuable to acquiring companies,” she says.

End users now understand the value of materials handling: “An industry with bright prospects is going to attract M&A activity,” says Bear. “Some overall business trends such as the greater emphasis on the distribution network, the emphasis on greener and more efficient warehousing all point to continued growth in the materials handling industry. That’s going to lead to M&A activity.”

 


About the Author

Bob Trebilcock
Bob Trebilcock, editorial director, has covered materials handling, technology, logistics and supply chain topics for nearly 30 years. In addition to Supply Chain Management Review, he is also Executive Editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.

Subscribe to Modern Materials Handling Magazine!

Subscribe today. It's FREE!
Find out what the world’s most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today!

Article Topics

Automation · DAK Group · · All Topics
Latest Whitepaper
Evolution of the Retail Fulfillment Operation
It’s an omni-channel world, and retail warehouse and DC operations must now seamlessly orchestrate a combination of software, automation, hardware and supporting equipment to meet ever-increasing customer expectations or be rendered irrelevant.
Download Today!
From the June 2017 Modern Materials Handling Issue
Self-driving mobile robots improve cycle times and reduce floor space at GE Healthcare’s new repair operations center in Wisconsin. General Electric operations center layout, General Electric Healthcare warehouse
GE Healthcare: Self-driving vehicles are the centerpiece of ROC
The Big Picture: Adaptability as King
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Warehouse Execution Systems (WES): The Pathway to Same-Day Fulfillment
This webinar explores the processes and technologies enabling same-day, same-hour order fulfillment using intelligent supply chain software.
Register Today!
EDITORS' PICKS
GE Healthcare System Report: Lean repairs
Self-driving mobile robots improve cycle times and reduce floor space at GE Healthcare’s new...
Materials Handling Innovation (and why it matters)
Every company considers itself an innovator. It’s time to include materials handling leaders in...

Thrive Market’s Startup Distribution Network
How does a fastgrowing, e-commerce startup company build out order fulfillment capabilities? Thrive...
U.S. Roadmap for Material Handling & Logistics: Version 2.0 released today
On Tuesday, the U.S. Roadmap for Material Handling & Logistics: Version 2.0 will be released on...