Optimism usually abounds at the start of a new year, and 2017 is no exception where North American mergers and acquisitions pros are concerned. Most see plastics M&A activity in 2017 exceeding or at least matching 2016's deal volume.
“Organic growth is single-digit, just like GDP growth,” said Andrew Petryk, managing director with Brown Gibbons Lang in Cleveland. “To go beyond that, companies need to look at acquisitions. We're still seeing a lot of untapped capital. I think high multiples will be sustained in 2017.”
Several M&A pros said that the removal of uncertainty about the U.S. presidential election and the pro-business approach of president-elect Donald Trump might help M&A activity in 2017.
“There are still more buyers than sellers in the market,” said John Hart, managing director of P&M Corporate Finance in Southfield, Mich. “There's excess cash and pressure to grow, especially in private equity.”
Rick Weil, managing director at Mesirow Financial in Chicago, added that all major factors — interest rates, debt environments, public stock valuations, private equity dry powder and general economic conditions — “are signaling green lights.”
“We expect continued growth in
institutional allocations toward private equity, and plastics packaging will likely remain a favored industry from the perspective of private equity investors,” he added.
Thomas Blaige, chairman and CEO of Blaige & Co. in Chicago, sees overall plastics M&A deal volume growing around 5 percent, with multiples in a range of 6 to 10 times earnings and possibly growing on the lower end.
2017 “could be a phenomenal year in the plastics and chemical markets,” said Ben Whiting, plastics team leader at KeyBanc Capital Markets in Cleveland. “We should see a more pro-business environment and there's a lot of capital out there.”