Deals to acquire distributors fell significantly in the second quarter, especially in the U.S., as tariffs created uncertainty and led companies to focus more on improving operations and organic growth, according to PMCF, an investment bank focused on mid-market companies.
The number of acquisitions of U.S. firms declined to 65 in the April-June period, down 38.7% from the same period of 2024. Globally, deal volume fell to 149 from 217 a year earlier, a 31.3% decrease.
Although the number of deals fell, the average deal size jumped dramatically to $275 million in Q2 2025 versus $53 million in the same quarter of 2024, reflecting ongoing strong demand for successful distribution companies, PMCF says in its Q2 Distribution M&A Pulse report.
“We are seeing competitive auctions, preemptive offers, and robust pricing for companies that show consistency, scalability, and leadership,” the report says. “This focus on quality is supporting healthy deal values across resilient sectors and signals a sustained appetite for differentiated assets.”
As an example of the demand for high-quality assets, the report pointed to the $600 million acquisition of building materials distributor KCG/Rew Materials in April by Foundation Building Materials.
The Industrial/MRO/Safety sector accounted for the largest number of Q2 deals, followed by food and beverage companies.
Strategic buyers, those in the same industry as the acquired company, accounted for 58 of the 65 deals in the U.S., with financial buyers accounting for five and two deals where the buyer was not disclosed.
The U.S. and Canada accounted for 49.0% of the deals tracked by PMCF and Europe 40.3%.
Higher interest rates and geopolitical and regulatory volatility are dampening buyer appetite for acquisitions, PMCF says.
“For sellers, this means navigating a more selective and complex environment where uncertainty is no longer temporary, but part of a fluid market,” the report says. “Buyers are still active, but they are more focused, undergoing enhanced diligence, and moving with greater caution. Sellers who are prepared, well-positioned, and flexible in their approach are the ones seeing the strongest outcomes.”
Don Davis, former editor-in-chief of Internet Retailer magazine and Vertical Web Media, is a freelance writer based in Chicago. His experience in retail and distribution goes back to his childhood when he worked in the toy wholesale business founded by his father and two uncles and in their discount department stores located throughout the New York metropolitan area.