![]() ![]() And then you look at the material supplier and the materials technology side of the equation and the people acquiring those businesses are typically more interested in gaining technological differentiation through acquisition. So you usually find businesses on the fabrication side that are acquired tend to be a little more established, mature - have been around for some period of time. When a business like that gets acquired, it’s usually being done for reasons of scalability or it adds a capability or is accretive in some sort of financial way. MDP: If you look at, call it the fabricators, the people making stuff. … But if you compare the average deal, in any industry, without some sort of advisor or some sort of third-party input, versus one that gets done with that advisory assistance, there’s a pretty notable difference in terms of valuation, terms of the deal, outputs and capability of the individuals moving forward.ĬW: How do you compare the M&A strategies of composites material suppliers vs. So then what happens is you’ve got the guy down the street or maybe it’s one of the big guys that they’ve been able to shoot breeze with at events over the year, and there’s a level of familiarity there to work together and a deal ends up happening. … He may be thinking that the time is right to consider some sort of alternative, whether that’s selling the business, taking on capital or a growth partner that will help him get to that next level … there’s less of a tendency to engage outside help to go make that happen. MDP: To give an example … if you have, call him Joe Composite, and he’s built a great technology and he’s built it up to a fairly sizable scale and it’s now starting to attract some interest from potential partners, would-be investors, potential acquirers, and he’s typically got that insular mentality because where he’s gotten with his business and his lifecycle has focused on protecting that intellectual property or whatever that secret sauce is. ![]() ![]() Ultimately what you have is a lot of very smart technical people in this industry, running businesses and owning businesses, but kind of figuring out the business of business on their own as they go, and they don’t have some of the same tools and resources that might be available to other peers in other industries.ĬW: How does this play out in the composites industry? Like I said, the industry’s greatest benefit is perhaps one of its areas for development and further growth. And that’s made it tough for some of the more institutional coverage efforts. That secrecy or that protection of what’s going on behind the curtain has been very beneficial to a lot of players … but I think a lot of the “bespokeness” of the industry has translated into a little bit of an insular attitude in some regards. So it’s been a little bit of a shorter period of time.… and a lot of the problems are trying to solve for are fairly bespoke, or there’s a lot of “secret sauce” that goes into competitively differentiating one business from the next. MDP: The composites industry has been around for 50 years - and I am sure there are people who would argue it’s been longer or shorter than that - but it’s really been more in the last 5 to 15 years that a lot of the materials and a lot of the technologies and a lot of the landscape has really developed and evolved. Plant tour: Airtech International, Springfield, Tenn., U.S. As someone who bridges the gap between those inside and outside the industry, what are your observations of the composites industry? Visit iTunes, Google Play or /podcast for the full CW Talks interview.ĬW: The composites industry is relatively young and growing quickly, but it’s also highly technical. CW’s conversation with Del Pero is excerpted here. Michael Del Pero, managing director at investment banking advisory firm FocalPoint Partners (Los Angeles, CA, US), has worked for several years in the composites industry M&A space and recently shared with CW Talks: The Composites Podcast his assessment of the composites investment market. Further, the past few years have seen several very significant acquisitions by larger industry players looking to shore up material and technical capacity (e.g., Tokyo, Japan-based Toray Industries’ acquisition of TenCate Advanced Composites, Nijverdal, The Netherlands). Editor’s note: The highly dynamic nature of the composites industry makes it a strong target for mergers and acquisitions (M&A) activity on the part of a variety of companies and investors eager to be a part of this industry’s growth. ![]()
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