Mid-size companies combining to compete

"By buying everything from one or two sources instead of six or eight, a large company can gain significant savings," says Alan Scharfstein, DAK president. "The smaller niche companies are being squeezed, and many are looking for merger partners. A few are trying to become multi-plant, multi-technology companies themselves by acquiring other small companies and expanding their product lines." These acquisitions are being made by what Scharfstein calls "strategic buyers," those inside the packaging business. At the same time, financial buyers are targeting mid-size privately held packaging companies because they're viewed as among "the best bargains around." They sell at a sizable discount to public companies, he says, and they tend to be overlooked because often they're too small to show up on the radar screens of companies that track merger and acquisition activity.