Industry Insights: Global Packaging, Spring 2025
Packaging M&A finished 2024 with robust deal flow, providing an overall strong year that surpassed the annual volumes in each of the last five years, including the prior peak year of 2021. While volumes were up, pricing (as measured as multiples of EBITDA) held constant. Early returns from the first two months of 2025 indicate a potential reversal of this volume trend; no discernable trend is yet noted in pricing.
Our key observations for this Spring 2025 edition of Industry Insights:
Transaction Volumes rebounded by 33% over 2023, eclipsing the 5-year average by a similar amount and the record year of 2021 by 6%. Each quarter was above prior year’s comparable period, with Q4-2024 volumes the highest on record at 150 transactions. Dealmakers saw through election year cycles in the US and EMEA to get transactions over the finish line in 2024.
Each Product Segment saw increased deal volume, with notable increases in Contract Packaging, Machinery & Equipment, Rigid Plastic, Rigid Other (metal, glass, wood), and Flexibles. The softest sector was Labels, which increased by only 1 transaction (2%) over 2023. The most popular product segments for M&A were Paper (98 transactions), Flexibles (68), and Distribution (62).
Buyer Composition changed significantly in 2024. In each of the last five years, Financial Sponsors (both new Platforms and Add-ons) represented over 50% of all transactions. In 2024, while Sponsors grew their volume of transactions by 12 deals, their share of Packaging Market deal flow fell to 42%. Activity among Corporate acquirers was flat on an absolute basis, falling to 19% of the mix. Volume was thus driven by Privately held businesses, which grew on an absolute basis by +107 transactions, represented 39% of the total mix.
Pricing did not reflect an overheated marketplace, with Revenue Multiples falling slightly by 0.3x versus 2023 and EBITDA Multiples holding steady at 8.0x. We believe that valuations have level set at a more sustainable average pricing of +/- 8.0x following an over-heated 2021-2022. On the whole, Financial Sponsors paid less for acquisitions versus prior years (>-1x), while Private acquirers paid +1x more.
Over the previous five years, premium valuation segments were Flexibles, Multi-format, and Machinery & Equipment and Paper-based Packaging. The only significantly discounted format was Distribution/Contract Packaging. In 2024, the various formats converged to the mean, with significant decreases in multiples among Flexibles, Paper, and Labels and noticeable price inflation in Distribution.
As we ended the year, a number of transactions hit the market with the hope of closing in 2025. We believe that many of these transactions have/will transact, but the current economic turmoil will create hesitancy on many Buyers and Sellers to initiate new processes. We anticipate a softness in volume in mid-year and look for an uptick nearer year-end, in the hope of a clearer economic and policy direction.
