Last month, Connecting for Results (CFR) participated in a webinar on M&A trends in Canada in collaboration with PrintAction and Printovation Canada. While the focus was on M&A activity in Canada, our American friends will benefit from some of the differences between the countries, especially if they are interested in exploring opportunities in Canada.
While 2022 has seen more mergers and acquisitions activity than the previous two years, CFR conducted a survey of publicly announced deals to provide an overview of the current marketplace.
To help set expectations, our Chief Operating Officer, Bob Dale, and Chief Financial Officer, Morris Slemko, shared their expert tips on some of the potential risks and rewards of current M&A activity.
In case you missed it, here are the top 5 takeaways:
1. Activity has picked up for 2022.
Activity for acquisitions virtually ground to a halt in 2020 due to the pandemic. There was increased activity in 2021, however the level of activity grew at a significant pace in 2022. Business has picked up for many, and valuations are returning to pre-pandemic levels. With positive trends, many view now as the right time to sell.
2. Commercial printers and packaging companies are in demand.
While the spread of purchases appears to be balanced across industry segments, commercial printers and packaging companies represent the majority of deals. However these segments also represent the majority of the companies and print volume in Canada (70-75%).
3. Buyers fall into two main categories.
While there is “Private Equity” (PE) activity in Canada, we have also added ‘professional buyers’ to this category. This would include the large companies / consolidators who employ professionals to review the market, assess the opportunities, and put deals together. There are also entrepreneurs. With all cases, the deal needs to make business sense and have a strong return on investment.
4. Companies need to evolve and grow.
Maintaining the status quo may provide regular income, but since most business relationships are not static, new customers are needed, new services should be offered, equipment needs to be replaced, and re-investment is required. Organic growth is good, but faces constant challenges, especially with our current substrate supply issues. Business acquisition could be one way to achieve growth.
5. Thinking of selling? Plan ahead.
Selling a business is not a simple or quick activity. There are a number of steps required including preparing, searching, evaluating, negotiating, and closing the deal for mutual benefit. Post-sale, sellers are often expected to remain engaged for one or more years to support transition activity to help obtain the highest value for their company. Business deals that are based on closures often aren’t public but require similar pre and post sale efforts and can also benefit from professional counsel.
Whatever your perspective and business goals, we wish you success!