Does anyone have strong views on investing in distribution businesses as a searcher? Distribution (and Industrial Distribution especially) is a highly attractive industry for middle market (and larger) PE firms, but I feel that it is not talked about as much in the search fund space.
Has anyone invested in a distribution business as a searcher and willing to share any details on their experience?
Distribution Investment Thesis
by a searcher from New York University - Leonard N. Stern School of Business
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Speaking from experience, I thoroughly agree with Tim's, Edward's and Chris' comments above: creating moats (i.e. exclusivity of regions for product lines), having strong market dynamics and creating customer stickiness is critical. It is true that PE likes distribution, however, they are typically very picky about the kind of distributors they acquire (speaking based on my own experience in PE).