Even during a multiyear wave of strong plastics M&A activity, 2021 stood out.
To put it in perspective, the year was almost like seeing a herd of unicorns in a field of four-leaf clovers.
"It was unlike anything I've ever seen," said John Hart, managing director at P&M Corporate Finance in Southfield, Mich. "The whole year was extremely active, but the fourth quarter really catapulted it to the next level. It was mayhem there at the end with so many deals closing."
For full-year 2021, PMCF tracked 485 plastics M&A deals. That's a jump of almost 75 percent vs. 2020 and the highest total recorded since the firm began tracking those deals more than 15 years ago. Of those 485 deals, 147 — more than 30 percent — closed in the final three months of the year.
The second-half deal total of 268 was up almost 24 percent vs. the first half. Fourth-quarter deal totals grew more than 20 percent over the third quarter.
Hart and other financial pros recently contacted by Plastics News identified a few key factors that supercharged plastics M&A in 2021. A strong appetite for plastics acquisitions continued from both strategic buyers already in the industry as well as from private equity firms. At the same time, 2021 benefited from some deals being delayed from 2020 because of reasons related to COVID-19, while some deals were pulled forward from 2022 as sellers tried to avoid potential higher capital gains taxes.
"There was a run of strong sellers in the market, with high multiples being paid and lots of buyers," Hart said.
Mesirow Financial of Chicago closed six plastics deals in December. "More so than in prior years, there was a rush to get deals done because of expectations of higher capital gains taxes in 2022," Managing Director Rick Weil said. "But now it looks like that's off the table because of gridlock in Washington.
"A lot of our clients are family companies, and they said that 2021 was the year they wanted to sell," he added.
Matt Miller, managing director of BlueWater Partners LLC in Grand Rapids, Mich., agreed that the second half was very strong for plastics M&A.
"There was a lot of pent-up demand caused by COVID," Miller said. "Now companies are trying to figure out how to sustain sales they may have gained from COVID. If you're a seller, you're asking how much longer do you want to wait."
Thomas Blaige, chairman and CEO of Blaige & Co. in Chicago, differed a bit from other financial pros by saying that he thinks the current M&A market "is at the top of the cycle" and could face some challenges in 2022.
"A lot of businesses have made it through some hard times these last few years but have bounced back and might want to sell before the market heads down again," he said. "It's like a boxer getting punched in the nose and knocked down in the middle of the ring. You've got to get back up or lose the fight."