The lumbering colossus of the plastics M&A market continued its march in the first half of 2017.
Deal volume in the first half of 2017 totaled 164 transactions, up three vs. the first half of 2016, according to P&M Corporate Finance LLC of Southfield, Mich. The market remains on track to crack the 300-deal level for the 11th consecutive year.
Many factors affecting the pace of plastics mergers and acquisition activity remain positive, according to PMCF Managing Director John Hart.
"There's aggressive competition to win deals, from both strategic and financial buyers, and that's kept valuations at or near record highs," he said.
Private equity firms were involved in 42 percent of first-half deals tracked by PMCF. That's slightly higher than the 40 percent share they've had since 2015 and well above the 35 percent share the PE firms held from 2005-14.
Based on end markets, construction grew by six deals in the first half vs. the year-ago period. Transportation and food/beverage gained four deals each. Industrial and consumer markets each declined by five deals in the same comparison.
In terms of processing sectors, specialty processing increased by nine deals in the first half. Thermoforming and sheet each fell by four deals. For product segments, rigid packaging posted nine more deals vs. the first half of 2016, while custom molding slipped by four deals.
The portion of deals where both buyer and seller were based in the United States declined from 35 percent to 30 percent. The number of deals in which a private equity firm sold to another private equity firm grew from 7 percent to 11 percent in the comparison period.
That last trend, Hart said, is likely to continue, given the increased ownership by private equity in plastics who will seek exits in the next several years. For overall M&A across all markets, plastics remained strong in the first quarter, while overall volume was down around 20 percent.
"The expansion and strength of the bull market in plastics M&A has been going on for years and has continued into 2017," added Matt Miller, managing director of Bluewater Partners LLC in Grand Rapids, Mich. "We didn't see any dip in the first quarter this year. Volume was high, and there were a lot of bidding situations and high valuations."