Beyond Hydraulics: VAD's Acquisition Signals a Supply Chain Shift

SHAWANO, WI – December 10, 2025

The recent announcement that Value Added Distributors (VAD) has acquired L.T.L. Supply is more than a standard line item in a quarterly M&A report. On the surface, it’s a straightforward deal: a distributor of hydraulic components has purchased a manufacturer of custom wire harnesses. But look deeper, and the transaction reveals a carefully orchestrated move, one that illuminates a powerful trend reshaping the industrial component landscape: the strategic, private equity-backed consolidation of niche suppliers into comprehensive, integrated platforms.

This acquisition, VAD’s first since partnering with private equity firm Rotunda Capital Partners in early 2024, is the opening move in a deliberate strategy to transform the company from a specialized fabricator into a national-scale, multi-faceted supplier for Original Equipment Manufacturers (OEMs).

The Strategic Blueprint: From Niche Distributor to Integrated Platform

For years, Value Added Distributors carved out a successful niche as a critical supplier of fluid power components. Specializing in hydraulic hoses, tubes, and filtration products, the Wisconsin-based company became a go-to partner for specialty vehicle OEMs—manufacturers of everything from agricultural machinery to construction equipment. However, the investment by Rotunda Capital Partners signaled a fundamental shift in ambition. Rotunda, a firm known for its operational focus and its proprietary "Rotunda Performance System," doesn't just invest; it aims to transform "family-founder owned companies into dynamic, data-driven platforms."

The acquisition of L.T.L. Supply is the first tangible execution of this vision. By bringing wire harness manufacturing in-house, VAD is moving into an "adjacent and highly complementary product category," as stated in the announcement. Modern specialty vehicles are complex systems of both hydraulic power and sophisticated electronics. By adding electrical assemblies to its portfolio, VAD is no longer just a hydraulics expert; it is positioning itself to be a systems-level partner.

"The company fits directly within our platform strategy and enhances our ability to support OEMs with a broader range of engineered components and services," said Mike Kostelnik, CEO of VAD. This move is a direct response to the evolving needs of its core customer base, which requires increasingly integrated and complex component solutions. Rotunda Capital's explicit goal is to continue this expansion, targeting acquisitions in related categories like filtration, gaskets, and motion control systems to build out VAD's platform.

The OEM Advantage: Consolidating a Fragmented Supply Chain

For procurement managers and engineering teams at OEMs, managing a sprawling network of specialized suppliers is a persistent challenge. Sourcing hydraulic systems from one vendor, electrical harnesses from another, and fabricated metal from a third creates logistical complexity, increases administrative overhead, and can stifle innovation that occurs at the intersection of these systems. The VAD-LTL tie-up is a direct play to alleviate this pain point.

The trend towards a "one-stop-shop" model in industrial distribution is accelerating, driven by OEM demands for efficiency and supply chain resilience. By integrating LTL's capabilities, VAD can now offer a more holistic package. This goes beyond simply selling more parts. It opens the door to truly value-added services, such as creating pre-assembled kits that include both hydraulic hoses and the corresponding electrical harnesses, ready for line-side installation. This simplifies the assembly process for the OEM, reduces part numbers, and minimizes the chance of error.

LTL will gain access to VAD’s "significant infrastructure and scale advantages," including a multi-facility footprint and more sophisticated IT and warehouse systems. For the end customer, this integration promises enhanced reliability. With unified inventory management and logistics, VAD can potentially offer more dependable lead times and greater visibility across a wider range of critical components, a crucial advantage in a post-pandemic world where supply chain disruptions remain a top concern for manufacturers.

Legacy Meets Scale: The Future for Family-Owned Specialists

At the heart of this strategic consolidation is L.T.L. Supply, a family-operated business founded in 1984 in Green Bay, Wisconsin. For decades, LTL built its reputation not on massive scale, but on deep expertise, "exceptional quality, dependable lead times, and close customer relationships." The company became a trusted partner for OEMs in demanding sectors like heavy equipment, timber harvesting, and government contracting by delivering high-quality, custom-built wire harnesses and electrical assemblies.

The decision to join a larger, private equity-backed platform reflects a common crossroads for successful family businesses. While they possess invaluable niche expertise and strong customer loyalty, scaling up to meet the demands of a national market requires significant capital investment in technology, infrastructure, and sales outreach. The partnership with VAD offers a pathway to that growth without starting from scratch.

"Joining VAD creates an opportunity to expand what we can offer while maintaining the values that have guided our business," noted Kathy Suring, Vice President of LTL. This sentiment highlights the ideal outcome of such an acquisition: leveraging the scale of the parent company while preserving the specialized culture and knowledge that made the smaller firm valuable in the first place. The announcement that LTL’s leadership team will remain with the business is a critical component of this strategy, intended to ensure continuity for both employees and customers and to facilitate a smoother cultural and operational integration.

The Bigger Picture: Private Equity's Remaking of Industrial Distribution

Zooming out from this single transaction, the VAD-LTL deal serves as a microcosm of the profound changes underway in the industrial distribution sector, a market projected to exceed $8 trillion globally. The landscape, long characterized by thousands of small, specialized, and regional players, is undergoing a period of intense consolidation, heavily fueled by private equity.

Firms like Rotunda Capital are not simply rolling up companies for financial arbitrage. They are acting as strategic architects, identifying synergistic businesses and providing the capital and operational expertise to build them into cohesive, data-driven platforms. This approach is designed to create entities that are more resilient, efficient, and better equipped to serve the needs of large, sophisticated customers. As Rohit Dhake, Partner at Rotunda Capital, stated, "We plan to continue expanding our product offering through acquisitions of distributors in adjacent product categories already used by our customer base."

This strategy reflects a fundamental belief that the future of industrial supply lies not in isolated specialization, but in integrated solutions. By combining VAD's fluid power expertise with LTL's electrical know-how, and with plans to add more capabilities, Rotunda is building a supplier that can engage with OEMs on a more strategic level. This shift is transforming the competitive dynamics of the industry, putting pressure on smaller, single-category distributors to either find an unassailable niche or consider joining a larger platform themselves. The era of the hyper-specialized but siloed component supplier is giving way to one defined by integrated systems and strategic partnerships.