The latest wave of tariffs is adding new layers of uncertainty to the printing and packaging industry.
As import costs rise, so does the cost of goods sold (COGS), leaving companies with a difficult choice: to either absorb thinner margins or pass price increases onto customers - a tough sell in today’s competitive market.
While we may see some long-term upsides to the job market in the U.S., tariffs are still causing challenges within the short-term that require more strategic thinking. To better handle increasing costs while remaining competitive, many business owners are debating how best to scale, and sometimes that requires a more robust M&A strategy.
At Wood Creek Advisors, we advise printing, packaging, and manufacturing firms on how to navigate these decisions. Over the past year, we’ve seen a growing number of clients start to consider consolidation more seriously as a way for them to remain competitive.
Tariffs and the Rising Cost of Goods
In 2024 and into 2025, the federal government began imposing and extending tariffs on a broad array of goods, which has added a layer of unpredictability and expense for which most firms hadn’t budgeted. This includes price increases on printing and packaging components such as paper, plastics, inks, and adhesives.
And, while some companies have attempted to pass those costs along to customers, others have found that the market simply won’t bear higher prices - especially in commoditized segments of the industry. The result is a painful squeeze on margins and a wake-up call for firms that may have delayed investment in cost-efficiency, automation, or supply chain diversification.
A Strategic Inflection Point
In this environment, forward-looking companies are not just asking how they can reduce costs. They’re also asking: what structural changes would make us more resilient?
This is where M&A could be a potential path forward. For many small- and mid-sized companies, it could offer a faster path to:
- Consolidate operations: Reduce duplicate facilities, equipment, and overhead.
- Diversify supply chains: Gain access to alternative sourcing channels, both domestic and international.
- Expand geographic reach: Serve more clients without relying on long-haul logistics.
- Invest in automation: Combine resources to modernize and scale production.
- Strengthen pricing power: A larger, more integrated company can have greater leverage with both suppliers and customers.
In short, strategic M&A can provide the scale and flexibility needed to absorb external shocks - whether it’s tariffs, inflation, or supply chain disruptions.
What Buyers and Sellers Should Know
If you’re considering M&A as a response to current economic pressures, it’s important to approach it with the right framework. Here are a few principles we share with our clients:
- Be proactive, not reactive.
- The best M&A outcomes come from deliberate strategy, not desperation. If you’re waiting until your margins are unsustainable, you’ve likely waited too long.
- Know your value drivers.
- Whether you’re a buyer or seller, be clear on what makes your business attractive: customer relationships, operational efficiency, niche capabilities, etc.
- Think beyond cost-cutting.
- A successful deal should not just trim the margin. It should position both companies for long-term growth.
- Align cultures early.
- Integration is where many deals fall apart. Make sure leadership styles, values, and business philosophies are compatible.
- Work with the right advisors.
- Legal, financial, or operational, experienced deal advisors can help you navigate complexity, avoid common pitfalls, and unlock more value.
A Window of Opportunity
It’s easy to view tariffs and rising costs as purely negative. But, for printing firms, these challenges also act as opportunities. The companies who explore partnerships, pursue scale, and/or invest in operational resilience are likely to be the ones who are best positioned for the future.
Even though M&A isn’t the right answer for everyone, it is an option that more companies should be actively exploring. At Wood Creek, we believe that adversity can sharpen strategy, and our current environment presents an opportunity to turn cost pressures into catalysts for change.
