Have you ever thought about where your Amazon boxes come from? Like nested Russian matryoshka dolls, as you unwrap one package you’re often led to another and then another before reaching your purchased product. Some packages are built for efficiency, like IKEA furniture, while others are built to provide an unboxing experience, such as a luxury watch. If you’re anything like me, you just rip open a package like a birthday gift, without a second thought as to the container. Behind the scenes though, there’s a whole industry dedicated to packaging, containing and presenting the products we buy.

With fewer than 100 deals per year, Packaging Products is a niche but growing industry with consistent growth in the number of sponsors involved in the space. Since 2015, more than half of the 545 Packaging deals closed involved a sponsor, and 64% of all deals were between $10-49MM in Enterprise Value. Looking at Add-on deals only, we see evidence of a Buy and Build strategy being implemented as 78.7% of all Add-on transactions in this space involved a sponsor buyer.

Since January 2015, 138 sell-side intermediaries, 174 equity investors, 131 lenders, 150 corporate investors, and 154 law firms participated on deals related to packaging products. Mesirow Financial is the most active intermediary in this space, completing 32 deals over this period, roughly 45% of their total sell-side transactions. AEA Investors and First Atlantic Capital tied for the most active equity investor in this space, both completing 15 deals related to packaging products since 2015.

When you think of “glamor” industries, Packaging Products isn’t likely to be at the top of that list. But it is resilient, as total deals in the space only decreased 8.3% in 2020, and are on track to recover to pre-pandemic levels with 21 deals completed so far in 2021. The ubiquity of packaging along every step of a product’s lifecycle, from raw materials to last mile delivery, gives Private Equity firms investing in the space not only a “safe” bet, but the potential opportunity to serve their own portfolio in adjacent industries as well.

 

Last week’s deals today

March 7  – March 13
~132 deals traded

Deal of the week

Abacus Data Systems Inc. (dba AbacusNext), a San Diego provider of management software for legal firms, was acquired by Thomas H. Lee Partners from Providence Equity Partners. William Blair acted as the sell-side financial advisor. Weil, Gotshal & Manges provided sell-side legal advice and Kirkland & Ellis provided buy-side legal advice for this transaction. No terms were provided.

Most active subsectors
  • IT: Software and services
  • Financial: Services
  • Financial: Insurance
  • IT: FinTech
  • IT: Services
  • Services: Misc., asset light
Most active cities
  • New York
  • Mountain View
  • Houston
  • Toronto
  • Austin
  • San Francisco
  • Indianapolis

Photo by Didssph on Unsplash

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