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48 The PCB Magazine • December 2016 by Dan Beaulieu If you want to know what is going on in our industry when it comes to mergers and acquisi- tions, there is no better person to turn to than Tom Kastner. Whenever I want to verify a ru- mor of a company being bought or sold, Tom is the first person I call, and unless he is under an NDA, he will fill me in. In this, our latest discussion, we talked about the PCB industry's M&A activity in 2016 and what Tom expects to see in 2017. Dan Beaulieu: It seems that there is a lot of activ- ity going on right now when it comes to companies buying other companies. Is that real or just my per- ception? Tom Kastner: There is a lot of activity in the past 12 months. I count 10 deals in the PCB sector in the last 12 months, and there are at least five deals going on at present that I am aware of or working on. I am also working on several projects in the EMS/PCBA sector for buyers. Beaulieu: What types of sales are happening? Kastner: A few of the sales have been larger companies buying smaller ones, and there have been a few mergers such as KCA/Marcel (now called Summit Interconnect) and Dragon/Elec- tro-Plate. Many of the buyers are larger compa- nies that are private equity-backed or publicly traded, such as Advanced Circuits, FTG, APCT, OSI, etc. More than half of the recent deals have been consolidations (seller's shop was merged into the buyer's). Beaulieu: What are the reasons people are selling now? Kastner: Most are selling to retire or to focus on other business. Several of the deals are due to underperformance. Of the owners I speak with, most are interested in retiring, but some would like to find a buyer/investor who can take the company to the next level. Beaulieu: I've noticed that there have been several "roll-ups" since last we talked. Please explain to our readers what a roll-up is, who gets involved in them and why. Kastner: Because many shops are running below capacity, the idea is that by combin- ing two or more shops, the business will run more efficiently and profitably. Also, a larger shop may be more able to invest in new equip- ment and technologies. These deals can be tricky, and it requires at least one of the shops to close, and transferring customers may be difficult. Beaulieu: Who would you recommend a roll up deal to, a seller or a buyer? FEATURE INTERVIEW Catching up with M&A Expert Tom Kastner