The Global Packaging M&A market pulled back in 2022 from the historic levels of transaction activity witnessed in 2021. A total of 263 transactions were announced in the year, a decline of 96 from 2021 levels and approximately 10% below pre-pandemic transaction volumes. The first quarter of the year was in line with historical activity levels, but, as the year wore on, market conditions created some challenges and caused each of the subsequent three quarters to dip below historical, pre-pandemic transaction levels. Packaging deals were still getting completed at attractive multiples and several marquee transactions were announced throughout 2022, but the total level of activity was noticeably lower in the second half of the year. The most notable decrease was in larger platform private equity transactions which appeared to be challenged by the higher cost of acquisition financing and conservative leverage amounts.
Key trends in Packaging M&A in 2022 include:
- Packaging deal volume remained relatively constant through the final three quarters of the year, averaging 21 transactions per month. The fourth quarter of 2022, excluding 2020, was the least active quarter from a deal volume perspective since Q3 of 2018, with 62 deals announced or completed
- All Packaging subsectors, including Rigid and Flexible Plastic Packaging, Paper Packaging, and Other Packaging, declined year-over-year, but both Paper Packaging and Flexible Plastic Packaging transaction volumes were either in line with or above historical levels. Rigid Plastic Packaging activity, which has been elevated in the last few years, fell below 60 transactions for the first time since 2014, excluding 2020
- Transaction activity contracted among both strategic and financial buyers, which accounted for an equal split of transaction volume. Private equity platform and strategic transactions fell more than 25% below pre-pandemic volumes, while private equity add-on transactions were more resilient amidst the difficult market conditions
- Transaction multiples held steady in the packaging space in 2022. The average of PMCF’s proprietary research on EV/EBITDA multiples has been above 9x since 2017
Overall, Global Packaging M&A activity was lower in 2022, falling slightly below pre-pandemic activity levels. Despite the lower M&A activity in packaging, deals continue to be successfully closed at attractive multiples. There appears to be a bias towards strategic, private equity add-ons, and smaller private equity platforms given credit markets and the high cost of acquisition financing. While deal activity for 2023 will likely remain similar to 2022 until market conditions improve, PMCF will be closely monitoring market conditions throughout the upcoming year and corresponding changes to Packaging M&A activity.
