Mergers and acquisitions activity in the graphics industry has been pretty steady both here and in the U.S. over the last several years. Periodically a huge deal will dominate the headlines, but many smaller deals regularly close quietly and without too much fanfare.

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.

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.

Industry Overcapacity

With disruptive social media communications, the amount printed by some customers has changed significantly. As a result, this can impact some printers’ revenue significantly, so companies look to merge with others to consolidate operations, reduce costs, address declining sales and expand product offering.

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.

Private investments

Venture capitalists 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 Canadian marketplace, and the trend will continue, albeit not at the level that has been apparent south of the border.

Tuck-in transactions

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. If a recession takes hold in 2020, as some expect, tuck-in transactions could be on the increase.

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 internet but are quite robust and growing.


According to studies and information emerging from the U.S., 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, 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.

Printers expect more M&A Activity

According to a recent study, most printers expect the pace of mergers and acquisitions to accelerate over the next five years. 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.