Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Resin pricing news
    • Videos
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • K Show
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Processor of the Year
    • Best Places to Work
    • Women Breaking the Mold
    • Rising Stars
    • Diversity
    • Most Interesting Social Media Accounts in Plastics
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • Pellets and Politics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • K Show Livestream
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Processor of the Year submissions
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics News Caps & Closures
    • Women Breaking the Mold Networking Forum
    • Plastics in Automotive
    • PN Live: Mergers and Acquisitions
    • Polymer Points Live
    • Numbers that Matter Live
    • Plastics in Politics Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Resin Prices
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Custom
    • Sponsored Content
    • LS Mtron Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
News
September 11, 1995 02:00 AM

BUYERS FIND DEARTH OF MIDSIZED PLASTICS FIRMS

Bruce Vernyi
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    ST. LOUIS - Independent, midsized plastics processing companies, especially injection molders with sales of $15 million to $100 million, are becoming hard to find, according to Debbie Douglas, managing director of the Douglas Group. Douglas' St. Louis firm, which specializes in plastic processors, sells businesses to companies and investors.

    Midsized plastic processing companies were plentiful several years ago, according to Douglas, who said hungry investors have snapped up many of the most profitable and capable, leaving a dwindling pool of available companies.

    Those that remain either have owners who operate them and are not willing to sell, or they fail to attract potential buyers for reasons such as insufficent market penetration or the lack of advanced technology.

    ``We used to have company owners coming to us to say they wanted to sell their company, then we would look for a buyer,'' Douglas said in an Aug. 22 interview at her St. Louis office.

    ``Today, the typical owner of a company with sales of $50 million to $60 million might get two to three calls a week from people who want to buy their companies,'' she said. The calls come in cold, often without the would-be buyer knowing the company's profitability and cost structure and, sometimes, what it makes or sells.

    Investors have been attracted to plastic processing firms that have niche positions and deep penetration into specific markets, she said.

    ``The more compact a business is, the more it owns a specific niche in its field, the easier it is to sell it,'' Douglas said.

    Today, she said, investors are particularly looking for firms involved in thermoset injection molding and blow molding-but only if the blow molding firm has ``blasted'' its market niche, wiping out its competitors.

    The attraction investors see in plastics processing companies-especially those that are dominant their market niches-is that the businesses tend to be very secure, so they present long-term opportunities with adequate, if not spectacular, returns, Douglas said.

    ``With an injection molder or a blow molder, if they have a particular piece of business, they are seen as having less risk than other businesses,'' she said.

    Molders with such businesses tend to keep them, and their customers tend to stick with them because of the high cost of moving tooling and the difficulty in finding new suppliers.

    ``You and I can't penetrate those market segments easily. We can't get started with $5 million in capital, the entry barriers - in technology and investments - are too high. So these businesses are not rapid turnover businesses,'' she said.

    Douglas does not see the pool of desirable companies growing larger in the near future.

    ``Companies in this size range [$15 million to $100 million] typically sell for five to seven times their earnings before taxes, less any abnormal salaries and plus any real estate or unusual assets, such as licensing rights,'' she said.

    ``If a company has sales of $10 million to $15 million, they are at the threshold of this range, and if a company has sales of less than $5 million, all bets are off. Selling a company of that size really depends on the individual company and its market penetration,'' she said.

    But Douglas sees firms in the $5 million to $15 million range as being stuck in a technological and financing eddy: They have difficulty growing beyond that size because they often do not have the technology that is required by customers, and usually cannot acquire financing to gain the technology because they are not big enough.

    She also noted that because entrepreneurs who start companies often are not good planners, they hit a wall in growth when their company's sales reach $10 million to $15 million.

    RECOMMENDED FOR YOU
    PET Recycling Coalition releases first grants
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    Asahi Kasei settles Michigan PFAS lawsuit, agrees to clean up pollution
    2
    Numbers That Matter Live January 2023: Expect short-term pain, strong rebound in 2024
    3
    Berry, Coca-Cola launch tethered caps in EU markets
    4
    Berry sees growing health care demand in India; new plant to open soon
    5
    Top-dollar deals, repeat buyers highlight 2022 M&A
    SIGN UP FOR OUR FREE NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Tire Business
    • Urethanes Technology
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • K Show
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • Processor of the Year
        • Best Places to Work
        • Women Breaking the Mold
        • Rising Stars
        • Diversity
        • Most Interesting Social Media Accounts in Plastics
      • Newsletters
      • Resin pricing news
      • Videos
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • Pellets and Politics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • K Show Livestream
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics News Caps & Closures
        • Women Breaking the Mold Networking Forum
        • Plastics in Automotive
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
        • PN Live: Mergers and Acquisitions
      • Editorial Livestreams
        • Polymer Points Live
        • Numbers that Matter Live
        • Plastics in Politics Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
      • Processor of the Year submissions
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Resin Prices
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Custom
      • Sponsored Content
      • LS Mtron Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified