Part 2 of 2, in a series of industry research papers written by SRR. As we stated in Part 1 (The Fall 2014 Report), GreenLeaf, has access to Industry research that is often helpful to students, bankers, investors, manufacturers, suppliers, entrepreneurs, journalist and others that monitor the pulse of the industry. As we stated in the part 1 post, SRR views the industry through the lens of the investment, banking & ownership community, so it is a unique perspective. We pledge to share valuable reports that shed light on the industry, from a variety of perspectives. Enjoy this Plastics Industry Research Winter 2014 edition!
Plastics Industry Highlights
- Plastics M&A volume decreased approximately 9% in 2013, although there continues to be strong demand for plastics companies across all end markets and processes.
- Tax changes that occurred at the end of 2012 likely had an impact on M&A activity in early 2013
- There appears to be positive momentum going into 2014 as the number of plastics transactions increased 15% in the second half of 2013 versus the first half of 2013
- Industrial plastics continues to represent the largest number of transactions with 63% of the volume followed by plastic packaging at 22% and medical plastics and automotive plastics at 10% and 5%, respectively.
- Medical plastics and industrial plastics deal activity grew in 2013, particularly medical, which increased 31%
- The sale of plastics-related private equity portfolio companies increased approximately 3% during 2013, while privately-held and corporate divestitures were down.
- There are a number of factors and industry dynamics that could have a positive impact on M&A activity within the plastics industry during 2014.
- Continued high demand for quality acquisition targets from both strategic and financial buyers
- Significant availability of financing for both small and large transactions, including senior debt (asset-based and cash flow), mezzanine debt, equity, and specialty financing
- Positive macroeconomic trends and outlook for many plastics end markets
- Valuation multiples in 2013 hit multi-year highs across each of the four end market sectors, while plastics industry valuation multiples continue to be heavily impacted by end market served.
- Each of the four plastics end market segments outperformed the S&P 500, which was up nearly 30% in 2013, and many publicly traded plastics companies are trading near their 52-week highs
Ultimately, an individual company’s valuation will be based on a number of value drivers, including company size, profitability/margins, customer concentration, resin pass-through ability, book of business/future prospects, proprietary products or processes, and overall amount of value-added content and niche market leadership.
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About SRR: SRR is a global financial advisory firm specializing in Investment Banking, Valuation & Financial Opinions, and Dispute Advisory & Forensic Services.
About GreenLeaf: GreenLeaf Industries is an ISO 9001 registered manufacturer that consistently adheres to all its standards to provide our clients with consistent, reliable, quality automotive and industrial plastic parts. We are an American injection molding company, unafraid to compete in the world market and determined to succeed. Established in 1999, we take pride in our high-quality craftsmanship and superior customer service. Visit us:
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