The revenue synergy imperative
Deal value justification is about to get more challenging.
Valuations in the consumer packaging goods (CPG) sector have been supported to date by strong, traditionally cost-focused synergies. But it will likely get harder to squeeze efficiencies out of combined entities in a tougher environment.
These familiar cost reduction M&A strategies in the consumer packaging goods (CPG) sector are mature and, as a result, less effective for organizations that are already running lean and heading into a less-hospitable, lower-profit environment. The results of cost takeout alone can’t justify valuations. Revenue synergies, in turn, have become more critical.