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Printing & Packaging M&A In 2020

Posted on November 25, 2020 By

In the printing and packaging sectors, M&A activity has slowed since August of 2019 with around 14 percent fewer deals closing. Deal activity was strong at the beginning of 2020, and then the COVID-19 pandemic brought everything to a standstill in the spring, with activity starting to return to normal in late summer. In fact, there were 16 transactions in August, which happens to be the same number as August of 2019.

The pandemic has made it more challenging to complete deals because of social distancing and how it impacts personal relationships, but buyers have not lost their strategic focus. The packaging side of the business has shown a heightened level of interest in labels, corrugated cartons, and folding cartons. Private equity and large corporate investors remain in the game. There is increased interest in flexible packaging, but the number of these transactions has been limited by the availability of target businesses in this segment.

 


Wide Format Printing
Activity has been up in 2020 in the wide-format printing sector, especially for tuck-ins. This is a sign of overcapacity partially due to a decline in brick and mortar retail activity that was made worse by the pandemic. Initially, retail signage and display saw a boom in demand for floor stickers and window signs used for social distancing requirements, a trend that appears to run its course.

Commercial Printing
The majority of deals taking place in the commercial printing sector are tuck-ins, under which the buyers acquire the customers of the target and tend to leave the facility and equipment to the seller to deal with, unless there is specific equipment needed to maintain specific customers. Less common deals were reverse tuck-ins, in which the buyer took on the seller’s assets and facility, and moved into the acquired company. Overall, these deals in commercial printing were down about 20 percent from 2019.

 

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Publishing
Print publishing activity (not including books) remains in decline as newspapers and other publications go digital and see increasing online subscriptions, as advertisers are putting their money into the online space, a trend that is expected to continue. Catalog printing has been in decreasing demand during the pandemic, with business owners being hopeful it will bounce back after COVID is a thing of the past. It is expected that weaker publishers will be acquired by stronger ones, boosting M&A activity, especially once government assistance runs out. With regard to direct mail printing companies, they are in a positive position as long as they know how to use data effectively to serve customers.

Packaging
In the packaging sector, tuck-in deals have been very much the minority in the last year. For most of the deals, buyers reported that the acquired location was a major factor, with some businesses having multiple locations, or having global reach. Private equity is actively involved in this sector. As previously noted, much of the M&A activity was in the labels business. Many of these deals marked the end of family ownership of independent companies. There was also steady activity amid corrugated carton and paperboard folding carton companies seeking buyers.

Ready to Sell?
If you are a business owner considering the sale of your company, our M&A experts at Benchmark International would love to hear from you.

 

Schedule A Call

 

Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com

Europe: Michael Lawrie at +44 (0) 161 359 4400 / Enquiries@BenchmarkIntl.com

Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com 

ABOUT BENCHMARK INTERNATIONAL

Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $6B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.

Website: http://www.benchmarkintl.com
Blog: http://blog.benchmarkcorporate.com

READ MORE >>2020_Food_&_Beverage_and_Restaurant_Sector_Update_Social

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