VAD and Exotic Merge to Build a Fluid Power Platform

What the merger includes

Value Added Distributors and Exotic Automation & Supply have merged, combining two established industrial distributors with strong positions in fluid power, automation, and MRO supply. The deal brings together Shawano, Wisconsin-based VAD and Novi, Michigan-based Exotic into a larger regional platform with broader coverage across the Midwest and parts of the South.

VAD supplies hoses, tubes, seals, and couplings through 18 facilities across its footprint. Exotic distributes hoses, fittings, pneumatic and hydraulic components, rubber parts, and other industrial MRO products from 20 locations in Michigan and Indiana. Together, the businesses add up to a meaningful branch network, deeper product availability, and more technical capabilities for customers that rely on uptime, application support, and responsive service.

The companies said the merged organization will benefit from greater infrastructure and scale, while positioning itself as a larger player in fluid power and automation distribution. Financial terms of the transaction were not disclosed.

Leadership continuity is also part of the transaction. The management teams of both companies are staying with the business. Mike Kostelnik, CEO of VAD, and Steve Orlando, president of Exotic, will serve as CEO and president, respectively, of the combined company. Exotic CEO Tom Marino will join the board and remain a significant equity holder.

Why this matters in industrial distribution

For distributors, this merger reflects a familiar but still important M&A pattern: combining adjacent territories, overlapping technical product lines, and service-led operating models to create a stronger platform without changing the core value proposition. In industrial distribution, scale matters, but not only for purchasing leverage. It also matters for inventory positioning, fabrication capacity, branch density, sales coverage, and the ability to support customers across multiple plants or regions.

That is especially true in fluid power and automation, where customers often need more than product fulfillment. They need application engineering, custom assemblies, troubleshooting help, and fast replacement of critical components. A larger combined distributor can often serve those needs more efficiently by spreading technical resources and infrastructure across a wider customer base.

The companies emphasized that point in the deal announcement. Kostelnik said, “Not only are both VAD and Exotic two of the most respected Parker Hannifin distributors in the country, but together we can provide a level of product selection and value-added distribution services … that will be unmatched in our combined territory.”

For wholesaler-operators watching the market, that quote underscores the strategic logic behind the transaction. Customers increasingly want fewer supplier relationships, broader product access, and deeper service support from the partners they keep. Distributors that can combine technical specialization with wider geographic reach may be better positioned to win share from smaller local competitors and from less specialized national sellers.

Operational and supply chain implications

From a supply chain perspective, the merger could improve responsiveness in several ways. A denser network gives the combined company more flexibility to position stock near customers, balance inventory across branches, and reduce the risk that one location becomes a bottleneck. In product categories tied to maintenance, repair, and equipment uptime, those operational gains can matter as much as price.

The transaction also suggests a broader push toward super-regional scale in industrial distribution. Rather than building a national footprint all at once, many acquirers and management teams are assembling contiguous territories where branch operations, logistics, and sales teams can be integrated more effectively. That approach can preserve local customer intimacy while improving backend efficiency.

Orlando highlighted the breadth of end markets in the companies’ release, saying, “The combination of VAD and Exotic allows us to serve a broad range of MRO, industrial OEM and mobile customers.” That customer mix matters because it can diversify revenue across maintenance demand, production cycles, and equipment channels.

For distributor executives, the larger lesson is that M&A in this segment is not just about adding revenue. It is about creating enough density and capability to become more relevant to strategic accounts, more resilient in procurement and inventory planning, and more effective in delivering specialized service at scale. In industrial distribution, those advantages can translate into stronger retention, more wallet share, and better operating leverage over time.