Buy? Sell? Partner?

'In 2015 packaging M&A looks to have hit a new record of 35 billion USD in the year, surpassing even the 32 billion USD set in 2007. A number of factors have driven this. The performance of packaging companies throughout the recession was particularly good, reflecting the defensive nature of the industry. Hence packaging share prices out performed comparable stock market indices, and a strong share prices mean it is easier to raise equity to make acquisitions. Companies also finance M&A with debt and at the moment interest rates continue to be around record lows. 2016 got off to a shaky start in the financial markets. However, for packaging the long term fundamentals make it an attractive industry to invest in and with such a large proportion of the industry in private ownership, including private equity, M&A is inevitable. Deals have been happening at high multiples so it continues to look like a seller’s market.'

Nicholas Mockett, head of packaging M&A, Moorgate Capital

'The last 30 years in print has seen major changes including major technology disruption. It has never been a stable sector and most who have survived have gone through periods of ups and downs and that inevitably colors the view of buyers. There is never a one size fits all answer as to what is the right multiple. Fundamentally it comes down to willing buyer and willing seller which is in itself based on a host of issues, including: synergies for the buyer; customer base demographic, business cycle and quality and sustainability of earnings; whether a volume driven or niche business; innovation; strength of remaining management team; and the desire of the vendor to exit and timescales for doing so. We are seeing a complete spectrum of earnings multiples from 2x to 10x-plus dependent on circumstances and the specifics of the business.'

Peter Alcock, corporate finance partner, Wilson Henry Corporate Finance

'What has changed in recent years are the key reasons for going through an acquisition or merger, and in the nature of the groups that are growing through acquisition, merger and new investment. Today, there are around 25 label printing groups that between them have in the region of 10 percent of the world label market. That is quite a substantial change in a relatively short period of time. These groups look to follow their major customers – the big global brands – into new emerging global markets in China, India, Latin America, Eastern Europe or Africa, consequently looking to acquire local label printers or establishing new start-up operations. The same challenges are facing the leading label industry suppliers of labelstock, inks, presses, dies and ancillary technology. It is probably easier to see patterns of acquisition or merger growth appearing today than it has ever been. It’s more focused, is being undertaken by even bigger groups, and is almost certainly starting to create a two level industry – large groups and consortiums serving the global brands, and smaller niche, specialty and more localized companies serving the remainder. Almost certainly, acquisitions and mergers will continue apace in the coming years, with the nature and structure of the label industry continuing to change.'

Mike Fairley, strategic development director, L&L

Read more detailed thoughts from Mike Fairley here