The promotional products industry sizzled with merger and acquisition activity in January, outpacing the same period from last year. Ad specialty executives expect the trend to continue, saying a variety of factors – including a rapidly changing marketplace – are increasing the number of M&A deals.

An analysis by Counselor shows that at least 10 acquisitions or mergers within the industry were publicly announced this month. Last year, seven occurred during the same period, though two of those involved company employees purchasing companies they worked for rather than one company acquiring or merging with another.

This January, the flurry of M&A activity included headline-grabbing deals centered on some of the largest suppliers in the industry. Gildan (asi/56842) acquired American Apparel in a bankruptcy auction. Top 40 supplier Hub Pen (asi/61966) bought Beacon Promotions (asi/39250). SnugZ (asi/88060) – another Top 40 supplier – snapped up SoulKix, a company that creates custom-printed canvas sneakers.

Deal-making thrummed among distributors, too. For example, Apopka, FL-based thumbprint (asi/293564) acquired Miami’s LOI Marketing (asi/255497), while Kansas-based Incentives International Inc. (asi/230802) bought another Sunflower State distributor – Midwest Premiums and Promotions.

Plus, shortly before the new year, a blockbuster acquisition occurred when Cimpress (asi/162149), owner of Vistaprint, bought National Pen (asi/281040) – the 10th largest distributor by revenue in the promotional products industry. “Merger activity on both the supplier side and the distributor side of the business has definitely increased,” said Marc Simon, CEO of HALO Branded Solutions (asi/356000) – the fifth largest distributor by revenue in the industry.

An M&A expert, Simon has led the successful acquisition and integration of nearly 20 distributor companies since joining HALO 16 years ago. He believes that technology enhancements, product safety requirements and increased need for efficiency to deliver safe products as cost-effectively as possible are pressuring industry companies to seek a merger partner. Simultaneously, low interest rates and large pools of capital seeking yield and return have made more debt leverage available to would-be buyers of businesses. In this mix, larger financially sound companies have the cash to buy smaller businesses at a time when an expanding number of smaller firms want a quality partner, making the marketplace ripe for M&A. “All of this combines with the gradual maturation of our industry to cause the larger players to become more dominant as their scale brings greater benefits to their customers than some of the smaller players can present,” said Simon.

Sounding a similar note, Mark Ziskind said that the beneficial economies of scale that strategic mergers and acquisitions present are driving more industry companies to engage in the deals. Furthermore, well-capitalized distributors are increasingly eager to “add capabilities, grow their geographic footprint and increase their client bases,” added the chief operating officer of Top 40 distributor CSE (asi/155807). Some companies are also buying, or trying to buy, their competitors out of a desire to reduce marketplace competition, Ziskind said. “Maybe most significantly, the industry is very attractive to private equity firms given the margins and opportunities to drive efficiencies, growth and profits,” said Ziskind.

Promo industry leaders anticipate that M&A activity will continue to hum throughout 2017. Certified Marketing Consultants, a firm with specialties that include helping to engineer strategic acquisitions specifically for promotional products companies, recently closed four M&A deals in the span of a month. The company has several other deals in the pipeline. “With capital available and the marketplace changing, business owners are looking to grow through acquisition to diversify and gain market share,” said Jamie Watson, senior financial analyst with Certified Marketing Consultants. “Until this economic climate slows down, we do not expect a decrease in activity.”

Beyond just the promotional products industry, global M&A activity was robust in 2016 – a trend that financial analysts anticipate could accelerate. Admittedly, global M&A was 17% less in terms of value last year than the boom-year of 2015, but the dollar figure still tallied a staggering $3.6 trillion, making 2016 the third biggest year ever for M&A and the second best year for dealmakers since the financial crisis.

Many M&A analysts are bullish on 2017, predicting a rise in activity – especially in the U.S. For instance, a recent study from Donnelley Financial Solutions and Mergermarket found that 96% of surveyed global dealmakers believe the United States will be one of the top three countries/regions to experience the biggest increase in M&A this year. “We remain extremely positive on the overall outlook for our M&A business,” Kurt Simon, global chairman of M&A at JPMorgan Chase, recently told the Financial Times.