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Business Management 28 MoldMaking Technology —— MARCH 2018 By Deborah L. Douglas M ergers and acquisitions (M&A;) activity has had a great impact on plastics-related companies in North America for years. When these companies sell to private-equity funds or powerful strategic players eager for new business opportunities, company owners are given a mechanism for exit or retirement. Such transition nourishes the influx of new blood, ready capital and creative new approaches for growth. While all plastics processors have long been accustomed to buying and selling activity, the capital-intensive mold and tool- ing providers have experienced less M&A; action because prior to the rising maturity and growth of North American mold and tooling, most tooling came from Europe or South America. M&A; activity is now becoming stronger in the United States and Canada, as previously offshored product comes back to the region. This activity has prompted equity firms, original equip- ment manufacturers and injection molders to inquire about buying tooling vendors to capitalize on a critical, high-value industry and to better control mold sourcing or to internally add a mold source division, respectively. The topic of preparing for mergers and acquisitions will be a four-part series that focuses on sharing tools and knowledge Understanding the most intense merger and acquisition interest areas will better prepare moldmakers for the process. Preparing for Mergers and Acquisitions: Interest Areas about how the world of plastics M&A; work, so shops can be bet- ter prepared and remain healthier and stronger through the pro- cess. The series will identify the areas of most intense M&A; inter- est, mechanisms to assess the likely M&A; impact on a company, the sale process and successful transition to new ownership. M&A; Interest Areas As shop owners grow their companies, it is important that they understand which features offer premium value to potential buy- ers. One of the most impactful is industry expertise, especially in areas known to have steady growth. Such areas include medical products, medical packaging, aerospace products, pet products and food packaging. Some buyers are so focused on industry specialization that they look only for target companies with a heavy and well-known concentration in a specific niche product. The Douglas Group has found that a company with a specific niche and a strong reputa- tion can experience a 20- to 50-percent increase in transaction pricing. This is because buyers assume that the mold provider with exceptional expertise in a defined segment will command stronger pricing and better margins. This series will review how the world of plastics M&A; works, including M&A; interest areas, mechanisms to assess impact, the sale process and successful transition to new ownership.