Cold Front Moves In – February 2016 M&A Activity

Is the market cooling off for companies in the printing, packaging and related industries? After the peak number of deals announced in January, there was a sudden and noticeable drop off in transactions. No mega-deals were announced in February, and with the exception of two deals by Luxembourg-based powerhouse ink supplier Flint Group, no big players were active. Accentuating the decline in M&A transactions there was a slight uptick in industry-related bankruptcy filings, accompanied by the steady drumbeat of non-bankruptcy plant closures. While it does not appear that we should be battening down the hatches, we may be seeing at minimum a pause in industry transactional activity as buyers take a break while multiples cool off a bit. 

Several private equity fund principals we spoke to have noted that they are taking a bit of a breather and stepping back from the packaging market despite their genuine interest in the segment. They report that sellers have caught “multiple fever” and continue to ask for higher and higher valuations, feeding on the prices they have heard that others obtained, and wanting even more. In a discussion about the broader transactional market at a recent panel discussion consisting of family office investors and their professional managers, there was a general consensus that they have become very selective about new investments. Given the patient nature of their funds, they are sitting it out while multiples cool, rather than chase ever more expensive deals.