Has the current M&A cycle peaked?

By Frank Esposito
Senior Staff Reporter

Published: August 20, 2014 11:55 am ET
Updated: August 20, 2014 2:30 pm ET

Image By: Blaige & Co. Thomas Blaige

Related to this story

Topics Mergers & Acquisitions
Companies & Associations

Plastics M&A veteran Thomas Blaige has called the peak of the current investment cycle.

Blaige — chairman and CEO of the Blaige & Co. financial firm in Chicago — pointed out that the six-year investment cycle ends this year, meaning that valuations for plastics businesses have peaked and could be trending down.

Historical data indicates that the average length of an M&A upcycle is six years, Blaige wrote in an Aug. 8 report. He also suggested that business owners considering a buyout, recapitalization or strategic sale should work with an advisor to take advantage of the current seller’s market.

Blaige’s firm has worked on dozens of plastics deals in the last 20 years. Most recently, Blaige in June advised MetPro Group — an Irish/German producer of specialty plastic film and paper packaging — on its sale to specialty films converter Transilwrap Co. Inc. of Franklin Park, Ill.

Earlier in 2014, Blaige recruited private equity firm Stonehenge Partners Inc. of Columbus, Ohio, as a minority investor in Jadcore Inc., a plastic recycler based in Terre Haute, Ind.

“If you look at the data, multiples are way up,” Blaige said in an Aug. 18 phone interview. “You’re seeing buyout deals and IPOs — and it was the opposite five years ago.”

“Some people are saying that because we’re coming out of a bad recession, that the upcycle will last longer, but we don’t think it will,” he added. “It’s a global market now and things can get choppy right away.”

Often, plastics business owners who are looking to sell wait until their business is at peak profitability. But Blaige said that approach can be a mistake if it ignores market timing.

“You need to look outside of your industry’s peak,” he said. “It’s better to sell at lower earnings if you can get a higher multiple.”

In the report, Blaige added that readily available financing and high earnings multiples could lead to a record number of transactions being completed in 2014.


Comments

Has the current M&A cycle peaked?

By Frank Esposito
Senior Staff Reporter

Published: August 20, 2014 11:55 am ET
Updated: August 20, 2014 2:30 pm ET

Post Your Comments


Back to story


More stories

Image

Reifenhäuser acquires German spinneret company Enka Tecnica

April 17, 2015 9:31 am ET

Germany-based Reifenhäuser GmbH & Co. KG, a major manufacturer of extrusion equipment, has announced that it is acquiring Enka Tecnica GmbH, a German ...    More

Image

Spain's Grupo Antolin to buy Magna's interiors business

April 16, 2015 12:33 pm ET

Spain's Grupo Antolin has reached an agreement to purchase Canadian auto supply giant Magna International Inc.'s interiors unit in a deal valued at...    More

Image

Madison buys Ferry Industries

April 16, 2015 5:22 pm ET

Ferry Industries, the largest manufacturer of rotational molding machinery, was purchased by Madison Industries, a Chicago holding company that is...    More

Image

Caplugs gets new private equity owner

April 16, 2015 11:17 am ET

Caplugs, a major producer of caps, plugs, tubing, netting and other protective goods for industry, has a new owner.    More

Image

A. Schulman, Citadel discuss the $800 million deal

April 15, 2015 1:45 pm ET

The $800 million match of materials maker A. Schulman Inc. and Citadel Plastics felt good from the start. “Everything in our first meetings show...    More

Market Reports

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molding Market Analysis & Processor Rankings

Plastics News BUNDLED package contains our in-depth Market Analysis of the Injection Molding segment. You will gain keen insight on current trends and our economic outlook.

As a BONUS this includes PN's updated 2014 database of North American Injection Molders RANKED by sales volume. Sort, merge, mail & prospect by end market, materials processed, region, # of plants and more.

Learn more

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Upcoming Plastics News Events

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 15, 2015 - September 17, 2015Plastics Caps & Closures - September 2015

More Events