Following on the heels of a wave of consolidations within the manufacture market and at the top of the distribution sector, we are now beginning to see similar levels of activity within the mid-market.
With consistently hungry acquirors at the apex of the market, ever more eager to enter the higher-margin world of design engineering and other value-adds, and a changing manufacturer landscape: is it any wonder that smaller firms are looking to fight back for their market share?
The stage is set for a new round of consolidation in the electronics components distribution market. Though still suffering from the effects of margin pressures, supplier and customer consolidation, commoditization and an almost morbid obsession with design engineers, distributors are about to embark upon the latest in a string of M&A actions that will improve the survivors’ competitiveness. Unlike in the recent past - when the biggest distributors led the sector’s M&A push - local and regional players with sales in the $200 million to $2.5 billion range will be involved in the latest cycle. They aim to be consolidators wherever possible, defending hard-won market share and design engineering turfs from the likes of Arrow Electronics Inc. and Avnet Inc., both of which have set their sights on the higher margins enjoyed by high-value, service-oriented distributors.