‘Crazy' offers prompt sale of medical supplier Molded Devices

A sale of Molded Devices Inc. just made too much sense, the company's founder said.

Private equity firm TruArc Partners LP is buying the Tempe, Ariz.-based plastics and rubber company from PNC Mezzanine Capital as founder Brian Anderson said prices being offered for companies these days essentially were too good to pass up.

Molded Devices makes most of its money in plastics but has a robust business in the smaller rubber dip molding market that accounts for about 10 percent of the firm's revenue, Anderson explained.

On the plastics side, the company provides injection molding, tube extrusion and blow molding as well as dip molding.

Molded Devices has grown to have sales of more than $100 million annually, Anderson said, and he expects that growth to continue under new ownership.

PNC Mezzanine Capital first invested in Molded Devices at the end of the 2015, bringing deeper pockets to allow for continued growth at a company that had been self-financing up until then. Private investors often remain anywhere from three to seven years before cashing out, so the sale to TruArc made sense for PNC, Anderson explained.

"I think the other trend that happened, the markets, in my opinion, got crazy in terms of the multiples being paid," he said in an Aug. 9 interview.

Molded Devices' work in the health care segment was attractive to TruArc. "Within our specialty manufacturing strategy, we have been looking for opportunities with significant exposure to the growing health care market," said John Pless, co-managing partner at TruArc Partners, in a statement.

Tempe, Ariz.-based Molded Devices has 12 manufacturing plants in the United States and one each in Mexico, Canada and China.

Anderson and CEO Jack Slinger had been informally managing three to five incoming acquisition inquires each week, the founder estimated. And that just became too much to handle. Advisers Piper Sandler was hired in late 2020 to create a more formalized process.

But the company soon put that on hold when an expansion opportunity emerged along the way. Molded Devices ultimately purchased Seitz LLC in November 2021, a deal that added locations in Torrington, Conn., and Jiangsu, China. Only after that deal was complete that the company returned to contemplating its own sale, Anderson explained.

While the founder understands with his head that selling Molded Devices makes sense in this seller-friendly market, his heart was still a bit reluctant.

"I'm, frankly, a crappy seller," he said. "I'm a buyer and a builder.

"I think it's disingenuous to pretend it's not about price. It certainly is. But it's not all about price. We wanted to have a good home," Anderson said.

Anderson and Slinger have reinvested in Molded Devices under TruArc's majority ownership and members of senior management remain with the firm.

TruArc has the capital available to help Molded Devices continue to grow both internally and through deals. Anderson said he sees the potential for a $200 million company in the next three to four years.

Growth, he said, could include efforts to further increase the company's presence in the rubber business. Molded Devices, through its Diptech Systems Inc. subsidiary, makes dip molding equipment for other manufacturers and provides custom contract dip molding services.