Target Report 2015 Forecast - The Evolution of Printing & Packaging
The Darwinian process of growth, change, merger, and failure proceeded with full vigor during 2014. The 241 transactions announced during 2014 in the printing, packaging, and related industries in the US and Canada represent a 40% increase compared to the 172 transactions that we noted during all of 2013. The vibrancy of the market is consistent with the M&A activity noted across many industries over the past year.
Bankruptcy filings fell once again in 2014, with 20% fewer filed than during 2013 (43 versus 54). The companies that did file bankruptcy were in general smaller and had less impact than in past years. Tellingly, in 2014 there were three months in which we could not find any Chapter 7 liquidations and four months without any filings for Chapter 11 reorganization. Similar to the trend in M&A transactions in 2014, the printing and related industries were in synch with overall reduction in bankruptcy filings.
However, the trend in reported non-bankruptcy closures was dramatically different; there were 46 reported plant and company non-bankruptcy closures in 2014, a 100% increase from 2013. Some companies simply closed up shop without going through the formal bankruptcy court process. Another significant factor driving the consolidation of operations is the increase in acquisitions and mergers and resultant need to rationalize excess capacity. Local newspapers shut down their own printing presses and outsourced print operations.
This month, we take a look back at transactional activity during all of ’14, drawing conclusions from current trends and offer our predictions for select segments of the printing, packaging, and related industries for 2015.
General Commercial Printing – Stabilizing and Consolidating
Acquisition activity in the commercial printing segment will continue to be brisk, with transactions once again outnumbering all other printing-related segments as the successful players take advantage of their strong balance sheets and borrowing power to acquire weaker undercapitalized companies. Commercial printers will also once again lead the pack in the number of bankruptcy filings, although many of these will be Chapter 7 filings of small companies that will simply be liquidated. The larger companies will announce more non-bankruptcy plant closures as they consolidate production and retire older less efficient equipment and facilities.