How important is an M&A strategy?

By Don Loepp
Editor

Published: January 31, 2014 1:04 pm ET
Updated: January 31, 2014 1:07 pm ET

Image By: Rich Williams

Mergers and acquisitions are important for a pretty big chunk of Plastics News readers. I know that because many of our best-read and most-talked-about stories are about deals.

When processors and suppliers are bought and sold, their customers, competitors and colleagues are interested. We hear all the time about how a merger will have a domino affect in the industry. Supplier relationships can be disrupted. Talented managers and sales staff can find themselves on the job market. Tools end up moving to new locations.

Deals can mean lost business, or new opportunities.

Because M&A activity is so important, we end up covering a lot of deals in our newspaper each week. And twice a year we do a special report on the latest trends. Our first 2014 M&A special report starts on Page 1 of this issue.

If you're a company owner, I imagine you're tempted to jump ahead to the part about multiples — you know, how much wealth are you sitting on?

Even if you're not interested in selling right now, successful companies are always fielding calls from M&A advisers and private equity investors. Some of you hang up the phone, or don't return the calls. Others listen and learn what they can about the market and their competition. It's getting to the point where a molder can find out a lot about the industry by talking with an M&A expert with an MBA the same way they used to catch up on scuttlebutt from their mold component supplier!

Plastics News has been reporting on M&A activity for nearly 25 years, and it's been a pretty interesting topic. We've seen a few waves of consolidation in some markets, and the rise (and fall) of quite a few rollups and private equity purchasers.

But despite the past few decades of pretty intense M&A activity, this industry is still populated by a lot of family-owned companies. That's a result, in part, of the plastics industry's relative youth. There are still many extremely successful first-, second- and third-generation companies. While we've all heard the statistics about how many second- and third-generation companies end up failing, plastics entrepreneurs can take some solace in the knowledge that if their companies survived through the Great Recession of 2009, they should be pretty well prepared to handle just about anything.

All that said, I wonder how much serious thought family-owned companies give to their M&A strategy. It's an important part of succession planning, of course. But it's also a way to take advantage of the opportunities that present themselves in the market, whether that means consolidating a position or pursuing a diversification strategy.

Not to mention maximizing asset value and minimizing the tax implications of their decisions.

Loepp is editor of Plastics News and author of "The Plastics Blog."


Comments

How important is an M&A strategy?

By Don Loepp
Editor

Published: January 31, 2014 1:04 pm ET
Updated: January 31, 2014 1:07 pm ET

Post Your Comments


Back to story


More stories

Image

Higher profits and rising blood pressure

August 27, 2014 12:19 pm ET

Company CEOs are typically big supporters of capitalism and the free market, and they should be. It's a great system for raising the standard of...    More

Image

Wal-Mart's 'Made in the USA' campaign is a great opportunity for reshoring effort

August 21, 2014 6:12 pm ET

Wal-Mart Stores Inc. has attracted a lot of attention with its latest “Made in the USA” push, and that's been by design. TV ads that...    More

Market Reports

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report analyzes economic and market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as growth strategies being implemented by thermoformed packaging companies.

Learn more

Pipe, Profile & Tubing Extrusion in North America 2014

U.S. demand for extruded plastics is expected to grow by 3 percent in 2014, with PVC remaining the largest segment.

Plastic pipe will post the strongest gains through 2018, continuing to take market share from competing materials in a range of markets.

Our latest market report provides in-depth analysis of current trends and their financial impact on the pipe, profile and tubing extrusion industry in North America.

Learn more

2014 Injection Molding Industry Report

GROWTH, OPPORTUNITY IN SIGHT FOR INJECTION MOLDERS IN 2014

In the wake of the economic turbulence earlier in this decade, molders today find themselves in much better shape. Molders are gaining a competitive advantage by investing in people, equipment and seeking inroads into new markets on a global scale.

Growth in the injection molding industry is going to be driven by low financing costs and a continued move to reshore some business.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events