The Target Report: Private Equity Consolidation in the Label Industry – September 2021 M&A Activity


Resource Label Group acquires Ample Label, Kennedy Group acquires Color Label Business, Postal Center International acquires Arrowmail, and more …

It’s a binge eating in the premier label printing and converting industry. Fueled by multiple roll-up platforms backed by private capital, business has been uninterrupted and does not look set to slow until all the prime fruit has been picked.

Resource Label Group, which itself changed hands in July, was back at the closing table in September, announcing two more acquisitions in addition to the acquisition of Tek Label and Printing in August. In its latest transaction, Resource Label acquired Ample Labels, based in Nixa, Missouri. The acquired company is a leading digital and flexographic label printer for the food, healthcare, personal care, industrial, pharmaceutical and beverage markets. Just four days earlier, Resource Label announced the purchase of StickerGiant.com, a producer of labels and stickers sold through an online storefront. StickerGiant.com would appear to be filling a gap at the lower end of the market, serving small businesses, a sort of break in the label winding space that has focused on higher volume label makers. .

While not the only privately backed consolidator in the label industry, Resource Label is an example of how the process of secondary, and now tertiary, buyouts by professional investment firms. provided the financial fuel to run a virtually uninterrupted acquisition process. . At Resource Label, buyout professionals wereted no time after the company changed financial sponsors from First Atlantic Capital to Ares Management; the team made three acquisitions in less than three months.

Resource Label Group is not the only EP-powered platform consolidating the label industry, nor the only platform that has switched from one financial sponsor to another multiple times. Fort Dearborn was founded in 1925 as a general printing house. By 1930, the founder had decided that label printing was the deal, and aside from a diversion during WWII to print top secret strategic topographic maps for the war effort, Fort Dearborn focused on labels, shrink sleeves and related products. Fort Dearborn is now owned by Clayton, Dubilier & Rice, its fourth financial sponsor. Fort Dearborn seller Advent International acquired the company in 2016 from KRG Capital Partners, which previously acquired the company from Genstar Capital in 2010, which previously acquired the company from individual non-institutional owners in 2006. At the time From its entry into the private equity-backed growth world, Fort Dearborn had six factories and sales of $ 190 million, and with this latest deal is now part of a cumulative $ 3 billion of income.

Concurrent with the purchase of Fort Dearborn, private equity firm Clayton, Dubilier & Rice also purchased Multi-Color Corporation from Platinum Equity. Multi? Color, now a global label producer, was established in 1916 as a manufacturer of tri-color sheetfed printing presses. The owners quickly decided to pivot and switched to printing labels rather than manufacturing the machines. A milestone in the company’s history was the development in 1980 of in-mold labeling technology, in which labels are applied to plastic containers as the containers are formed in the mold. mussel. Platinum Equity bought Multi-Color as part of a private transaction in 2019, ending Multi-Color’s listing as a public share that dated back to 1987. (For more information, see Consolidation of the packaging industry in all directions – July 2021.)

In addition to the PE funds mentioned above, others are also suing label companies: Mason Wells, a Milwaukee-based private equity fund, has just formed another entry in the PE-backed roll-up of the label industry. labels with the double acquisition of KDV. Label in Waukesha, Wisconsin, and its sister company I-Graphics, based in Loveland, Colorado. Another recent entry into the mix is ​​the HIG Capital mega fund, which is no stranger to print-centric companies. Last summer, HIG acquired flexible label and packaging company Chromatic Productions, creating its labeling platform company. Dunes Point Capital, based in Rye, New York, started small and launched its label rewinding platform with the acquisition of Label Graphics Manufacturing in Little Falls, New Jersey. Not to be outdone, in December 2020, Morgan Stanley Capital Partners acquired AWT Labels & Packaging from Mason Wells (yes, that Mason Wells, the same private equity fund that just returned to the labels business last month. ).

And let’s not forget Brook & Whittle, the label platform now owned by Snow Phipps Group, which acquired the company in 2017 from RFE Investment Partners and Charter Oak Equity. Other PE-backed acquisition platforms in the label segment include Inovar, based in Dallas, with financial sponsorship from AEA Investors, and Fortis Solutions Group, based in Virginia Beach and operating 14 factories across the United States. United, with the financial support of Main Post Partners.

Not all transactions in the label manufacturing segment are driven by large privately funded roll-ups. The Kennedy Group, a family owned and operated label and packaging manufacturer, acquired the Color Label business in St. Louis, Missouri. * Based in Willoughby, Ohio, the Kennedy Group has self-adhesive label production capabilities , in roll -Fed film, digital labels and RFID labels and is actively seeking growth opportunities through strategic acquisitions, offering an alternative to roll-ups on PE media.

Direct mail and commercial printing

Postal Center International, a direct mail store in Weston, Florida, has announced the acquisition of Arrowmail in nearby Miami. In addition to direct mail services, PCI processes transactional printing and provides presortation services. The company recently announced its intention to establish a series of regional sites across the country, starting with a leased 100,000 square foot facility in San Antonio, Texas. According to the CEO, the company seeks to “propel the scale rapidly, not only in San Antonio, but also in other high-impact and highly centralized regions of the country” as part of the company’s national expansion. in terms of regional office, production and postal sorting. sites. Based on our conversations and mandates with other owners in the direct mail and transactional printing segments, we believe that PCI’s strategy of expanding direct mail production capacity in multiple regions is driven by a direct response. slowing standards for postal delivery times in the United States.

The commercial printing segment was noticeably calm in September, with the exception of the acquisition of Taylored Printing by Worth & Higgins, based in Richmond, Va., A diversified printing supplier in sheetfed offset, digital printing, large format and signage.

There has been a noticeable, but not yet dramatic, increase in the number of bankrupt commercial printing companies, the majority of which have filed under Chapter 7 of the Code, meaning the company is in liquidation. without the possibility of reorganizing as is allowed. under Chapter 11. This increase in bankruptcies was expected since the Covid-19 epidemic, prevented by the distribution and cancellation of the ubiquitous PPP loans, the benefit of which is probably now, or will soon be, exhausted. Another factor that may increase the pressure on financially troubled companies, especially in the commercial printing segment which has its own headwinds, is the unwinding of the Covid support measures which is likely to lead to an increase in the number of loans classified as non-performing. , with corresponding increased pressure from lenders on borrowers.

Promotional

Commercial printing companies are increasingly offering promotional and specialized advertising items to their customers. What was once a separate and differentiated business is now included in the integrated mix of production and marketing support services under the umbrella of many commercial printing companies.

Grossman Marketing, a 111-year-old Massachusetts company, has acquired Symbol Marketing & Promotions. Founded in 1910 by the great-grandfather of the current owners as the Massachusetts Envelope Company, the company has grown from manufacturing envelopes to a business model of distributing promotional and printing products. The current acquisition is the eighth of the Grossman brothers, all of whom strategically support its thin asset servicing model.

Reno Type, a printing and courier company, has acquired CDMS, a promotional products distributor near Sparks, Nevada. BR Printers, based in San Jose, Calif., A commercial printing and book manufacturing company with extensive production capabilities, certainly not a lightweight business, has acquired Casa del Mar, a San Diego-based promotional products distributor. . While not all commercial printing companies embrace the promotion industry, the trend towards becoming an integrated marketing service provider will continue, often through an acquisition strategy.

* Graphic Arts Consultants, editor of The target report, provided outreach to identify the opportunity and served as exclusive advisers to the Kennedy Group in this transaction.

View the Target report online, complete with transaction logs and source links for September 2021

www.graphicartsadvisors.com

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