Mergers & Acquisitions: An Update BY JAMES RUSSELL If we’re realistic, we’re going to get through this. Despite all the glum news we have been hearing lately, that is what
Board Converting NEWS INTERNET DIRECTORY
THE HAIRE GROUP www.hairegroup.com
key printing & packaging industry business indicators are telling us. Not surprisingly, a recent NAPCO Research/Printing United Alliance survey found that the pace of busi- ness was still far below what would be expected in a normal year. But it also reported that sales, quote activity, and confidence were
Haire Group is the premier provider of new machinery for the corrugated industry. As the exclusive US & Canadian agent for one of the largest machinery manufacturers in the world, Haire Group is able to pair clients with the best machinery solutions for the best value to meet their spe- cific needs. As an operating partner of the US-based DFA Technical Support Center (a joint venture of Haire Group and Dong Fang), Haire Group delivers top-notch 24/7 pro- fessional, reliable service and support, maximizing quality and uptime. Additionally, Haire Group has been the indus- try’s #1 pre-owned machinery broker and plant equipment appraiser since 1976. HarperLove is the leading provider of specialty adhesives, performance additives, and wet-strength resins to corru- gated packaging manufacturers. With the largest and most experienced field service and technical support team posi- tioned throughout the U.S. and Latin America, HarperLove has a long-standing reputation for providing outstanding service and delivering demonstrable performance improve- ments. HarperLove’s renowned services include not only innovative product development and custom product for- mulation, but also machine and process assessments, ad- hesive formula adjustments, machine tuning, detailed ser- vice reporting, and more. HARPERLOVE www.HarperLove.com
James Russell
starting to trend up from the bottom in the darkest days of COVID-19. If that is not exactly cause for rejoicing, at least it tells us we have good reason to hang in there and keep on believing that better times are ahead. We are seeing this new strain of realism at work in the M&A marketplace as well. Sellers who once imagined they would have to ride out only a few bad months now under- stand that recovery will take longer. They know if they sell now, they are likely selling based on current EBITDA levels that are probably lower than what their companies gener- ated in pre-pandemic 2019. Even though EBITDA multiples have not changed, the gross purchase price is likely to be less because EBITDA is down. This obliges them to adjust their thinking about timing and valuation. We know an owner who, having enjoyed two very good years in 2018 and 2019, naturally expected 2020 to be the right time to sell. Now, he is confronting the likelihood that his numbers will not return to what they were until 2021, and possibly not even then. He is reconciled to the fact that if he sells this year, the pandemic’s negative impact on his company’s performance will be reflected in the sell- ing price. The good news is that this well-run company remains highly desirable for acquisition — if its owner ac- cepts the market’s present estimate of what the business is worth. However, the virus does not dictate everything. The in- dustry segment a company belongs to, and the personal circumstances of its owner, still influence the selling deci- sion, even in an M&A market as upended as this one. Some Segments Doing Better For example, businesses concentrated in products for events are looking at a longer bounce-back period than those producing labels and packaging, where demand has not declined nearly as much and may even have in- creased as is generally the case for corrugated containers. Younger owners may be more willing to tough it out to full recovery than owners nearing retirement age. ‘Second Paycheck’ Option As it always does, the M&A market is finding ways to adapt to changing economic conditions with creative ap-
KIWIPLAN www.kiwiplan.com
Kiwiplan - premier worldwide software provider of enter- prise-wide, fully automatic solutions specifically for the cor- rugating and packaging industries. Kiwiplan’s Total Solution delivers comprehensive, seamless real-time flow of infor- mation from sales order management to dynamic total plant scheduling and inventory control through shipping.
MAROTECH INC. www.marotech.com
Manufacturer of Marotape®, Marotape®Plus, Marotape® FPT and MaroString™; hot melt coated tapes and strings used for reinforcement and easy-open features for pack- aging. Marotech Inc. also manufactures state-of-the-art dispensing and tape placement equipments to optimize the productivity of applying hot melt coated tapes in pack- aging.
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December 21, 2020
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