Have you been considering making a strategic acquisition within the UK packaging sector? If the answer’s yes then you’ve picked a prime time to ponder such an opportunity, as the industry is performing particularly well right now.
In fact, the most recent research reveals that the UK packaging sector experienced a CAGR of 1.6% between 2018 and 2023 and is slated to enjoy a further CAGR of 1.5% between now and 2028.
This steady growth has been driven primarily by flexible packaging, followed by rigid plastics, but glass is set to experience the most significant growth by 2028 – something to think about!
If you’re keen to find out more about the ins and outs of buying a packaging business and get up to date on pros and cons and specific industry considerations, never fear, we’ve got you covered in this concise but detailed guide. Without further ado, let’s dive right in!
Pros and cons of buying a packaging business
Before we delve into the nitty-gritty aspects of making a packaging acquisition, it’s important to weigh up the pros and cons so you have a clear idea of the reasons for and against making this kind of investment.
Advantages
Perhaps the biggest upside of acquiring a packaging business is the opportunity it provides you to cement your place in a robust and resilient market. After all, there will always be a need for packaging, even if the types of materials favoured for use may alter according to emerging trends and requirements.
Sustainable packaging, unsurprisingly, is set to become a burgeoning segment of the industry, fuelled by both consumer demand and changes in regulations. Currently, the sustainable packaging market has a value of over USD $285 billion and a CAGR of 5.8% is predicted for the next decade.
Finally, as new innovations continue to emerge – including augmented reality – the packaging sector offers plenty of opportunities for creativity and ingenuity. And, as we’ve already seen, the industry is only going to continue to grow, so buying a packaging business should set you up to enjoy a steady income stream in the coming years.
Disadvantages
Perhaps the biggest potential pitfall of investing in the packaging sector is the level of competition. There are plenty of big companies that have acquisition strategies of their own, and which are keen to buy up smaller businesses to grow their market share.
As a result, it’s important to be selective as you weigh up different acquisition targets, as you need to make sure the business you buy has the capacity to compete and remain consistently profitable.
Another possible obstacle could be lack of knowledge and industry-specific expertise. If you’re brand new to the packaging industry, it may be a daunting prospect to purchase a company operating within this sector. However, if you do your research – and your due diligence – there is every chance that your M&A activity will lead to positive results.
Special considerations
There are several key factors to consider as you approach an acquisition in the world of packaging.
This sector is constantly adapting and innovating, with new trends emerging that have the power to shape the industry in the coming years.
These trends include a focus on sustainable, eco-friendly materials (as already mentioned) as well as durable, bespoke options for ecommerce businesses, and a focus on using cutting-edge manufacturing techniques to create high-quality packaging.
By taking these important trends into account, you can hopefully make a savvy decision when it comes to choosing the ideal acquisition target.
How to buy a packaging business
As you can probably see by now, the packaging industry is a particularly exciting option for would-be investors, both now and for the foreseeable future. So, if you’re eager to tap into this growing market, why not kickstart the M&A process?
Here are some top tips and advice on what to expect as you go ahead with your acquisition.
1. Finding the right match
Making an acquisition can perhaps be likened to embarking on a marriage. You need to make sure that you choose the right candidate, one that can enhance your current portfolio and encourage growth and innovation, while bringing you significant rewards.
At the same time, you need to ensure that you are also the right fit for the potential candidate and that you have the knowledge, expertise and drive to help them flourish in turn.
It’s beneficial to begin your acquisition journey by compiling an ideal profile of the company you’d like to buy. You can then begin the process of finding and vetting businesses that most closely match this profile.
If you find this task a little intimidating, never fear – you can hire a business broker to take it over on your behalf, drawing on their extensive network of contacts to find businesses that could be a great fit for your portfolio.
Once you have narrowed down your preferred candidates you can then ask for valuations, so you start off with a good idea of their market value. Again, a business broker can assist you by conducting the valuation themselves and providing you with an indication of the company’s genuine worth.
2. Negotiating important terms
When you have settled on a packaging business that you would like to purchase and a valuation has been done, it’s time to proceed to the negotiation stage.
This part of the M&A process enables both you and the seller to create an initial agreement that sets out key terms for the proposed deal.
Although this agreement will not be legally binding in most cases, it’s still incredibly useful when it comes to smoothing and streamlining the acquisition process and ensuring both you and the seller are on the same page.
3. Due diligence
The next step, following negotiations, is due diligence, a particularly crucial part of the journey. During this phase of the acquisition process, you’ll be able to access and pore over all your target’s documentation, gaining invaluable insights into its operations. You can then draw on this insider knowledge to help you make an informed decision about whether to proceed with the acquisition.
Don’t be tempted to rush this stage, as if you do, you could possibly miss a vital detail that could prove pivotal to the success – or lack thereof – of your deal post-sale.
4. Closing the deal
Once you have completed your due diligence – hopefully to your satisfaction – then the obvious next step is to seal the deal and add the packaging company to your portfolio!
Now is the time for your legal team to finalise the contracts, while you begin preparing to integrate your new business and make the transition as smooth as possible for your new team, customers, and suppliers.
How Harris Acquire can be of service
As we have described above, the acquisition process can be made much simpler by asking a business broker to mediate the transaction on your behalf. Reliable and experienced brokers – like our team right here at Harris Acquire – specialise in orchestrating an efficient, confidential, and stress-free sale for both buyers and sellers.
In short, if you want to purchase an existing business with minimal fuss and maximum returns, then our team offers the ideal solution.
And that’s not all – you can take advantage of our exclusive Acquisition Finder pilot, which includes a 30-day money-back guarantee for your peace of mind. To find out more about this pilot and how we can assist you with your packaging acquisition, give us a ring on 01926 757100 or send an email to Hello@harrisacquire.com.
We look forward to helping you spread your wings and expand your market footprint in 2025 and beyond!
