Mergers and acquisitions and business closure activity in 2020 was reduced significantly due to the pandemic, and 2021 displayed tendencies to be robust, especially with US activity.  In Canada there was a lot of activity happening behind the scenes and we predict 2022 will see a significant increase in activity. There are more buyers than sellers, which is not unusual, so this is a good time to investigate opportunities, if you have realistic expectations.

All business people want to “buy low and sell high” but the effect of the pandemic has been disruptive on customer requirements with printers impacted both positively and negatively. Buyers understand the fundamentals for valuation of a business. While short-term trends do impact, accounting for government support, and averaging revenue and profitability over a longer period, like 3 years, balances the effect.

Several trends are shaping and influencing both the pace of mergers and buyouts, the structure of deals, and the valuations placed on selling companies. Let’s examine some of them.

Industry overcapacity

Effects from the pandemic have compounded disruptive online communications, and the amount printed by many customers has changed significantly. As a result, this can impact printers’ revenue significantly, so companies look to merge with others to consolidate operations, reduce costs, address declining sales, and expand product offering. This creates the trend for buyers to look for distressed companies for a value buy. In these circumstances, tuck-ins can generate positive operations than separate operations.

Tuck-in transactions

Organic growth with acceptable margin is very difficult in today’s environment, so acquisition is a favourite way for companies with a good balance sheet to grow.  A tuck-in transaction refers to ones in which a buyer buys the book of business from a seller, with the expectation to grow the acquiring companies’ market share. This may leave the seller to dispose of the hard assets, such as building and equipment. It can also refer to a transaction in which the operations of a purchased organization will be integrated into the facility of the buyer. Research indicated the market is likely to see more of these types of transactions as consolidation occurs, as it’s an efficient way to add revenue to a business.

Private investments

Private equity investors are looking for a place to invest their money and have twigged to the stability offered by the printing industry, especially when returns elsewhere are merely average. We’ve seen some of this in the North American marketplace, and the trend will continue.

Packaging and labels lead the market

Packaging deals have dominated headlines over the past couple of years. Packaging and labeling companies will likely remain high on acquisition target lists as those segments are not only proving resilient to the ravages of the pandemic but are quite robust and growing.

Fragmentation and an aging owner population

Printing is a hugely fragmented industry, characterized by many owner-operated companies. Concurrently, many of those owners are close to or at retirement age and are seeking a profitable exit strategy. These conditions are perfect for consolidation activities and indicate a high level of transactions.

Convergence in the industry

Convergence is a term that has been around for some time, but for these purposes it refers to companies that want to diversify their revenue base by expanding into other services or markets. A commercial printer seeking to take on wide-format work is one example. Research shows that textile printing is a desirable area for expansion as is packaging. In these circumstances, buying an existing business, rather than growing sales organically, might be easier and more efficient. Convergence is a strong trend in the industry, meaning buyers are out looking for potential purchases.


According to studies and information available, multiples have averaged in the 3 to 6 times EBITDA range and, on occasion, have exceeded that based on several factors. If sellers can demonstrate consistent growth, strong customer relationships, a pattern of investing in their companies instead of simply cost cutting, investments in data and IT, personalized services, and creative services, then the multiple will be more attractive. Buyers typically use a 3-year period for valuations, so sellers are not able to pick and choose profitable periods and discount less profitable periods.

Expect more M&A activity

Most printers expect the pace of mergers and acquisitions to accelerate. Almost 40% of respondents to an industry wide survey said they were planning M&A deals both to grow within their primary segment and to expand into other markets.

If you are part of this group, now is the time to engage us for a professional review and support.