Home >> Business Trends >> Becoming A Bigger Player In A Bigger Market

Becoming A Bigger Player In A Bigger Market

Becoming a Bigger Player In A Bigger MarketAn interesting picture will evolve during the next few years as consolidators and material handling companies jockey for global supremacy and/or survival. The desire to build a company into a gigantic corporate entity may well be irresistible. While there are compelling, valid reasons for bigness, and it may seem natural to assume that every merged entity will think it can sell more equipment, systems and trucks, not all mergers are made in heaven. Herewith a few considerations…

  • Do investors financing consolidation understand the material handling business? Do consolidators have a history of involvement in the material handling industry? Should they?
  • Will the creation of mega-distributorships squeeze out medium-size firms that are too small to interest consolidators but too large to survive as a niche company?
  • Is the merger headed toward a future IPO?
  • Can a family-owned business be sold without sacrificing the security of younger family members?
  • Will key management stay in place?
  • Are owners who continue to manage the company after selling to a consolidator prepared to deal with the loss of majority control?
  • What distributor accountability, if any, will be required to stockholders?
  • Do consolidators have the financial strength to secure the long-term health of the companies they buy?
  • What product lines are platform companies focusing on when making acquisition decisions? Are consolidators interested in only part of the businesses they buy (e.g., systems, forklift trucks, etc.) and will they pare the business down to a narrow range of products once the acquisition is made?
  • How will the manufacturer/distributor relationship be affected?
  • Will the consolidator maintain the brand loyalty of the purchased company?
  • Must the platform company be line specific?
  • Can a company be sold without the blessing of its suppliers?
  • What options does a distributor have if a supplier balks at a distributor’s plans to sell the company?
  • Can manufacturers maintain leverage with distributors in areas such as production volume, scheduling and pricing?
  • Are discounts passed on to a distributor network that makes up a central buying group?
  • What are the intentions of European investors? Will profits be reinvested in the United States or repatriated to Europe?
  • Do European investors understand the U.S. material handling industry in terms of products, markets and services?
  • Since European companies typically market direct, will they respect the manufacturer/distributor relationship nurtured in the United States?
  • What impact will the economies of scale and potential price advantages available to mega-distributorships have on the ability of smaller independent distributors to compete?
  • What value does the end-user see?

And finally, we’re in good economic times now. How will consolidators react to the inevitable downturn to come? 

Material Handling Equipment Distributors Association

Leave a Reply

Your email address will not be published. Required fields are marked *

*