Packaging M&A Activity Remains Strong in 2018

Conversations at October’s PACK EXPO International focused on the trends driving heightened dealmaking in the packaging industry.

Friday, November 16, 2018

Packaging M&A activity remains elevated, driven by the ongoing consolidation of an industry that remains largely fragmented, growth tailwinds provided by the e-commerce, on-the-go food and beverage, and healthcare markets, and growing interest from financial sponsors drawn to the industry’s defensive characteristics. In the first half of 2018, there were 156 acquisitions of packaging companies, totaling $40.9 billion, a pace well ahead of 2017’s record 307 transactions, totaling $52.8 billion.

The robust demand for packaging assets is reflected in the valuations of these companies. In the first half of 2018, the median EV/EBITDA multiple for packaging acquisitions was 9.4x, well above the longer-term median of 8.3x since 2006. The healthy valuations achieved by sellers have been supported by lenders' willingness to finance packaging acquisitions, with leverage multiples today sometimes surpassing 7.0x total debt / EBITDA.

In mid-October, we attended PACK EXPO International in Chicago, where we met with executives, corporate development professionals, and investors from across the packaging industry. The four-day event continues to attract a larger and broader audience each year, with an increasing number of exhibitors displaying innovative, on-trend solutions. Based on our one-on-one meetings and other discussions at PACK EXPO, as well as our M&A advisory work in the sector, we examine several of the most powerful trends that are driving dealmaking activity in the packaging industry.

Highlights include:

  • Financial sponsors aggressively pursuing platform assets
  • "Healthcare halo" drives premium valuations
  • E-commerce spurs growth and innovation
  • Ongoing demand for sustainable solutions



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