Distribution Company EBITDA & Valuation Multiples – 2023 Report
The following report aggregates EBITDA and revenue multiple data pertaining to the sale of private distributors between Q3 2022 – Q3 2023. Our team sourced the data in this report from private equity networks, expert interviews, and proprietary databases. (Sources)
The tables below show average EBITDA and revenue multiples for distribution companies, broken down by industry subsector as well as EBITDA and revenue range.
EBITDA Multiples for Distributors, Q3 2023
|Company Type||EBITDA Range|
|Importers & Exporters||6.8x||8.8x||10.9x|
|Logistics & Fulfillment||7.1x||9.3x||10.5x|
|Medical & Healthcare||6.9x||9.8x||12.5x|
Revenue Multiples for Distributors, Q3 2023
|Company Type||Revenue Range|
|Importers & Exporters||2.9x||3.2x||3.6x|
|Logistics & Fulfillment||3.1x||3.5x||3.7x|
|Medical & Healthcare||3.2x||3.6x||3.9x|
The following sections detail the state of distribution company M&A moving into 2024, including predictions for the future of the industry.
The State of Private Distribution Company M&A
Valuation multiples for distributors fluctuated between 2020-2023 due to macroeconomic turbulence caused by rising interest rates in 2022. However, valuations have seen a rise in multiples over the last year. Our team attributes the rise in valuations to a stabilizing supply chain, which saw marked improvements beginning in Q1 2022.
The graph below shows the fluctuation of EBITDA multiples for private distribution companies over the last 3 years:
EBITDA Multiples for Private Distribution Companies, H1 2020 – Current
While multiples are rising across the sector, the overall rate of growth has slowed compared to its pre-pandemic trajectory. Consumer Goods, for example, is nearly flat when compared to Q1 2020; and Import / Export multiples are up only about 1% between 2022 and 2023. Valuations for more essential subsectors like Medical and Food Service have seen slightly better growth, but obviously not nearly as much as they did during the pandemic. The only sector that has experienced a more substantial rise in multiples is Industrial, increasing by approximately +.4x over the past year.
Viewed over a 5-year period, there has been consistent growth in multiples for distributors, and this has resulted in distinct M&A activity patterns. Notably, over the past year, there have been more carve-outs and divestitures, which we attribute to rising interest rates and a deceleration in growth. This trend is predicted to persist until a full economic recovery—ideally in early next year, but possibly extending into 2025.
Our research team has the following predictions about what to expect in 2024:
- Increased focus on reshoring and supply chain optimization: Given the challenges posed by the recent global supply chain disruptions, rising input costs, and product shortages, acquirers are likely to prioritize deals that contains solutions to address these challenges, such as companies that have adopted advanced logistics technologies or supply chain optimization tools.
- Better industry margins and pricing stability will improve distribution M&A: M&A activity will likely see a rise in valuations as a result of stabilizing freight and commodity prices. Strategic buyers and PE firms will likely be looking closely at acquiring companies that have successfully capitalized on these margins, as they provide the best opportunity to enhance profitability following a sale.
- There will be a rise in sustainable and ESG-focused M&A: As environmental, social, and governance (ESG) awareness continues to grow among corporate leaders, companies focusing on sustainability and eco-friendly products will see higher valuations from prospective buyers. Similarly, we predict growing numbers of strategic alignments and joint ventures with relevant industries, such as renewable energy and waste reduction. These types of discussions would take place with an M&A advisor.
|Related: See our article on the Top M&A Advisory Firms in the US|
Selling your Distribution Company
Selling a distribution company involves a type of strategy that can be hard to pin down for business owners. Having sold multiple businesses to strategic and financial buyers, I can personally speak to the demanding nature of this process.
If you’re seeking guidance as you contemplate entering the M&A market, I’m available for a brief discussion. Feel free to contact me through the link below or using the contact page on this website.
- How to Value and Sell a Distribution Business (MidStreet Mergers & Acquisitions)
- Valuation Multiples for Wholesale Trade (Peak Business Valuation)
- EBITDA Multiples For Distribution Companies (MicroCap)
- EBITDA Multiples By Industry (Equidam)
- Distributor’s Market Update (Cascadia Capital)
- Specialty Distribution: Industry Update (Stout)