A packaging business sells two things at once: a set of customer relationships, and a machine park. The first is what the seller talks about. The second is what determines the price, because a buyer is not acquiring the profit you reported last year — they are acquiring the obligation to keep those machines running long enough to earn it again.
That obligation is invisible in the accounts. Depreciation is a tax and accounting convention with only a loose relationship to the year in which a press, an extruder or a die-cutter actually needs replacing. A converter can report a respectable EBITDA for a decade while quietly consuming the asset that produced it, and the day the buyer's technical adviser walks the shop floor, that consumption becomes a number.
This article sets out how buyers convert a machine park into a valuation, why substrate and energy prices distort the earnings picture in both directions, what the packaging regulation that applies from August 2026 changes about how a plant is underwritten, and what an owner should fix in the year before going to market.
Every capital-intensive business has a gap between accounting profit and cash, and in packaging the gap is wide enough to change the answer.
The number that matters to a buyer is EBITDA less maintenance capital expenditure: what the business earns after spending whatever is required to keep output, quality and safety where they are today, before any growth. For capital-intensive converters, maintenance capex commonly runs in the region of two to three per cent of sales, with total capex higher once growth and compliance projects are included. Those figures are orientation, not a benchmark to apply blindly — the right number for any given plant depends on the technology, the age profile and the shift pattern.
The distinction matters because of how the multiple is applied. If a business reports a given EBITDA and a buyer believes it needs a material slice of that back every year simply to stand still, they are not buying the headline figure. They are buying what is left, and they will either reduce the multiple, reduce the base, or deduct the deferred spend from the price. All three arrive at the same place.
Sellers frequently argue that recent capex has been low and should be treated as the run rate. That argument works only if the machines are young. If capex has been low because spending was postponed, the buyer will read the same data as evidence that a catch-up is due, and they will be right.
The single most useful document a packaging seller can prepare is a complete asset register, and almost nobody has one when the process starts.
For each significant machine, a buyer wants the year of manufacture, the year of installation, the hours or impressions or tonnes run, the service history and whether the original manufacturer still supports it. That last question is decisive more often than owners expect. A mechanically sound machine whose control system is obsolete, whose spare parts are no longer produced and whose service engineers have retired is a different asset from the same machine with a current support contract, however well it prints today.
Buyers then look at what the machines actually deliver. Availability and utilisation by line, changeover times, scrap and waste rates, and reject and complaint rates all describe the real capacity of the plant as opposed to the nameplate capacity. A plant running at high nominal utilisation with a high scrap rate is not running at high utilisation at all; it is producing waste at full cost.
Two further points are routinely missed. The first is that the replacement cost of a line has usually risen substantially since it was installed, so a fully depreciated machine can carry a seven-figure replacement obligation that appears nowhere in the accounts. The second is that energy efficiency is now part of the asset's economics: older equipment consumes more per unit of output, and at current European energy prices that difference is large enough for buyers to model it separately.
When a technical adviser walks a plant, they are producing a list with a total at the bottom: what must be spent in the first twenty-four months after completion, and what can wait.
That total behaves like debt in the negotiation. It is deducted from the price, or funded through a retention, or reflected in a lower multiple. Sellers sometimes hope that a busy order book and good margins will distract from it. They do not, because the adviser's report is written by an engineer with no interest in the commercial narrative.
The response is not to hide the list but to produce it first. A seller who commissions their own technical review, publishes it, and shows a costed capex plan with the work already begun changes the negotiation entirely: the discussion moves from an open-ended risk to a scheduled expenditure, and open-ended risks are always priced worse than scheduled ones. In our experience at Conclave Partners, sellers who spend a modest sum on their own equipment assessment before launch recover it many times over, because the buyer's figure is invariably the more pessimistic of the two.
The commercial context for European packaging changed with Regulation (EU) 2025/40 — the Packaging and Packaging Waste Regulation — which entered into force on 11 February 2025 and applies from 12 August 2026, replacing the previous directive with a directly applicable regulation.
Several of its requirements land later but are already being underwritten in transactions today. All packaging must be recyclable by 2030, with packaging below the defined recyclability threshold barred from the market. Minimum recycled content requirements for plastic packaging apply from January 2030, with the level depending on the material and on whether the packaging is contact-sensitive. The empty space ratio in grouped, transport and e-commerce packaging is capped at fifty per cent from 2030. Member States face packaging waste reduction targets of five per cent by 2030 against a 2018 baseline, rising thereafter.
For a seller, the effect is that buyers now ask a question they did not ask three years ago: can this plant, with this equipment, make packaging that will be legal to sell at the end of the decade? A converter whose lines are built around multi-material laminates that will not meet recyclability thresholds is selling a shorter asset life than the machine list suggests, regardless of how new the machines are.
The corollary is an opportunity. A seller who can document which product lines already comply, which require reformulation, what the conversion costs and how far customer qualification has progressed is answering the buyer's most expensive uncertainty in advance. That documentation is worth more than any presentation about market growth.
Packaging margins move with input prices, and the direction of the move is frequently mistaken for operating performance.
When paper, resin or aluminium prices fall and selling prices lag, margins expand and EBITDA looks excellent. When input prices rise, the same lag works in reverse. A buyer normalises for this, and a seller who has enjoyed a favourable substrate cycle in the last reported year should expect the buyer to price a more neutral one.
What protects the seller is contractual. Supply agreements with explicit index-linked pricing mechanisms, defined pass-through lags and stated review points are a genuine value driver, because they demonstrate that margin does not depend on the direction of a commodity market. Agreements where price is renegotiated informally each year do the opposite: they tell the buyer that the margin is a matter of goodwill.
Energy deserves the same treatment. Consumption per tonne of output, the contracted position, hedges and their expiry dates, and any on-site generation all belong in the data room. In extrusion, thermoforming, corrugating and glass, energy is a large enough line that a buyer will model it independently rather than accept a historical average.
Two structural questions decide how transferable a packaging business is.
The first is tooling. Dies, moulds, plates and cylinders are frequently owned by the customer even when they sit on the seller's floor and appear in the seller's fixed asset register. Buyers check this carefully, because customer-owned tooling can walk out of the building at the end of a notice period. An accurate tooling register, stating ownership and location for each item, prevents an unpleasant discovery halfway through diligence.
The second is customer position. Packaging tends to have high customer concentration, and in this sector concentration is not automatically fatal, because qualification cuts both ways. A supplier who has passed a food or pharmaceutical customer's audits, whose artwork and specifications are embedded in that customer's systems, and whose materials are qualified for a specific product is not easily replaced within a year. That is defensibility, and it should be presented as such — with the audit certificates, qualification records and specification approvals to prove it.
What undermines that argument is contractual weakness: short notice periods, no volume commitment, and change-of-control clauses allowing the customer to exit on a change of ownership. Those clauses need to be identified before launch, because a buyer who finds them late will treat them as a reason to restructure the deal rather than a point to discuss.
Packaging plants are industrial sites with industrial histories, and the site is examined as carefully as the machines.
Buyers look for the operating permits and their conditions, emissions and solvent handling, waste routes, and the status of any abatement equipment. Where inks, solvents or coatings have been used over decades, they look at soil and groundwater history, and they will often commission an environmental survey before signing rather than rely on the seller's assurance.
Where the seller owns the property, it is usually better to separate it from the operating business and lease it at market rent. Most buyers of a packaging business do not want to fund industrial real estate, and separating it widens the buyer pool while giving the seller a retained income asset. The lease must be documented properly, because a rent set below or above the market distorts the earnings the buyer is underwriting.
Strategic groups in paper, plastics or metal packaging buy for capacity, geography, a technology they lack or a customer they want. They understand the machine park immediately and their diligence on it is fast and unsentimental.
Private equity platforms remain active in the sector, typically through buy-and-build strategies that consolidate regional converters. They will engage a technical adviser early and will be forthright about deferred capex, but they are also the buyers most likely to fund a growth investment programme after completion.
Adjacent converters buy to extend their format range, and customers occasionally integrate backwards to secure supply of a critical component — usually only where the packaging is genuinely strategic to their product.
Which of these values a particular business most depends less on scale than on what makes it hard to replicate: a qualification position, a technology, a site with permitted capacity, or a customer list. Establishing that before approaching anyone is where Conclave Partners spends the first weeks of a packaging mandate.
Build the asset register. Every significant machine with age, hours, service history, manufacturer support status and current condition, reconciled to the fixed asset ledger.
Commission your own technical assessment and cost the resulting work. Then start it, so that the buyer sees a programme in progress rather than a backlog.
Separate maintenance capex from growth capex in your own reporting, for three years, with a stated basis. This is the single figure the buyer will build the valuation around.
Document the regulatory position line by line: which products meet recyclability requirements today, which need reformulation, what conversion would cost, and where customer qualification stands.
Review supply and customer agreements for pass-through mechanisms, notice periods, volume commitments and change-of-control clauses, and fix what can be fixed while there is no transaction on the table.
Produce a tooling register with ownership stated for each item.
Clean up inventory. Obsolete substrate, discontinued customer stock and slow-moving finished goods should be written off before the process, not argued about during it.
Get the environmental and permit file in order, including any historical reports, and consider commissioning a survey yourself if the site has a long industrial history.
Normalise the accounts honestly, including a market salary for the owner's role. Adjustments a buyer can verify are accepted; adjustments supported only by the owner's word cause the buyer to discount the whole earnings figure. Sellers who ask Conclave Partners where to start are pointed at the asset register and the maintenance capex split, because those two documents determine both the multiple and the deductions from it.
A prepared packaging business typically takes nine to twelve months from launch to completion. Technical and environmental diligence add time that a services business does not face: site visits, equipment inspections, sometimes intrusive environmental investigation with its own laboratory timetable.
Expect several site visits by different specialists, and prepare the plant and the story told on the floor accordingly. Expect questions about single points of failure — one line that produces a disproportionate share of output, one press with no backup — and have an answer that is operational rather than reassuring.
Confidentiality is manageable but not automatic. Machine suppliers, substrate merchants and customers all talk to each other, and a plant that suddenly receives unexplained visits from men with clipboards is noticed. At Conclave Partners we stage technical access late and under specific terms for that reason.
On EBITDA, but the EBITDA they use is adjusted for maintenance capital expenditure and for input price cycles, and the price is then reduced by any deferred capex the technical review identifies. Two businesses with identical reported EBITDA can be worth materially different sums if one has a young, supported machine park and the other has a list of overdue replacements.
Not by itself. Age matters through three questions: is the equipment still supported by its manufacturer, does it deliver acceptable output quality and scrap rates, and can it produce packaging that will comply with requirements that bite in 2030. A well-maintained older machine that passes all three is not a discount. An unsupported one that fails any of them is.
Regulation (EU) 2025/40 applies from 12 August 2026, with recyclability, recycled content and empty space requirements arriving by 2030. Buyers underwrite the whole holding period, so they are already asking whether a plant's product portfolio will remain saleable. Documenting compliance status by product line, and the cost of any conversion, removes the buyer's largest unpriced risk.
Usually not. Most buyers do not want to fund industrial property, and retaining it on a properly documented market-rent lease widens the buyer pool and leaves the seller an income asset. The rent must be genuine, because an artificial figure distorts the earnings being valued.
Less than in most sectors, provided the relationship is defensible. Audit qualifications, embedded specifications and long requalification cycles create real switching costs, and buyers recognise that. Concentration hurts where the contractual position is weak — short notice, no volume commitment, a change-of-control right — because then the concentration is real and the protection is not.
Around nine to twelve months from launch to completion for a prepared business, with technical and environmental diligence the usual reason it runs longer than a comparable services transaction. The preparation that matters — the asset register, the capex programme, the regulatory documentation — needs a further twelve months to be credible.
Ildar Zakirov — Conclave Partners ildar@conclavepartners.com
Sergi Kosiakof — Conclave Partners sergi@conclavepartners.com