CORONADO, CALIF. — When Dubin Clark & Co. Inc. acquired a significant ownership in Mulay Plastics Inc. in 1992, the equity investor was moving down a familiar path, according to Ronald N. Dubin, chairman of the Greenwich, Conn.-based partnership.
Subsequently, Dubin Clark has participated in Mulay's senior-level recruiting efforts, corporate strategy development and construction-financing programs, usually providing input during on-site monthly meetings.
Dubin said the firm's principals are not Wall-Street types but ``businessmen masquerading as investment bankers'' operating in the ``middle of the spectrum between financial and strategic buyers.''
Annually, Dubin Clark acquires two or three businesses and, typically, encourages key managers to retain equity and function as partners.
Injection molding has become an attractive industry, Dubin said during a merger-and-acquisition lecture at the Society of the Plastics Industry Inc.'s Western Section conference, held May 14-16 in Coronado. He cited boosts from corporate outsourcing, value-added operations beyond molding and strong customer relationships. Plastics companies can be high-margin businesses and generally are positioned in a ``fragmented industry with [the] ability to consolidate.''
Dubin encouraged confidential negotiation rather than a disruptive auction as a prospective seller's best way to control the transaction and influence its outcome. He said he favors a financial-buyer method that leaves senior management in place, with equity and an opportunity to preserve the independence and culture of the company.
Using a company as a platform to roll up and consolidate businesses, however, ``can make financial buyers strategic,'' he said.
Strategic buyers give no equity, often shrink management staffs, can insist on conformance with their procedures and can consolidate one business into another, Dubin said.
``If you sell to a strategic buyer, be prepared to take the money and run,'' he said.