M&A activity snapshot
Distribution deal volume is recovering from a soft 2025. PMCF counted 70 U.S. distribution transactions in Q2 2026, up 7.7% year over year and above 2025 averages, though it notes activity has not returned to peak-cycle levels. Full-year 2025 volume trailed 2024, and in Q3 2025 U.S. closed distribution deals fell about 20% year over year.
The industry is large and fragmented. Wholesale trade had $11.9 trillion of sales in the 2022 Economic Census, the highest of any sector. Census counted 382,081 wholesale establishments with paid employees in 2023, and 193,569 of them had fewer than five employees. Under NAICS, merchant wholesalers fall in codes 423 (durable goods) and 424 (nondurable goods).
The biggest deals cited here came from strategics. QXO completed its acquisition of Beacon Roofing Supply for about $11 billion, and Home Depot's SRS Distribution completed its purchase of GMS at an enterprise value of about $5.5 billion. Serial acquirers keep adding smaller targets: Core & Main completed two acquisitions during and shortly after its fiscal 2025.
Who is buying
Strategic distributors. Other distributors do most of the buying. Strategic acquirers accounted for approximately 85% of transactions in Q4 2025, and in Q3 2025 strategics completed 123 of 138 distribution deals worldwide, nearly 89%. PMCF ties that share to an ongoing focus on consolidation, capability expansion, and long-term strategic positioning.
Private equity. Sponsors own many specialty distribution platforms, and Baird noted that U.S. private-equity-owned portfolio companies, across all industries, had surpassed 11,500 and that sponsors should be more motivated to seek exits, creating a larger pool of potential targets.
Retailers and other strategics. Home-improvement retailers bought distributors to reach professional contractors, as the building materials deals show. Employee-owned distributors are also active acquirers, especially in electrical distribution.
What buyers look for
Technical and service content. PMCF reports buyers are increasingly assigning premium valuations to businesses with meaningful engineering and service content, citing automation integration, engineered systems, field service, vendor-managed inventory, and lifecycle support.
Growth end markets. Baird observed that assets tied to high-growth end markets such as data centers and life sciences were trading at differentiated multiples, compared with those tied to cyclical markets such as new construction and oil and gas.
Digital and embedded ordering. Large distributors measure how much revenue runs through systems that tie customers in. Fastenal reported 61.6% of Q2 2026 sales through its "Digital Footprint" of vending, bin stocking, and eBusiness.
Pricing discipline. Baird expected distributors to pass tariff-driven cost increases to customers to maintain gross margin percentage. Buyers check whether a target held margin through recent cost changes.
What makes a strong company
A distributor that commands a premium typically shows:
- Value-added services (technical support, assembly, kitting, field service, inventory management) that customers pay for and competitors cannot match easily.
- Authorized supplier agreements that transfer cleanly on a change of control.
- A diversified customer base, with no single account carrying the business.
- Gross margin that held through recent cost inflation.
- Some exposure to growth end markets rather than one cyclical market.
- Management beyond the owner. That matters in an industry where 32.7% of wholesale employer-firm owners are 65 or older and another 30.7% are 55 to 64, compared with 23.1% aged 65 or older across all sectors.
Valuation and deal structure
Private distribution multiples sit well below public levels. In GF Data's data on private-equity-backed deals of $10 million to $250 million, distribution averaged 7.2x TEV/EBITDA in 2025 through Q3, versus 6.9x in 2024 and a 6.8x long-run average. In the first half of 2026, using GF Data's broader $10 million to $500 million cohort, distribution fell to 6.0x, its weakest reading in the series, while business services led at 7.5x. The two figures come from different size bands, so the drop is directional rather than exact.
Size matters. Across all industries, GF Data's 2025 averages through Q3 ran from 6.4x for $10 million to $25 million deals to 10.3x for $100 million to $250 million deals. Public distributors trade higher still: KPMG's industrial, MRO and safety index stood at 12.2x LTM EBITDA in June 2026, against a 10.3x long-run average, and Baird's median public distributor multiple was 11.8x for 2024. For a general starting point, see the Axia valuation tool.
Earnouts and seller rollover are common in private-equity deals generally, but the sources above do not report how often distribution deals use them.
Subindustries
Each vertical below has its own buyers, multiples, and diligence issues. Electrical and building materials distribution produced the biggest deals covered here, MRO remains highly fragmented, and food and medical distribution carry the heaviest regulatory requirements.