``Hey, buddy, you wanna buy a plastics company?'' Owners of some large plastics processing companies say they get calls like this a couple of times a month. Whether they return the call depends on several factors.
Many firms look for a business that complements their own. Randall Barko, vice president for sales and marketing at Nypro Inc. in Clinton, Mass., said Nypro wants a company that has been well-run. It looks at the chemistry of the employees and the business philosophy of the people who operate the plant.
``The people in place who know the day-to-day operations of a company are the most valuable in a new territory,'' Barko said.
``It's not just the bottom-line dollars a company makes, but the mindset of the people is what's important.''
Size is important also. Nypro typically likes a company that has $3 million to $5 million in annual sales.
George Votis, chairman and chief executive officer for Moll Plasticrafters, said his company also gets approached by smaller processors looking to sell, particularly after Moll announces a purchase.
William Sahlein, president of Sahlein Associates, a business broker in Lexington, Mass., that specializes in plastics companies, said most larger molding companies do not want to buy companies with less than $1 million in annual sales.
``Many want a minimum of $5 million in annual sales, primarily because the very small company tends to have older equipment, is usually located in a small facility that's not expandable, and has a marginal customer base,'' Sahlein said.
Owners of the very small shops who want to retire usually have problems selling, he said, and tend to attract people who want to own a business - but not necessarily plastics firms.
Skip Humphrey of Humphrey Plastic Machinery in Canyon Lake, Calif., said he is finding the opposite is true for him.
``The market is hot right now,with interest high in buying small shops,'' he said.
As a sideline, Humphrey connects companies that want to buy with those that want to sell. He recently placed an ad for a small molding shop in Southern California that generated more than 60 telephone calls.
``It's difficult for the small shops because business brokers don't want to take on the little ones,'' Humphrey said. ``There's not enough in commissions to make it worth it.''
When expanding into a new area, is it better to buy an existing company or build a new organization from the ground up?
Ed Christensen, vice president and chief operating officer of Complex Plastics Cos. in Boulder, Colo., said there are pros and cons with both approaches.
``If you buy a smaller molder it takes time to retrain the people and regroup the organization,'' he said. ``An anchor client would just as soon see us start a new facility.''
When buying an existing company, the building, customers and employees usually are provided. But you also get the baggage that comes with that company, he said.
``Sometimes it's difficult to convince a customer that this isn't the old company, but a new one,'' he said.
Votis said there is an advantage when you build from the ground up in that everything and everyone is the way you want it from the beginning.
``It's a compromise, a trade-off,'' he added, ``but both are valid ways to grow a company.''
