The Goal Report: Non-public Fairness Items Collectively Print & Packaging—September 2022 M&A Exercise

The consolidation of the printing and packaging trade continues to choose up momentum as new monetary gamers enter the sector. The brand new contenders, principally non-public fairness companies with backing from a number of traders, normally transfer into an trade phase with an preliminary acquisition, a transaction that drives a stake within the floor, a deal that says their intention to spend money on and develop a enterprise in that particular sector. That first foray into the actual enterprise phase is more likely to be an organization that has ample measurement and profitability for use as a launching pad for additional acquisitions. From that preliminary platform funding, the funding companies aggressively search out and full a number of sequential bolt-on acquisitions to increase their footprint within the focused market.

This development has been most evident and prevalent within the label and versatile packaging segments the place the PE-backed frenzy has, over the previous a number of years, reached a fever pitch of exercise. A number of non-public fairness consumers vying to construct out their platforms to attain important market gravitas has led to sky-high buy multiples for label printing firms, no less than judged throughout the worth context of the general printing and packaging trade segments.

As now we have famous in earlier Goal Studies, our expectation has been that PE-driven consolidators would develop into fascinated by different print-centric segments, particularly the manufacture of folding cartons. Just like labels and versatile packaging, folding carton manufacturing is characterised by recurring revenues, strict coloration administration, adherence to quite a lot of technical necessities associated to the trade vertical being served, and a relentless proliferation of brand name extensions which requires continuity of buyer interplay. These trade options are enticing to personal fairness companies that function within the decrease center market, precisely the extent of many family-operated privately-owned folding carton firms.

In contrast to labels and folding cartons, the extent of M&A exercise within the business printing enviornment has been a lot quieter for a number of years. Industrial printing has a a lot larger dependence on the ebb and stream of selling budgets. Inner manufacturing in business print environments is characterised by the staccato rhythm of job-shop workflows. Industrial print has been and is more and more challenged by the continuing transition of selling communications to digital media. On account of these elements, M&A exercise and enterprise values within the business printing phase have lagged behind the opposite print segments, with fewer competing consumers and decrease buy multiples. Critically, in as we speak’s market-driven dynamic that’s extremely influenced by non-public fairness, the monetary gamers stayed on the sidelines and averted the extra generalized business segments of the printing trade.

There are indicators of change. A number of monetary gamers have now emerged to sponsor important platforms throughout the basic business phase. Nevertheless, business printing firm house owners mustn’t confuse the looks of a choose few non-public fairness funds within the phase with a return to the strong market and better valuations that characterised the marketplace for business printing firms within the nineteen-nineties. The non-public fairness gamers coming into the business printing phase have been principally very selective, buying profitable worthwhile firms with numerous service choices together with upstream inventive providers and multi-channel supply of their clients’ communications. Run-of-the-mill business printing firms needn’t apply.

Folding Carton Veterans Get Again within the Recreation

Trade icons Marc Shore and Dennis Kaltman are again, establishing a brand-new platform firm. Leaving little doubt about their intentions to be severe gamers as they return to the trade, the duo is heading up a brand new firm, Max Options, with backing from non-public fairness agency Jefferson Capital Companions. Shore and Kaltman labored collectively at Shorewood packaging and had been supported by Jefferson Capital Companions within the formation of Multi Packaging Options, a extremely profitable folding carton roll-up that was ultimately offered to Westrock, the huge publicly-traded paper and paperboard manufacturing firm.

Somewhat than begin with the acquisition of an current manufacturing firm, Max Options started by establishing two model new manufacturing vegetation centered on manufacturing of folding cartons and labels for the well being care and shopper markets. The primary plant to open, a 100K square-foot facility in Bristol, Pennsylvania, started operations in July. The second, additionally a brand new plant, is a 150K square-foot manufacturing unit in Harmony, North Carolina, and is slated to open this month.

The corporate introduced its first acquisition, the acquisition of Ellis Group, Canada’s largest family-owned and operated folding carton firm. The acquired firm operates three amenities within the Toronto area. Along with sheetfed offset capabilities, the corporate makes use of web-fed flexographic presses designed particularly for high-volume folding carton manufacturing.

One other entrant into the competition to consolidate the folding carton market is GPA World, with monetary backing from Sweden-based non-public fairness agency EQT Companions. GPA World has constructed up a community of folding carton vegetation, layered on high of the corporate’s core outsourcing experience, together with vegetation in Poland, Eire, the UK, in addition to US-based factories in Massachusetts and California (see GPA Global Emerges as Packaging Consolidator – December 2021 M&A).

The PE-backed roll-up of Oliver Printing & Packaging, sponsored by Pfingsten Companions, was lately traded out in a secondary buyout to Tenex Capital. Pfingsten established the platform in 2016 with the acquisition of Cleveland area-based Oliver Printing, on the time a business printing firm that had efficiently transitioned a considerable portion of its enterprise to folding carton manufacturing. Constructing on that preliminary base, Pfingsten acquired a number of folding carton firms, together with Pohlig Packaging in Virginia, Boutwell Owens in Massachusetts, Skilled Picture in Oklahoma, and DISC Graphics in Hauppauge, New York the place the corporate is now headquartered. 

Different PE-backed gamers consolidating the folding carton phase embrace Radial Fairness Companions with the Lewisburg Printing platform, Mill Rock Capital’s Mill Rock Packaging roll-up, and Wellspring Capital’s Rohrer. (For extra, see Label Roll-Ups are Red Hot; Are Folding Cartons Next? – March 2022).

Industrial Printing Roll-Up Redux (Advertising and marketing Manufacturing Suppliers)

DCG One, based mostly in Seattle, Washington, acquired Corporate Communications Group (CCG), based mostly in Higher Marlboro, Maryland. Notably, DCG One payments itself as a “advertising and marketing providers group” and described its acquisition goal as an “built-in business print and direct advertising and marketing firm.” Whereas neither firm shies away from selling their roots within the printing trade, nonetheless each DCG One and CCG clearly current their printing capabilities throughout the framework of a broad vary of capabilities. Along with print, the mixed group presents strategic advertising and marketing, inventive design providers, internet design, grand format printing, promotional merchandise, digital media advertising and marketing, success, unsolicited mail providers, and oh sure, printing.

DCG One has been backed by Clavis Capital Companions and Dobbs Administration Service since January 2020. The transformation right into a advertising and marketing service supplier was underway on the time of the acquisition, after which accelerated with the acquisition of the Garrigan Lyman Group, a branding and digital promoting company with places of work in Seattle and New York. 

Publish Capital Companions, a non-public fairness fund that focuses first on its belief and perception in an skilled government management crew, and solely thereafter will spend money on a particular trade, continued its help of the crew at Ironmark, with the acquisition of Millennium Marketing Solutions.* Based mostly in Annapolis Junction, Maryland, Ironmark presents a complete worth proposition to its clients. With the moniker of an “Picture Firm,” Ironmark presents inventive providers, web site design, database integrations, search-engine-optimization, web-to-print, digital media advertising and marketing, success, and oh sure, printing. (see Commercial Print Awakes from M&A Slumber – June 2022).

The bought firm, Millennium Advertising and marketing Options, can be based mostly in Annapolis Junction, and over time transitioned from a small print store right into a full-service advertising and marketing agency. Areas of experience embrace digital advertising and marketing, webpage design, graphic design, promotional merchandise, signage, and oh sure, printing. 

Labels Stay the Division One Section

Labels proceed to be essentially the most sought-after phase, if gauged by the variety of non-public fairness consolidators which have been competing to choose up the diminished variety of appropriate impartial label printing firms that stay within the decrease center market.

Fortis Options Group introduced the acquisition of Digital Dogma, a label printing firm based mostly in Santa Fe Springs, California. Fortis is now backed by Harvest Companions which acquired the corporate in a secondary buyout from Foremost Publish Companions in October 2021. Fortis has grown through acquisition from one small strain delicate label printing firm in Virginia Seaside to a nationwide multi-product packaging producer with over 1,300 workers throughout twenty-two vegetation.

Different lively non-public fairness gamers within the label phase embrace Incline Fairness with platform firm NovaVision, Quad-C Administration with Catapult Print and Packaging, Dunes Level Capital with Premium Label & Packaging, Sole Supply Capital with Peak Applied sciences, Genstar Capital with Brook + Whittle, Heartwood Companions with All American Label & Packaging, Morgan Stanley Capital with AWT Labels & Packaging, Sole Supply Capital with I.D. Photos, and Ares Administration with Useful resource Label Group. And that’s simply the checklist of PE-backed platforms lively within the label phase which have introduced transaction within the first 9 months of 2022! 

* Graphic Arts Advisors, writer of The Goal Report, served as unique advisors to Millennium Advertising and marketing Options on this transaction.


View The Target Report online, complete with deal logs and source links for September 2022


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