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

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

Coveris changes culture, eyes IPO

November 20, 2014 1:40 pm ET

CEO Gary Masse has a simple message, and some new math, for everyone at Coveris Holdings Corp. Get on board or get out of the way.    More

Image

Total to buy majority stake in Polyblend

November 20, 2014 10:04 am ET

French oil and gas giant Total SA will buy a 68 percent stake in Germany's Polyblend GmbH, a subsidiary of Polymer-Chemie GmbH.    More

Image

Private equity fuels acquisition market

November 18, 2014 11:52 am ET

Plastics firms and outside investors with money to spend increasingly have done so in the plastics industry for the last quarter-century — and...    More

Image

Venture capital firm buys stake in Ximedica

November 17, 2014 3:32 pm ET

International venture capital firm SV Life Sciences has acquired a majority stake in Providence, R.I.-based medical device company Ximedica LLC.    More

Image

A. Schulman closing Ohio color concentrates and additives plant

November 17, 2014 9:48 am ET

A. Schulman Inc. is closing a color concentrates and additives plant in Ohio that it acquired earlier this year from Ferro Corp.    More

Market Reports

Plastics in Brazil - State of the Industry Report

This in-depth report examines the Brazilian plastics industry from a historical and geographical context. Our analysts provide insight on economic trends and forecasts, growing manufacturing sectors that utilize plastics, private investment opportunities, market environment challenges, and innovations in R&D.

Data tables and charts on producer prices, trade, plastics production and end market indicators is also included.

Learn more

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 Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Upcoming Plastics News Events

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

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

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

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events