Record Breaking Plastics M&A Activity in 2021
There were 522 plastics industry M&A transactions in 2021, a 41% increase from 2020. Plastics M&A activity in 2021 represented the highest annual total in the Stout proprietary database with 173 transactions in Q4 2021, a 33% increase from the previous quarterly high of Q4 2016.
Positive momentum continues into 2022, which is expected to be another strong year for M&A activity. From a buyer’s perspective, there continues to be strong demand from both strategic and financial buyers despite the continuation of COVID 19 and other operational challenges affecting businesses. There is significant equity capital ready to be deployed, a strong lending environment, and a generally low cost of capital. From a seller’s perspective, improved performance, a strong valuation environment, and other macro and company-specific factors have increased the supply of acquisition candidates in the market.
Key Themes & Macro Trends
- Record breaking M&A activity in 2021, largely driven by private equity
- Potential tax law changes drove a race to close deals by the end of 2021
- Positive momentum heading into 2022 with strong buyer demand and access to capital
- Continued interest in plastics companies across all processes and end markets, particularly in the U.S. market
- Improved company performance in many plastics sectors, despite numerous operational challenges
- Emerging secular trends positively impacting the plastics industry and strong industry tailwinds in many end market segments
- Strong financing environment and overall cost of capital continues to be low
- Mixed results in key macroeconomic indicators, with inflation seeing its biggest increase in years