Blaige & Company (“Blaige”) has been tracking the expansive printed/converted flexible packaging sector mergers and acquisitions (“M&A”) activity and the shifting competitive landscape due to consolidation for over two decades.
Our research indicates that the pouch converting niche is a “lightning rod” for M&A deals as exemplified by the ever-increasing demand for acquisitions and record purchase price premiums.
Due to the strong industry advantages and wide recognition of the successful consolidations, pouch converters can demand large valuation premiums in both strong and weak economic cycles. Pouch converters are now on the global stage. What makes them such “hot commodities”?
Pouch converters represent one of the most attractive M&A targets with strong valuation premiums due to the sector’s above average growth characteristics. The USD 42.3 billion global pouch converting market is expected to grow at 5.9% annually between 2023 and 2030. The pouch niche is continuously attracting new participants through both startups and conversions. The key end market is food & beverage, which represents 55% of all pouch demand, with the remaining 45% evenly distributed between healthcare, homecare, personal products, and other.
Several drivers account for the superior growth and valuations relative to mainstream packaging companies including the following:
Market share shift favoring pouches versus alternative packaging solutions including bags as well as fiber, metal, and rigid plastic packaging containers.
Sustainability advantages in source reduction up to 90% relative to traditional rigid packaging applications such as folding cartons (including multi-wall bags inside), blow molded / thermoformed / metal containers (including caps or lids and pressure sensitive, shrink or glue-applied labels).
Superior food shelf life via barrier properties of high-tech co-extruded / laminated films and foils relative to rigid container alternatives. Foil pouches also provide production advantages for retort applications (food cooked within the pouch).
Superior dispensing and serving applications via the use of innovative fitments/closures and the use of single serve stick packs and sachets.
Marketing advantages in the ability for the pouch to reflect striking printed graphics on the primary package versus on a separate, attached label.
Valuation Premiums
As the pouch market matures, many first movers and innovators which have established a market foothold attracts valuation premiums as suitors seek to acquire versus build on their own. Due to the unique drivers previously discussed, valuation multiples for niche pouch converters exceed those for mainstream packaging converters - thus pouch converters are hot commodities!
Founders Are Leaving Millions on the Table.
Pouch converters constantly receive unsolicited one-off offers, and all of our recent clients had multiple seemingly solid offers in hand when we were hired. Yet not one of those offers, if they would have eventually closed, would have prevailed in our process — they were substantially inferior in all respects.
The biggest mistake is for founders to “reactively” accept an unsolicited offer without turning the tables and “proactively” managing a competitive process and therein controlling the selection process. A proactive approach, in our experience, results in a 20-30% price difference; superior non-price terms and conditions (escrows, employment agreements, deferred payments); a significantly greater probability to close quickly with minimal organizational disruption and most important: the leverage to maintain the original price. Eleventh-hour price adjustments are almost a given in today’s world, and sellers must establish solid backup offers in order to fend off last minute attacks, strategically planned for just prior to the expected closing date when the seller is most vulnerable and expected to “cave”.
In our experience, institutions are keenly aware of this dynamic, and it is estimated that when selling a portfolio company, a professional competitive process is utilized 99% of the time (unfortunately, professional M&A investors know something that many founders, although successful in their own right, are still learning).
Blaige Process Can Add Millions, Protect Your Staff, and Avoid Broken Deals, Which Destroys Value and Upsets Your Organization.
Blaige runs an effective process that has a proven track record - achieving an average 48% premium over expected value in last 8 closings. Our “Secret Sauce” involves using our strategic knowledge of the sector to identify your strengths to tell the best story in a “Shark Tank” world, selectively exposing your opportunity to our proprietary global pouch converter contact network, and utilizing the industry’s most experienced and talented deal makers to create maximum competitive bidding pressure amongst an average of 8 serious bidders per deal, negotiating the material terms of the deal, creating and managing a virtual data room with hundreds of documents, controlling access to your staff, customers and suppliers, insulating you from the heavy negotiations in order for you to preserve goodwill with the new owner of your “baby” post-closing, and decisively close your deal. Every pouch converter is unique, so let’s start a conversation and strategize on the future of your company and expansive opportunities uniquely available to you as a member of the most treasured segment in M&A today.
COMPLIMENTARY CONSULTATION
Blaige & Company provides a multitude of advisory services, which can assist pouch converter owners, investors, board members, and senior managers to benchmark, enhance, and harvest the value in their companies. When it comes to selling, buying, funding, or evaluating pouch converters, Blaige & Company is the industry-dedicated advisor most qualified to guide you through a successful process. Blaige & Company is the clear industry leader in the pouch M&A. We look forward to engaging with you in a no-obligation, confidential discussion (NDA available) of your strategy and vision. Whether you are considering an unsolicited offer from a buyer, starting a sale process, or making an offer to acquire, we are well prepared to assist you in evaluating your options and navigating these dynamic market conditions.
Blaige & Company / Blaige Industry Intelligence, with offices in Miami and Chicago, is an investment bank and market intelligence expert dedicated exclusively to the packaging, plastics, and chemicals industries. The Blaige team has decades of transaction experience, has completed over 200 transactions, and has visited and evaluated over 600 packaging, plastics, and chemical operations all over the world. This year Blaige & Company celebrates its 20-year Anniversary.
Thomas E. Blaige, Chairman & CEO
tblaige@blaige.com, C: 312-806-4000
Chicago Office: One Magnificent Mile,
980 North Michigan Avenue, Suite 1350, Chicago, IL 60611
Miami Office: Brickell Arch Plaza, 1395 Brickell Avenue,
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