The number of global M&A transactions in the packaging industry declined by 21% to 126 in the first half of 2019 (prior year period: 159). In Europe, the decline during the same period was 35% to 40 transactions, while in North America it was only 9% to 41 deals.
One indicator for the indication of corporate attractiveness is the multiple for the EV / LTM EBITDA (equity value / last 12 months EBITDA). In 2015, the multiple value was still at an average of 7.5; It even rose to 13.0 in the third quarter of 2018. Since then, the value has fallen and in Q2 2019 was only 9.3. However, multiples may vary depending on the industry. It also matters whether a strategic or a financial investor is interested in an M & A deal. Due to the size differences, company situation and margins, the multipliers can only be transferred to a limited extent to small and medium-sized enterprises or crisis enterprises.
Political and economic uncertainties dampen the M&A mood
The decline in European transactions is also likely to be related to the global political situation and economic uncertainties (eg Brexit, US trade barriers). But the topic of plastics and the environment as well as a looming recession will also play a role in the meantime (the plastic packaging industry has so far mostly been the main sector in transactions).
Outlook
Private equity floats in money. Large investors such as insurance companies and pension funds are looking for alternatives in view of the low interest rates and are increasingly encountering off-market corporate investments. The strengthening of strategic portfolio positions of individual companies will continue to contribute to consolidation through acquisitions, so that overall, albeit at the moment, a weakening in M & A activity is expected in the medium term. Especially the packaging segments such as “Active and Intelligent Packaging”, “Bio-Plastics”, “Biodegradable Packaging”, “Smart Labels” or “Anti-Counterfeiting Packaging” will be of increasing interest.
Further information on M & A / due diligence for the packaging industry can be requested at www.new-business-consulting.com.
About New Business Consulting GmbH:
New Business Consulting is a consulting firm focused in packaging and specializing in sales and marketing. With detailed analyzes, evaluations and consultations, the company supports, for example, in market analysis, new customer acquisition, customer evaluations, sales process optimization, development of new export markets, key account management and business development.
New Business Consulting also supports investors and companies in a market-oriented portfolio selection process by identifying and evaluating the best market segments, identifying and pre-evaluating potential candidates, and providing future-oriented sales and marketing due diligence (www.new-business-consulting. com)