MMT Chats: Acquisition Trends and Lessons for Mold Builders
Jim Berklas is a former full-time M&A lawyer for several of the largest private equity firms in the country and has 25 years of M&A experience and 200 closed transaction. Today, he is founder and M&A Leader with Augmented Industry Services. He joins me for this MMT Chat on mergers and acquisitions trends and strategies within in the mold manufacturing industry.
- How did AIS develop and why is different from other acquisition firms?
- Why is there so much M&A activity within moldmaking the past few years and what does it ultimately says about this niche within manufacturing?
- What has been the impact of COVID on all of this M&A activity?
- What advice do you have as to what a mold builder can do to prepare for a sale?
- With the goal being to grow the acquired shop including its people, what do you believe is the top priority of the new owners and the leadership of the acquired shop to make it all work?
A few tidbits to whet your appetite:
- Investment capital continues to pour into private equity funds (because of their historical performance for their investors) and private equity has identified plastics - and moldmakers - as ways to get into healthcare, packaging and other growing end markets. e mold maker at a lower multiple than the molder.
- Apart from attractive end markets, some investors believe moldmaking creates an attractive consolidation opportunity.
- By acquiring several moldmakers and creating scale, these combined companies can pursue larger moldmaking opportunities with large consumer goods companies who launch products in multiple countries around the world.
- Moldmakers, who predominantly service growing and recession-resistant end markets such as healthcare and packaging, will command a higher multiple than those who do not.
- If you can add automation to a CNC or EDM and save labor costs—fewer operators or less overtime—do it!
- When considering an equipment purchase, pay particular attention to the opportunity to reduce labor costs and improve productivity with higher-axis and higher-speed equipment.
- If you can grow beyond your budget, the extra work is more profitable than the work you've budgeted because the work you budgeted has already covered your fixed costs.
- To maximize the sale proceeds, reduce inventory and speed receivables collection in the 12-36 months before you sell-driving down your averages.
- Smaller mold builders often work on handshakes and purchase orders, but business practices must evolve as a shop approaches a sale.
Watch the full video chat above, and for more of our archived MMT Chat conversations, click here.
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