Continued Consolidation In The Label Segment
In 2022 the Label segment experienced an unprecedented consolidation, which is expected to continue through 2023, as companies seek to capitalize on the opportunities arising from changing consumer behaviors and technological advancements. The Label M&A deal volume has more than doubled since 2003. Representing a nearly 4.5% increase over the deal count in 2021 and a nearly 15% increase over the deal count in 2020, the Label M&A activity is evidently thriving.
BII is projecting a 5% increase in packaging related deals in 2023 compared to 2022 and a slight decrease in overall plastics industry. We expect consumables related industries, such as Labels, flexible and rigid packaging, to remain strong. We expect a decline in cyclicals industries and businesses due to macroeconomic headwinds that will negatively impact industrials related M&A, which we predict will decrease 5% compared to 2022. Capital goods related segments, such as machinery and segments with exposure to the building / construction and transportation industries are most at risk.
Global transaction multiples are at record levels and expected to remain strong. Buyers have access to large amounts of inexpensive cash and are prepared to invest in M&A opportunities. While the number of Label sector M&A deals did not reach prior record levels, the competitive significance of the consolidations experienced in 2022 is unprecedented.
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