How many PE firms (of those registered in the US) have full-time partners dedicated to buying industrial distributors?

Name: How Private Equity Firms Impact Industrial Distributors #privateequity
Uploaded: 2024-08-01T16:02:22+00:00
Duration: 54 s
Channel: Tom Burton
Description: A YouTube video (Tom Burton) discussing how private equity (PE) firms affect industrial distributors. The speaker argues PE firms buy companies to create…

Tom BurtonCo-Founder, COO and CTO of LeadSmart Technologies

How Private Equity Firms Impact Industrial Distributors #privateequity

1 Aug 2024 · 1 min

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0:54

A YouTube video (Tom Burton) discussing how private equity (PE) firms affect industrial distributors. The speaker argues PE firms buy companies to create shareholder value and exit, not to serve the company; this creates culture clashes that drive senior sales and operations leaders to leave and start new distributors, which helps explain why the number of distributors remains roughly constant despite consolidation. The speaker describes the sector as "pressurized," notes specialized PE activity focused on distributors, and asserts that extreme acquisition multiples are no longer common.

Questions this video answers

Over 20 of the 1,400+ PE firms registered in the US.

Chapters

A lot of people misunderstand when a PE firm buys a company. They're buying it to create shareholder value and sell it. They're trying to get a return to their investors, not the company. And so the culture clash in a lot of these has created a lot of problems, which is part of the reason the number of distributors remain constant, even though there's all this, this consolidation. Because the VP of sales and VP of operations say, I don't want to work for intergalactico. Let's go whisper in the supplier's ear, get some lines and start a new distributor. So, I mean, this is, it's a pressurized system. It is. There are over 20 PE firms of the 1400 plus that are registered in the US that have full time partners dedicated to buying industrial distributors. So I mean, it just, it's just, it's pressurized. But you're not going to see the multiples you're getting. People aren't paying those kind of multiples anymore. It's, you're not going to be seeing these crazy things people talk about.