When does buying distribution make more sense than building it?
We’ve been looking at cross-border buyouts in mature UK industrial sectors, and one deal got us thinking about this.
Foresight Group invested £12 million in the MBO of Automotive & Industrial Consumables (AIC), a Leeds-based distributor with 5,500+ customers across the UK, Europe and the U.S. and 6,100+ products.
What stood out wasn’t just the EBITDA. AIC had built up long-standing supplier relationships, broad SKU availability and an established customer footprint across multiple markets.
That raises an interesting acquisition question:
At what point does buying an established distribution network and geographic footprint become much more efficient than building the same thing organically?
There are plenty of similar businesses in the U.S. industrial fasteners, HVAC parts, regional auto aftermarket, etc. In many of these, the moat is less about proprietary technology and more about customer relationships, supplier access and distribution.
We’ve been seeing similar acquisition logic across India, the UK and Australia as well.
For those who’ve looked at international deals:
Have you ever evaluated a target primarily for its existing distribution/customer footprint rather than the standalone EBITDA?
And how do you think about entry multiples when comparing UK industrial distributors with U.S. peers?