Food Chain Illustration

A new report by Pursant indicates that 2018 was another solid year for mergers and acquisitions. In fact, the broader market M&A deal volume was up as much as 50 percent.

M&A activity was fueled by encouraging macroeconomic indicators and generally positive business sentiment. In addition, the incredibly high numbers of baby boomers retiring — as much as 10,000 a day — created numerous opportunities in the small business sector.

The jan/san industry certainly saw a continuing trend of mergers and acquisitions last year. Perhaps most notable was Staples’ purchase of Essendant (although this acquisition completed in 2019, it was first broached in 2018).

In the jan/san manufacturing sector:
• BISSELL acquired the Sanitaire commercial vacuum brand from Electrolux.
• Montgomery Manufacturing purchased Carroll Company to form one of the nation’s largest packagers of private branded cleaning and maintenance chemicals.
• Mountville Mills and The Andersen Company merged to form M+A Matting.
• The O’Dell Corporation and GSC Manufacturing merged to create one of the largest privately-owned mop manufacturers.

Regional and national distributors took advantage of the favorable conditions to continue their growth. In this sector:
• Imperial Dade continued its aggressive growth strategy by acquiring Sikes Paper and Gulf Coast Paper.
• Penn Jersey Paper strengthened its foodservice business side by acquiring DePalo’s Mid-Atlantic Restaurant Supply.
• KSS Enterprises broadened its presence in Michigan with the acquisition of GT Packaging and Janitorial.
• WAXIE Sanitary Supply acquired Sac-Val Janitorial Sales and Service.

Mid-size and large building service contractors, too, continued to expand through an acquisition strategy.
• 4M Building Solutions strengthened its reach with acquisitions of Ad-Vance Building Services and Kimmko Cleaning Solutions.
• Clean Team continued to expand with acquisitions of Absolute! Building Maintenance and Commercial Maid.
• IH Services expanded its product offerings with the acquisition of MaintainIT Facility and Plant Services.
• Vonachen Group acquired Kenway Janitor Service.

These are just some of the multiple merges and acquisitions from 2018.

According to Pursant, 2019 continues to offer favorable conditions for M&A activity with baby boomers continuing to exit the industry and sell their companies. However, there will be some softening in valuation multiples in 2019. This could possibly mean that 2019 will be the last year of an extended seller's market phase.