Packaging M&A Pulse – 2023 Year In Review

The Global Packaging M&A market improved in 2023 after a down year in 2022. 294 transactions were announced in the year which was an increase of 31 deals over 2022 levels and in line with pre-pandemic volumes.

While transaction announcements increased year-over-year, the higher level of activity was mainly driven by deals involving foreign buyers and sellers. Domestically, transaction activity remained stagnant, and well below elevated levels experienced in 2021.

Overall, deal activity picked up significantly in the second half of the year as negative market conditions such as inflation, rising interest rates, uncertain debt markets, and varied demand trends normalized. While improving market conditions likely played a role in the elevated levels of deal activity, transaction announcements in the latter half of the year were likely also the result of processes that were put on hold in Q1 closing later in the year.

Key trends in Packaging M&A in 2023 include:

• Packaging M&A activity was sluggish through the first six months of the year, with only 130 deals announced through the end of June. The monthly average of 22 deals in H1 2023 was in line with depressed Q4 2022 levels. Despite a slow H1, packaging M&A activity picked up significantly in the second half of the year with over 160 deals being recorded through this period
• Foreign buyers and sellers drove transaction activity in 2023, increasing by 31 deals year-over-year. Activity from foreign buyers also increased each quarter in 2023, helping to propel the year above 2022 levels. Domestic transactions, on the other hand, recorded only 47 deals in the second half of 2023 which was 10 deals below the first half
• Similar to 2022, packaging transaction activity was once again buoyed by financial buyers. Both platform and add-on investments increased year-over-year, with add-ons in particular being well above pre-pandemic levels. Private equity remains a strong asset class with dry powder at historic levels. After another strong year of fundraising in 2023, private equity firms appear positioned to sustain elevated levels of M&A activity in 2024
• Transaction multiples compressed in the packaging space which was likely the result of varied company performance and an increasing cost of debt. The average of PMCF’s proprietary research on EV/EBITDA multiples has fallen to 8.7x, which is the lowest level recorded since 2016

From a transaction volume standpoint, Global Packaging M&A rebounded in 2023 after a subpar 2022. Much of the second half of 2022 was burdened by rising interest rates and inconsistent demand which appeared to have an effect on M&A that carried over into 2023.

As these factors returned to normal, M&A activity increased. Domestically, packaging transaction activity remained in line with 2022 and well below 2021 levels.

With that being said, businesses with strong fundamentals remain highly attractive to both financial and strategic buyers and the general buzz in the industry is that many transactions are in the process of being launched in Q1.

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