Mezzo’s Summer 2023 Packaging Industry Insights highlights moderating M&A activity, evolving valuation trends, and continued sponsor participation as the packaging market adjusts following peak deal levels.

Mezzo acted as exclusive financial advisor to TSC Auto ID Technology Company on its acquisition of a Polish producer of labels and shrink sleeves. This cross-border transaction strengthens TSC’s ability to serve European customers with high-quality OEM supplies and complements its portfolio of printers, scanners, and RFID solutions.

Mezzo’s Labels Industry Insights explores recent M&A activity and transaction trends, highlighting a moderation in deal volume following peak levels in 2021 amid inflationary pressures and rising interest rates.

In the following video, Managing Director Jonathan White discusses key insights from this year’s AWA Global Release Liner Industry Conference in Denver, CO, which he attended with Director Stuart Sanford.

2022 ended on a whimper, bringing 2022's M&A transaction volume down by over 20% across all industries as increases in inflation and interest rates as well as fears of recession dampened appetites for acquisitions worldwide. Similarly, Valuations (measured as a multiple of EBITDA) declined by at least 1.9x from 2021’s high point. Mazzone’s universe of Packaging Transactions, however, points to a more resilient marketplace. Overall, our tracked global deal volume declined 9% over 2021 and median EBITDA valuations declined by 0.7x. While not good news, 2022’s Packaging Sellers can take solace that they fared better than the overall market.

Mazzone & Associates is pleased to announce that it acted as the exclusive financial advisor to INDEVCO North American on its acquisition of Perma R Products, Inc.

After a banner year for acquisitions in 2021, everyone anticipated a decrease in deal activity. Indeed, broader measures for 2022 suggest deal activity will be down as much as 20%versus 2021. Anecdotally, greater availability among providers of QOEs and Rep & Warranty Insurance indicates capacity in these support industries, which further supports a sense of a softer market.

Mezzo is pleased to announce that it acted as exclusive financial advisor to Mativ Holdings, Inc. (NYSE: MATV), (“Mativ”) on its sale of the product arm of Filtrexx, Inc. (“Filtrexx”) to MKB Company, a portfolio company of Kurtz Bros., Inc.

Mezzo Managing Director Jonathan White presented at the AIMCAL Executive Leadership Conference, offering insights on M&A trends and how companies in the web converting sector can position for continued transaction activity in an active market.

2021 was remarkable for the economy, the transaction market overall, and specifically for the Packaging Transaction Market. Packaging companies benefitted from robust demand which grew pipelines and revenue forecasts, with many companies producing record results. There were challenges, however, as many struggled to keep up with material price increases, unavailability of key components, delays in expansion plans and labor shortages.

Mazzone & Associates will be releasing its Winter 2022 Packaging Industry Insights in the coming weeks, but in preparation for The Association for Corporate Growth's (ACG) M&A South 2022 taking place in Atlanta February 7-9, we wanted to preview 2021's activity in Packaging as it relates to the Sponsor Market. If you are attending M&A South 2022, we would be pleased to speak with you regarding our experience and expertise in the Packaging Market.

Mezzo is pleased to announce that it acted as exclusive financial advisor to Rayven Inc. (“Rayven”), a developer and manufacturer of engineered packaging coatings, tapes, and release liners, on its sale to Duraco Specialty Tapes (“Duraco”), a leading manufacturer of pressure-sensitive tapes and specialty materials.

2021 has witnessed remarkable rebounds for the economy generally, the transaction market overall, and specifically for the Packaging Transaction Market. The economy rebounded particularly well through mid-year 2021, with the US GDP growing over 6% in each of Q1 and Q2 and defying the rise of the delta variant, inflationary pressures, supply chain disruptions, and a disconnect between labor demand and willing workers. This success was mirrored in the deal-making marketplace, particularly among financial sponsors (Private Equity), which drove volumes that will surpass 2019's former annual record [i]. Acquirers are riding the high economy, a very favorable lending environment, and sellers seeking to avoid a potential increase in tax rates in 2022.

In this summary, we highlight trends, developments and M&A activity within the sustainable packaging market including key trends in the supply chain and in regulation, mergers and acquisitions activity, and investment opportunities within the sustainable ecosystem.

Robert Bateman, retired CEO and co-founder of Roplast, reflected on the transaction: “We are quite satisfied with the result and Roplast’s new partnership with PreZero. In these uncertain times, the Mezzo team proved invaluable, providing guidance and driving the marketing process with domestic and international parties. I doubt whether anyone could have advised us better.”

With 2020 finally behind us, we can see how the global pandemic impacted the packaging industry and, more specifically, packaging mergers & acquisitions. Overall, Packaging fared better than many sectors of the economy. This was in part driven by a large portion of packaging destined for inelastic markets such as food, personal care, and healthcare as well as a favorable raw material environment for the better part of the year. However, a deeper dive into the various packaging end markets leads to a wide array of year-over-year results for sales and volumes.

As we now enter the seventh month of our pandemic-induced recession, we find ourselves still dominated by uncertainty – uncertainty in our COVID-19 recovery timeline, uncertainty in our economic recovery, and uncertainty about the long-term impacts of changes in how society will operate in the future. With several months of data now available, we can now begin to assess how has this impacted M&A for the Packaging Industry.

As of this writing, we are in the early stages of “lock down” as a result of the COVID-19 outbreak. While we cannot be certain of either the severity or duration of the impact, it is safe to say that no one in our Industry is immune to COVID-19’s effects.