Private equity has changed the plastics industry in the past 25 years. It's been the biggest M&A trend nearly every year, and it's changed the competitive landscape of the plastics processing, machinery and materials sectors.
Can anything slow down PE investors? How about higher interest rates and reluctant lenders?
Steve Daniels of Crain's Chicago Business reported this week that the PE boom is fizzling, the result of a 3-percentage-point increase in interest rates in just six months and reluctance from bankers and other lenders to finance deals.
"I cannot recall as precipitous a change as is occurring right now," Bruce Hague, Chicago-based president of national commercial banking for CIBC U.S., said. "I don't think it's done yet."
But, the story notes, the biggest impact has been on multibillion-dollar deals. Lenders are still willing to back smaller transactions, "which make up the lion's share of private equity activity." That may be good news for plastics company owners looking to cash out, although it could depress multiples.
The bottom line: Don't write off PE interest in plastics.