Duking it Out in the Label Business – February 2023 M&A Activity

Packaging deals have eclipsed transactions in all other segments of the printing and related industries for the past three years. That shows no sign of letting up. The temporary dominance in transactions that involved box printing companies, as we noted in The Target Report last month, has reverted once again to the norm in which label printing companies are the preferred target. (See The Box is Back – January 2023). The consolidation of the label printing industry is being driven by a slew of private equity firms that have demonstrated a willingness to pay double-digit multiples for profitable label manufacturers of any decent size. The attributes of recurring revenue, customer stickiness due to required brand continuity, and relative de minimis component cost of labels within the scheme of total product cost, all make label printing highly attractive to financial buyers.

The Contenders

Resource Label Group is my choice as the poster child for the PE-backed label industry feeding frenzy. With backing from Ares Management, its third private equity firm sponsor, Resource Label acquired Riverside, California-based Majestic Labels, the digital label printing division of Majestic Printing Systems. Majestic is the 27th acquisition for the Resource Label Group, which began as a single location company in Tennessee in 1991. The company grew organically until 2005 when it entered the private equity ecosystem with financial backing from Lineage Capital. With only one acquisition under its belt, Lineage passed the torch to First Atlantic Capital in 2011. With the backing of First Atlantic, Resource went into hyper-growth mode and added 21 more companies over the next decade. Ares Management picked up Resource in 2021 and has continued to nurture the platform. (See Private Equity Fuel$ Consolidation of Label Industry – September 2021).