Chemical manufacturers have historically relied on chemical distributors and infrastructure providers, i.e. logistics and supply chain management service firms, as important elements of their sales and marketing models. Especially in markets where customers’ ordering patterns are sporadic and small volume orders are the norm, distributors and logistics companies play a crucial role in making sure customers get the products they need on time. Distribution and infrastructure firms also have robust business models: because they can sell a diverse range of products to a broad range of customers, they are somewhat insulated from ups and downs of the business cycle, can hold their margins in downturns, and can count on relatively steady cash flows.
M&A activity in the supply chain has been strong over the last decade. Large, national distributors have been buying regional firms to bolster their market share and geographic coverage, and private equity groups have been attracted by the positive economic profile of sector. Consolidation has also been occurring internationally. As both their suppliers and customers have migrated overseas, distribution and infrastructure firms have followed and actively sought to acquire their overseas counterparts.
Grace Matthews is focused on understanding the dynamics of the entire supply chain, from the manufacturer to the end customer. We recognize the value of the services provided to the chemical industry by distribution and infrastructure, and we believe we can help these firms achieve their goals in M&A, whether it is to capture the value they have created or to expand into new markets.