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Get the Most from the M&A Process

Strategies for maximizing the value gained through mergers and acquisitions.

This has been a big year for merger and acquisition (M&A) shake-ups across the composites sector, and it’s easy to see why.

“The composites supply chain is very fragmented,” says David Horner, CEO of Applied Composites Holdings LLC, an aerospace and defense composites supplier. “There are a lot of smaller-scale players competing with very large players and very few medium-size organizations. There’s a real opportunity for consolidation, and it brings some strategic opportunities to those companies that pull together to find ways to be more competitive.”

From his aerospace perspective, Horner is watching large OEMs vertically integrate to bring needed capabilities and materials in house. “Very large OEMs are going to be nervous about putting a large amount of work into very small organizations, so that also is going to drive the need for consolidation and creating greater scale in the supply base,” he says.

Composites companies entertaining the idea of a potential merger or acquisition, from either side of the table, should make sure they’re prepared to maximize the value they get from a deal.

Finding the Right Steward

Michael Del Pero, managing director of FocalPoint Partners LLC, an investment bank with expertise in composite industry M&As, sees two primary drivers behind composites industry acquisitions: Acquirers are looking for deals to land either innovative materials technology or specific manufacturing capabilities. When it comes to the former, he notes, “That’s where you sometimes see smaller businesses trade at pretty high valuation because a buyer, like PolyOne for example, [recognizes] how they can leverage their global network of sales, distribution, etc. and take a small but sophisticated material technology and turn it into a much bigger product in their portfolio.”

Joel Rathbun, senior vice president of mergers & acquisitions for Cleveland-based PolyOne, describes acquisitions as pivotal to the company’s growth strategy. The company has purchased four composites companies over the past five years: Glasforms Inc., Polystrand, Gordon Composites and, most recently in June, PlastiComp Inc. “These were all headed by owner entrepreneurs who were looking for good stewards for their companies,” Rathbun says.

That level of experience has taught PolyOne how to position itself in the M&A market. “We’ve built our capabilities so that we become the buyer of choice: we’re efficient, collaborative and have a track record of closing deals successfully,” Rathbun says. “Our deep resources, commercial excellence, invest-to-grow strategy and global reach are all part of this capability structure.”

» Author: Megan Headley

» Publication Date: 06/11/2018

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This project has received funding from the European Union Seventh Framework Programme (FP7/2007-2013) under grant agreement n° [310187].