This past year has brought the most rapid rate of industry consolidation to date. While the drop in stock prices of rental companies has recently caused a slowdown in ac-quisitions, I believe the pace will pick up again over the next few months.

>From the perspective of long-standing owners of rental businesses, >industry consolidation has brought several advantages. First, they now >have a way to convert their equity in the rental business into cash if >they wish to. Before the consolidation began, many owners had difficulty >finding prospective buyers with enough cash. Many sold on an installment >payment basis and found themselves back in the rental business when the >buyer got into trouble.

Second, for those not wishing to sell, consolidation brought a certain financial legitimacy to the rental industry. Now the financial statements of several large rental businesses are a matter of public record. Independent rental businesses can present banks and lenders with the consolidators' SEC filings, which contain a wealth of financial and operating information about the rental business.

On the other side of the coin, there are negative consequences for some independents when powerful consolidators acquire nearby competitors and make changes to the marketing landscape by altering price structures and flooding the market with inventory.

Consolidation is also having a major effect on the way rental products are distributed to the industry. I've heard some rental owners lament the decline of regional trade shows. However, the fact is that the regional shows were on the decline even before consolidation gained momentum. It's true that the decline has accelerated lately, in part, because the consolidators want to negotiate national purchasing deals directly with manufacturers. They don't typically make major purchases at trade shows, at least not at regional trade shows. Therefore, with hundreds of individual companies no longer buying individually, less business is being done on the show floors, and I expect that fewer manufacturers will attend regional shows.

The American Rental Association's Member Buying Alliance program will also likely contribute to the decline of the regionals because members buying at manufacturers' "best prices" through the MBA catalog will have less incentive to buy at shows. For these member stores, the primary value of the trade show floor may be that it offers a way to become aware of new products.

As consolidation continues, more positive and negative effects will come to the surface. I hope that for the industry, the benefits will outweigh the costs.