When rock musician Dave Mason hit the Top 40 in 1977 with "We Just Disagree" — the one that goes "There ain't no good guy ... there ain't no bad guy ..." — it's safe to say he wasn't thinking of plastics mergers and acquisitions deals.
But Mason's song is a good fit, since M&A pros contacted recently by Plastics News don't see eye-to-eye on the 2012 market, though most of them are optimistic regarding 2013.
(Actually, Mason does have a plastics connection. He helped to design guitars with polyurethane bodies in the early 2000s. Prior to his plastics work, Mason was a founding member of Traffic, joined Fleetwood Mac for a while and also played 12-string acoustic guitar on the Jimi Hendrix classic "All Along the Watchtower.")
Officials with P&M Corporate Finance LLC, Polymer Transaction Advisors Inc. and Deloitte Corporate Finance LLC each saw plastics deal volume grow 8-12 percent in 2012. But officials at Stout Risius Ross Inc. tracked a much larger gain at 26 percent, while their counterparts at Blaige & Co. LLC and Mesirow Financial Holdings Inc. saw 2012 as being flat to slightly down.
Since there are no official statistics for plastics M&As, there is no real way to settle the argument. But M&A pros contacted for this story did share their insights on the market and what the future may hold.
In the 8-12 percent growth camp, Southfield, Mich.-based P&M saw global plastics deals jump from 347 in 2011 to 381 in 2012. All of that growth came in the second half, when deal volume surged more than 30 percent vs. the second half of 2011.
That 381-deal total was the second highest in the 2006-12 period, trailing only the 393 total of 2010, when many distressed deals took place as the market moved out of a global recession.
Based on end markets, P&M saw deal volume growth of almost 40 percent in industrial end markets. On the other end of the spectrum, the number of construction end-market deals fell 33 percent.
In individual sectors, P&M reported a surge of more than 70 percent in blow molding, while film deals fell 9 percent. In product segments, the number of custom injection molding deals also shot up more than 70 percent, as building product deals tumbled 33 percent.
"The first half and second half [of 2012] were similar," said John Hart, plastics and packaging group director at P&M. "The market is pretty strong for sellers right now. There are a lot of strategic buyers and undeployed capital out there."
"There's still a supply/demand imbalance with more buyers than sellers," he added. "But as long as the economy continues to recover and we don't experience a recession, we see conditions being strong in 2013."
Tracking mostly North American deals, Newbury, Ohio-based PTA saw a 10.6 percent jump in plastics deals volume in 2012.
"The cost of borrowing is less, particularly if you're a private equity group," PTA owner Bill Ridenour said. "With cheaper financing, buyers can afford more than they could in the past."
At Deloitte's Chicago office, Managing Director Will Frame said 2012's 8-12 percent growth "was good, but people were more optimistic at the start of the year."
"Conditions were decent in 2012 after a couple of tough years," he said. "And we expect 2013 to be a solid, strong year, but without radical growth."
The hefty 26 percent increase reported by Chicago-based SRR for 2012 plastics M&As includes a jump of 47 percent in the number of plastic packaging deals. The firm also reported big jumps in deal involvement from financial buyers (up 52 percent) and private equity sellers (up 65 percent).
"When we look at the medical and packaging markets, there's higher quality because they're less cyclical," SRR Managing Director David Evatz said. "There's a flight to quality.
"And even if you look at cyclical, we were on the upswing of a cycle in 2012," he added. "We caught the automotive market on the upswing."
Conversely, Blaige's president, Thomas Blaige, and Mesirow analyst Louis Mitchell were less than excited about 2012 plastics M&A results.
"There were more broken deals in 2012 than in any other year in the last decade," Blaige said. "There was a lot of uncertainty because of the [U.S. presidential] election and some sellers got back in too soon.
"Those [sellers] that were hammered in the financial crisis tried to get back [into the market], but there weren't enough good financial results," Blaige added. "A lot of them only had one good year. So sellers pulled out of deals when they didn't get the price they wanted.
"There was a gulf between buy and sell expectations and, as a result, a lot of deals weren't completed."
"Our data shows that the [plastics M&A] market was flat, but that's better than other markets that were down last year," Mitchell said. "People were concerned about the fiscal cliff and tax issues.
"Things weren't as bad [in 2012] as 2009, but we still haven't recovered to pre-recession levels."