There are a number of positive factors and industry dynamics that could result in continued strong plastics M&A activity during 2013. Plastics industry valuation multiples continue to be heavily impacted by end market served, although there are a number of other 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.

Commodity price fluctuations are not going away anytime soon and volatility will likely increase before settling down.  The issue of dealing with raw material cost volatility should not be ignored or passively accepted.  Managing inventory and raw material price risk will be an important part of maintaining a healthy business for years to come.

Many family business corporations are missing a potentially valuable resource for both the business and the family. Owner/managers, whether they are founders or successors, should consider diversifying their board to include independent directors if they have not done so already. Such a move is particularly valuable if they are considering transitioning the business to the next generation.