The M&A market remains active. Strategic, hybrid, and financial buyers remain active in M&A. Financial buyers continue to pursue new and add-on investment opportunities. In addition to this, sellers are entering the market, often due to some concern over the long-term health of the economy.

Still, multiples have begun to soften from all-time highs in 2021 within end markets demonstrating uncertainty. The housing/construction and consumer durable markets are seeing this the most, and markets that are seeing a slowdown understandably see lower sale multiples. All in all, valuation differences continue to exist across key end markets served.

Inflation persists. Despite recent interest rate increases to tame the rising level of inflation, the overall cost of capital remains relatively low by historical standards. The global economy has begun to slow as geopolitical and macroeconomic headwinds persist.

Uncertainty remains across the plastics industry. The plastics industry is faced with some level of uncertainty as inflation, interest rate increases, the continuation of the COVID-19 pandemic, labor and supply chain constraints, and geopolitical issues continue to be a concern for businesses and investors alike. 

Pricing issues challenge the market. Labor costs and availability, along with material price volatility, will continue to impact businesses across the supply chain. Sustained cost increases in raw materials and labor costs are driving companies to raise prices, but market participants continue to see strong demand even while employing more aggressive pricing strategies. Many manufacturers are benefiting from reshoring efforts that started before the pandemic and have since accelerated in some segments.

Geopolitical obstacles weigh on market. Sanctions on Russian exports have intensified the upward pressure on commodity prices. Factors from the COVID-19 pandemic, inflationary pressures, and global supply chain constraints have led to an increase in prices across the board. In addition, the relative uncertainty surrounding Europe’s energy and overall economy (largely but not exclusively caused by the war in Ukraine) may lead to offshoring from Europe either to North America or Southeast Asia. This may also drive interest from European companies in M&A activity within the United States.