Healthcare IT: February 2023 Market Update

GENERAL TRENDS

Healthcare IT Industry Outlook and Observations

• The global Healthcare IT market reached a value of $350 billion in 2021 and is expected to grow to $500 billion by 2025 and $1.1 trillion by 2032

• Artificial Intelligence (AI) and Machine Learning (ML) continue to be notable growth drivers thanks to their advanced features to help prevent, predict, diagnose, and treat human diseases. The global AI and ML healthcare market reached $15 billion in 2022 and is expected to hit $21 billion in 2023. And by 2030, the market will reach $188 billion, with an annual growth rate of 37% from 2022 to 2030

• Remote Patient Monitoring (RPM) is also one of the significant growth drivers, with about 71 million users in the U.S. by 2025, an increase of 57% from 2022

• Virtual Communities will play an essential role in providing comprehensive care where there is limited access to traditional healthcare such as long-term care facilities, remote locations, and via devices

• Internet of Medical Things (IoMT) connects a network of devices and apps around the patients, providers, and healthcare facilities to provide data on medical records, track patients' behavior, and medication, monitor real-time vital data, and more. The market of IoMT and connected medical devices was valued at about $158 billion by the end of 2022 and will grow at a CAGR of 12% and reach $216 billion by 2025

• As a result of the trends mentioned above, the demand for Healthcare Software Development will increase dramatically across all platforms and applications, such as medical imaging analysis, hospital management, e-prescription, telemedicine, and patient portals, to name a few

• After an all-time high in 2021, the Healthcare IT M&A deal volume maintained momentum in 2022, with over 300 transactions in North America. For 2023, we expect robust M&A activity as many institutional buyers who held out before will likely step up their transactional activity this year

M&A ACTIVITY

Healthcare IT Transactions in North America

DEAL SPOTLIGHT

CLICK HERE FOR 555 RELATED TRANSACTIONS

ABOUT 555 CAPITAL ADVISORS

• Investment bank and advisory firm providing bespoke M&A, capital raise, and related services to middle market companies

• Transactions: 100% Sale or Divestiture, Growth Capital, Recapitalizations, Mergers, Management Buyouts, Acquisition Advisory, and Financing

• Industries Served: Manufacturing, Business Services, Consumer, Technology, and Healthcare

• Highly experienced and personalized client relationships: 25+ years experience, 100+ transactions and mandates, customized solutions

This presentation contains information obtained from third parties, including but not limited to market data. 555 Capital Advisors believes such information to be accurate but has not independently verified such information. To the extent such information is obtained from third-party sources, there is a risk that the assumptions made and conclusions drawn by 555 Capital Advisors based on such representations are not accurate.

Packaging: December 2022 Market Update

GENERAL TRENDS

Packaging Industry Outlook and Observations

• Urbanization, the rise of e-commerce, and growing consumer demand for easy-to-use packaging have continued to drive growth in the global packaging industry, with an expected CAGR of 3.9% through 2027

•  As a result of the pandemic, increasing food safety concerns and changing consumer eating habits have resulted in a boom in the global food packaging industry, with the market expected to expand by a CAGR of 5.1% from $338.4B to $478.2B by 2028

•  Growth factors + growth limitations

  • Expanding market for non-recyclable, non-bio packaging → limiting biodegradable, recyclable packaging solutions industry

• High growth within the flexible packaging industry

• Traditional packaging may continue to be replaced by flexible packaging and high-barrier films and challenge rigid packaging like metal and glass for food products

  • Flexible packaging providers are offering packaging solutions catering to the rise of bakery + confectionery demand → with confectionery manufacturing expected to reach $10.9B in 2023

  • Sustainability trends - including recycling and biodegradable forms of PET are continuing to rise 

Other Industry Observations

• Growing consumer awareness for sustainable packaging and increasing environmental federal regulations are augmenting the market for paper-based packaging, with over 75% of companies like PepsiCo, Nestle, and Coca-Cola having already made sustainable packaging commitments

• The growing demand for plastic coupled with supply chain issues with crude oil, a primary raw material used in plastic production, has resulted in a surge in plastic prices and price volatility, incentivizing companies to look into alternative forms of packaging

• Even with the cost of pulp and paper increasing by over 25%, the increasing demand for sustainable packaging solutions, and stringent environmental regulations, the paper-based packaging industry production is expected to expand by 1.5% annually and a current valuation of $373.7B, exhibiting a CAGR of 4.7% until 2030

• The value of domestic packaging machinery shipments hit $10.5B last year, a jump of 11.2% from 2020, according to the Industry Packaging Machinery report from the Association for Packaging and Processing Technologies. Shipments of domestic packaging machinery are also expected to increase at a CAGR of 5.4% to hit $12.9B in 2027. This demand is driven by the increase in consumer goods, increased adoption of automated packaging machines/ systems, and the increasingly efficient machines

Recent and Upcoming Trends

Recent packaging trends show consumers are looking to companies for innovative solutions to keep consumer safety and needs in mind. Consumers expect companies to incorporate responsible and sustainable packaging solutions accompanied by accessible, tamper-resistant, and transparent packaging that will build trust and communicate quality to buyers.

• The legalization of cannabis, the rise of the medical cannabis market, and the surge in new cannabis startups have driven the growth of the global cannabis market to a projected revenue CAGR of 25.2% and a market valuation of $23.8B by 2030, with consumers emphasizing the importance of child-resistant and tamper-evident packaging

•  With consumer demand for sustainable and eco-conscious alternatives to plastic packaging on the rise, startups specializing in plastic-free packaging, circular packaging, and mushroom-based styrofoam alternatives are emerging to disrupt the packaging market

M&A ACTIVITY

Global Packaging M&A Transaction Velocity

DEAL SPOTLIGHT

• Liquibox is a leading manufacturer of sustainable liquid packaging solutions offering a wide assortment of bag-in-box solutions as well as fluid dispensing fitments to a variety of end markets including food and beverage, consumer products, and healthcare

• This acquisition provides Sealed Air accelerated growth and capabilities within sustainable packaging solutions for the Fluids & Liquids industry

• This transaction is synergistic, with both companies benefiting from the complementary solutions portfolio, technologies, and operations

• MBC is a Utah-based company that specializes in the conditioning and recycling of industrial packaging containers, including steel and plastic barrels, drums, and intermediate bulk containers

• This acquisition provides an expansion in their industrial packaging capabilities

• Additionally, sustainable packaging and environmentally-safe collection options are the core of MBC's services, providing TricorBraun headway into this market as well

Date: 11/01/2022

Target: Liquibox

Buyer: Sealed Air Corp

Transaction Value: $1.15B

Date: 9/21/2022

Target: TricorBraun

Buyer: MBC

Transaction Value: Undisclosed

CLICK HERE FOR 555 RELATED TRANSACTIONS

ABOUT 555 CAPITAL ADVISORS

• Investment bank and advisory firm providing bespoke M&A, capital raise, and related services to middle market companies

• Transactions: 100% Sale or Divestiture, Growth Capital, Recapitalizations, Mergers, Management Buyouts, Acquisition Advisory and Financing

• Industries Served: Manufacturing, Business Services, Consumer, Technology, and Healthcare

• Highly experienced and personalized client relationships: 25+ years experience, 100+ transactions, and mandates, customized solutions

The opinions expressed herein are those of 555 Capital Advisors. There is no guarantee that any predictions/projections as to certain market activity or events will come to fruition or past market or transaction performance referenced within will yield the same results as transactions previously conducted by 555 Capital Advisors.

Transportation & Logistics: November 2022 Market Update

GENERAL TRENDS

Logistics Industry Outlook and Observations

• Technological advancement and digitization continue to drive growth within the transportation and logistics (T&L) market, with an expected valuation of $12.9 trillion by 2027 and a CAGR of 6.5% globally

• COVID-19-related challenges coupled with a cooling economy continue to present obstacles for the T&L market  

  • Rising fuel costs, the persisting global supply chain crisis, and the skilled driver labor shortage all remain to be key roadblocks exerting pressure on logistics providers 

  • After expanding 5% year-over-year in the first half of 2022, retailers are withdrawing in the short term to avoid the supply-chain congestion that brought on delays and product shortages in 2021 

  • The changing geopolitical landscape this past year highly disrupted the supply chain logistics industry, as the market needed to evolve and adjust to the impacts of geopolitical events like the Russia-Ukraine war and the lingering impacts of Brexit 

• Other external factors such as parts and supply chain shortages made it difficult for asset-based carriers to keep their fleets at similar price points as the prior year

• Regardless of the above challenges, the market remains resilient with continued technological improvements, the rise of e-commerce, and diversified sectors of the market 

  • The diversification toward on-demand mobility services and data-driven services in the automotive industry is projected to drive growth by over 30%, with up to $1.5 trillion in additional revenue potential

  • The e-commerce boom combined with increasing global trade is expected to propel the transportation and logistics market growth forward, with global trade already reaching a record high of $28.5 trillion

  • IoT-enabled linked devices and technological advancements like AI-based tech, biometrics, GPS, and automated systems aid in streamlining logistics efficiency, augmenting market growth even further

  • Untapped growth potential globally within other sectors of the logistics market is evident through the global cold chain logistics market size, which is expected to grow at a CAGR of 14%, with the most growth expected in the Asia Pacific region due to rapid industrialization and urbanization

•  For the remainder of 2022, forecasts estimate a range between 10% and 14% Y/Y increase in LTL pricing, which is flat to slightly up from forecasts last month. Unlike truckload, which has seen softening over the past quarter, LTL pricing continues to increase

Recent and Upcoming Trends

• As the T&L market starts to evolve and expand to meet consumer demand, companies are continuing to innovate and implement fundamental changes to increase their market share and remain dominant within the market 

  • To combat the labor shortage within the trucking industry, retailers like Walmart, have offered robust truck driver training programs and a competitive salary that’s nearly double the average salary, to incentivize and retain talent

  • The fragmentation of the logistics market has opened up lucrative niches and opportunities, with behemoths like Maersk and Amazon capitalizing on e-commerce fulfillment by expanding control over other steps of supply chain logistics and becoming one-stop logistics providers

  • The rising consumer demand for retail goods in the US has driven the import of container volumes up 16% year-over-year, with the Port of Charleston expanding its working hours and providing leasing options for its new chassis

• Across the industry, companies are proactively implementing creative measures and solutions to combat supply chain disruptions

• The adoption of tech-enabled logistics platforms, like Uber Freight, has helped reduce the friction of business disruptions by digitizing the supply chain infrastructure and allowing businesses to recover from canceled shipments and the rising costs of trucking

  • Companies' investment in robotics to automate processes has not only cut costs and streamlined distribution network efficacy but also enticed a progressive and tech-savvy pool of potential recruits to join their workforce

•  555 expects to see an increase in freight brokerage M&A as the asset-light business model negates some of the asset-related difficulties that a traditional service provider would have to endure

M&A ACTIVITY

North American Transportation and Logistics M&A

DEAL SPOTLIGHT

• Roadtex operates a network of 32 cold storage facilities, providing expedited, temperature-controlled LTL transportation

• This acquisition provides Echo additional value-add in their services as well as diversified their business model from a pure-play brokerage

Date: 05/05/2022

Target: Roadtex

Buyer: Echo Logistics

Transaction Value: Undisclosed

• Fastmore is a Chicagoland-based broker with extensive knowledge in selling domestic non-asset-based transportation services to international freight forwarders

• This acquisition provides Echo a unique point of entry into an expansive network of expedited brokerage for the international freight forwarding market leveraging multiple equipment types, including cargo vans, straight trucks, and full truckload

• This new acquisition provides Echo with the cross-selling ability and insights into the international freight market that has historically evaded them

Date: 11/03/2022

Target: Fastmore

Buyer: Echo Logistics

Transaction Value: Undisclosed

CLICK HERE FOR 555 RELATED TRANSACTIONS

ABOUT 555 CAPITAL ADVISORS

• Investment bank and advisory firm providing bespoke M&A, capital raise, and related services to middle market companies

• Transactions: 100% Sale or Divestiture, Growth Capital, Recapitalizations, Mergers, Management Buyouts, Acquisition Advisory and Financing

• Industries Served: Manufacturing, Business Services, Consumer, Technology, and Healthcare

• Highly experienced and personalized client relationships: 25+ years experience, 100+ transactions, and mandates, customized solutions

The opinions expressed herein are those of 555 Capital Advisors. There is no guarantee that any predictions/projections as to certain market activity or events will come to fruition or past market or transaction performance referenced within will yield the same results as transactions previously conducted by 555 Capital Advisors.

Healthy Living: November 2022 Market Update

GENERAL TRENDS

Nutrition & Wellness Overview

• The global dietary supplements market, currently valued at $155.2B, is estimated to grow at a CAGR of 8.9% from 2022 - 2030, with growth driven by a fundamental shift among consumers toward preventive healthcare and holistic wellness

• Growth in the sector continues to be driven by both the COVID-19 pandemic and increasing health awareness among consumers, with supplement sales increasing by over 23% above the 2019 market

  • While total market growth has normalized to 7.5%, it still exceeds the 5.3% growth projection that the Nutrition Business Journal had predicted, reaffirming the persistent trends developed during the pandemic

  • Consumer commitment to health is expected to continue trending upward, fueling the boom in the supplement industry with an anticipated conservative growth of $1.8B yearly

  • The pandemic coupled with declining consumer health satisfaction has intensified the need for consumers to seek out supplementation to boost general immunity and health

• The growth and adoption of tech-oriented solutions for health and wellness to keep up with the increasing consumer demand for nutritional supplements comes with its own growing pains

  • While e-commerce sales have grown four times that of total industry growth, “economic adulteration” of ingredients continues to persist and has prompted the need for high-quality and ethical sourcing for consumers

  • The limited resources for regulating dietary supplements have presented a challenge for mitigating reports of “adulteration, misbranding, and misleading claims”, with one study finding inaccurate labels for over 50% of the products tested

  • As e-commerce sales continue to outperform other channels growth-wise, the need for stricter FDA oversight and enforcement to ensure proper labeling and quality control grows in tandem

• Increasing consumer value in holistic wellness has driven the emergence of other product categories within the nutraceutical and supplement industries as consumer interest and demands continue to evolve

  • While multivitamins continue to remain popular, supplements like Irish moss and mushroom coffee that can address needs across a myriad of different wellness verticals (nutrition, beauty, fitness, health, appearance, and mindfulness) are rising in popularity

  • Herbs and botanicals have quickly grown to become the second largest vitamin category, becoming desired “natural” alternatives to over-the-counter supplements for consumers to manage their health concerns

  • Consumers are progressively seeking personalized and data-oriented solutions to guide their individual health needs, with an expected CAGR of 9.6% in the personalized nutrition market

• Growing disposable income across an increasingly educated and health-oriented consumer market has fueled demand and interest in personalized, sustainable, and holistic supplementation

  • The rising trend of reduced meat consumption and promoting environmental sustainability has directly impacted the growth surge in plant-based protein supplements, with a continued 6.7% year-over-year growth and a projected CAGR of 5.5% over the next 6 years

  • Personalized vitamins and nutrition is becoming an increasingly differentiated market as consumer interest in satisfying multiple wellness verticals continues to grow, with some brands like HUM Nutrition and Vous Vitamins seeing triple-digit growth over the past 2 years

Preventive Health: Healthcare + Consumer

With the COVID-19 pandemic nearing the endemic stage, preventive health remains a key determinant of growth within the nutrition and wellness industry as consumers continue to prioritize addressing potential health risks before they occur

• Supplements have become a way for consumers to easily access a variety of health and immunity solutions, without the time and coordination needed to consult professionals

• The astronomical growth in the wellness industry and the abundance of supplements on the market necessitates more FDA regulation and manufacturer transparency to certify advertised health claims and high-quality ingredients

• In the face of the pandemic, e-commerce and tech-enabled solutions, like telehealth, have risen in popularity to meet the growing demand for dietary supplements and streamlined access to professional healthcare recommendations

The tremendous growth within the wellness industry has resulted in an integration between technology, consumer goods, and healthcare that has transformed the way that consumers choose to approach health. Both holistic wellness and tech-oriented solutions offer consumers alternatives outside of traditional healthcare.

M&A ACTIVITY

North American Healthy Living Deal Activity

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DEAL SPOTLIGHT

•Nutrawise is a leading innovator, manufacturer and marketer of premium supplements under the Youtheory brand in the United States and other international markets

•This provides Jamieson with a strong platform to expand in the U.S Vitamins and Supplements market

Date: 7/19/2022

Target: Nutrawise

Buyer: Jamieson Wellness

Transaction Value: $210 million

•Clif is a U.S. maker of nutritious energy bars with organic ingredients

•This transaction will build on Mondelez International’s continued prioritization of fast-growing snacking segments and will also complement Mondelez’s performance nutrition business

Date: 8/1/2022

Target: Clif Bar

Buyer: Mondelez (NASDAQ: MDLZ)

Transaction Value: $2.9 billion

CLICK HERE FOR 555 RELATED TRANSACTIONS

ABOUT 555 CAPITAL ADVISORS

• Investment bank and advisory firm providing bespoke M&A, capital raise and related services to middle market companies

• Transactions: 100% Sale or Divestiture, Growth Capital, Recapitalizations, Mergers, Management Buyouts, Acquisition Advisory and Financing

• Industries Served: Manufacturing, Business Services, Consumer, Technology and Healthcare

• Highly experienced and personalized client relationships: 25+ years experience, 100+ transactions and mandates, customized solutions

The opinions expressed herein are those of 555 Capital Advisors. There is no guarantee that any predictions/projections as to certain market activity or events will come to fruition or past market or transaction performance referenced within will yield the same results as transactions previously conducted by 555 Capital Advisors.

Senior Living: May 2022 Market Update

GENERAL TRENDS

Senior Living Industry Outlook & Observations

• The U.S. senior living market was $87.4 billion in 2021 and is expected to grow at a CAGR of 5.5% from 2022 to 2030, according to Grand View Research

• The primary driver of growth in the sector is the rise in geriatric population due to increased life expectancy

  • According to the United Nations World Population Prospects, by 2050, one in six people in the world will be over age 65 (16%), up from one in 11 in 2019 (9%)

  • Population aging is accelerating in developed, Western nations with one in four people living in Europe and Northern America expected to be aged 65 or over by 2050, according to the same UN report

• Other drivers of growth include advancements in overall healthcare technology and medical science which have initiated a wave of transformation in the elder and disabled care segment

  • Key opportunities include the development of sophisticated, yet user-friendly devices and services, IoT-enabled biometrics and home monitors, and telemedicine and mobile health platforms

• While demand for high quality senior housing properties has historically outpaced availability and driven transaction prices to near record high levels, COVID-19 and its effects on growth have not yet waned

  • Rising construction costs, longer construction schedules, and protracted labor shortages continue to pose challenges, but new development opportunities remain attractive to investors in the senior housing market due to historically strong investment performance, availability of capital, and strengthening demand

• Deal volume reached an all-time high in 2021 and senior living remains an attractive segment for M&A activity

Industry Insight: Senior Housing Ready to Turn the Corner

The pandemic has had a disproportionate effect on older populations and residents of senior housing communities. Adults aged 65 or older, and especially those with preexisting conditions living in close proximity with others, are more likely to have severe infection compared to other age groups. Fortunately, occupancy and investment activity are slowly trending upwards as the senior living market looks to recover to pre-COVID levels.

• Following record lows in 2020, occupancy rates within primary and secondary senior housing markets are slowly recovering from 80.8% at the end of 2020 to 81.6% in the fourth quarter of 2021, according to Lument

• Occupancy appears to be improving despite new COVID outbreaks such as the Omicron variant, in part due to operational refinements and increased emphasis on creating safe environments

• Some challenges will take more time to address, such as labor, which is typically the largest expense for senior living operators

  • Staffing pressures have been exacerbated since the outbreak of the pandemic and are not expected to improve in the near-term

The senior housing market has challenges to overcome, but is poised for a steady recovery as the target demographic inexorably grows and drives demand.

M&A ACTIVITY

Senior Living M&A Activity Holding Strong

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DEAL SPOTLIGHT

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SELECTED 555 SENIOR LIVING TRANSACTIONS

ABOUT 555 CAPITAL ADVISORS

• Investment bank and advisory firm providing bespoke M&A, capital raise and related services to middle market companies

• Transactions: 100% Sale or Divestiture, Growth Capital, Recapitalizations, Mergers, Management Buyouts, Acquisition Advisory and Financing

• Industries Served: Manufacturing, Business Services, Consumer, Technology and Healthcare

• Highly experienced and personalized client relationships: 25+ years experience, 200+ transactions and mandates, customized solutions

The opinions expressed herein are those of 555 Capital Advisors. There is no guarantee that any predictions/projections as to certain market activity or events will come to fruition or past market or transaction performance referenced within will yield the same results as transactions previously conducted by 555 Capital Advisors.

Healthcare IT: April 2022 Market Update

GENERAL TRENDS

Healthcare IT Industry Outlook & Observations

• The global healthcare IT market reached a value of $323.8 billion in 2021 and is expected to grow at a CAGR of 18.7% to reach $493.5 billion by 2028, according to Vantage Market Research

• Growth is being driven by an explosion in the development and adoption of digital health technologies, pressures stemming from the global COVID-19 pandemic, empowered and better-informed consumers and government entities, and a fundamental shift in focus from disease care to prevention and overall well-being

• IT infrastructure within healthcare is undergoing a transformation due to smarter implementations of digital technologies such as AI, improved data collection and access with IoT devices and big data algorithms, and operational advancements within the mobile health, telehealth, and remote patient monitoring submarkets

• Other drivers of activity include high returns on investment within the HCIT category as well as rapid advances in medical science

• 2022 marks the beginning of the third year of the COVID-19 pandemic, which continues to dominate healthcare organizations’ attention and resources worldwide and accelerate transformations across the health industry

• Deal volume and transaction value reached an all-time high in 2021, and while the momentum is unlikely to be sustained at this breakneck pace, M&A activity in the healthcare sector remains strong

Industry Insight: The Future of Health Begins Now

Despite COVID-19’s devastating impacts on numerous fronts, it has thrust healthcare systems across the globe into a digital transformation and created a powerful opportunity for technological innovation and growth. Consumer preferences, workforce management, care delivery, and clinical development are all undergoing fundamental shifts towards a holistic approach that combines life sciences, overall well-being, and tech-enabled health care.

• Telehealth has been embraced by health care providers, insurers, and governments alike, as COVID-19 prompted many practices to rapidly adopt virtual care delivery models

  • Medicare telehealth utilization increased 63-fold during the pandemic according to the U.S. Department of Health and Human Services

  • Patient satisfaction with telehealth systems has also been high, with many praising the convenience and swift access of services

  • However, there is still significant opportunity for refinement with some patients reporting inconsistent or limited care and unintuitive technology platforms

• Medical science, often fraught with long, expensive, and high-risk discovery processes, stands to be transformed by technological advancements that will dramatically change the way diseases are diagnosed and treated

  • AI software solutions supported by big data are poised to propel medical research to new drug discoveries at an unprecedented pace, with new candidate medicines delivered in months rather than years

  • The study of genomics is another disruptive force with the potential to redefine health care and offer consumers personalized and more effective care, with a patient’s DNA now able to be sequenced for a few hundred dollars in as little as one day

  • The proliferation of digital medicine products and devices has combined software and hardware to grant unparalleled insights to patients and care providers alike, improving treatment experiences, knowledge and outcomes of drug therapies

• Overall preferences have shifted from disease care towards holistic well-being and disease prevention, with governments and regulatory bodies expected to spend heavily in 2022 on introducing initiatives to promote public health

M&A ACTIVITY

Healthcare IT M&A Activity Continues at a Solid Pace

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DEAL SPOTLIGHT

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SELECTED 555 HEALTHCARE IT TRANSACTIONS

ABOUT 555 CAPITAL ADVISORS

• Investment bank and advisory firm providing bespoke M&A, capital raise and related services to middle market companies

• Transactions: 100% Sale or Divestiture, Growth Capital, Recapitalizations, Mergers, Management Buyouts, Acquisition Advisory and Financing

• Industries Served: Manufacturing, Business Services, Consumer, Technology and Healthcare

• Highly experienced and personalized client relationships: 25+ years experience, 200+ transactions and mandates, customized solutions

The opinions expressed herein are those of 555 Capital Advisors. There is no guarantee that any predictions/projections as to certain market activity or events will come to fruition or past market or transaction performance referenced within will yield the same results as transactions previously conducted by 555 Capital Advisors.

Packaging: March 2022 Market Update

GENERAL TRENDS

Packaging Industry Outlook & Observations

• The global packaging market reached a value of $402.4 billion in 2021 and is expected to grow at a CAGR of 3.5% to reach $493.5 billion by 2027, according to Research and Markets

• Growth in the packaging industry suffered overall due to pandemic-related issues such as regional lockdowns, global supply chain bottlenecks and fluctuations in end-user demand, but has recently gained traction as barriers relax

• Online retail and food-grade packaging products will be the primary drivers of growth in the sector as consumer shopping preferences continue to trend towards e-commerce and delivery-on-demand services

• While deal activity in 2021 surged to exceed pre-COVID levels, it is uncertain if momentum is expected to continue due to rising inflation, persisting supply shortages and geopolitical unrest

Industry Insight: More Innovation Towards Less Packaging

It is clear that consumers and government regulators have been shifting their preferences towards sustainable packaging materials in recent years, even with cost premiums. However, the growing ubiquity of e-commerce and delivery-on-demand services is creating a flood of packaging waste. Product designers are being challenged to innovate beyond the use of renewable materials and create solutions that also enhance the efficiency of the product experience and most importantly – reduce waste.

• According to the Environmental Protection Agency, containers and packaging make up roughly 28% of municipal solid waste in the United States, with that proportion steadily rising even as overall waste generation has increased

• Nations across the globe such as France, Italy, Australia and China have initiated programs to phase out or tax single-use plastics and require recyclable packaging materials, with many other regulatory bodies following suit

• A California initiative has qualified for the November 2022 ballot that would require all single-use packaging, containers, and utensils to be recyclable and tax single-use plastic packaging to fund recycling programs

M&A ACTIVITY

Packaging Deal Activity at Multi-Year High

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DEAL SPOTLIGHT

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SELECTED 555 PACKAGING TRANSACTIONS

ABOUT 555 CAPITAL ADVISORS

• Investment bank and advisory firm providing bespoke M&A, capital raise and related services to middle market companies

• Transactions: 100% Sale or Divestiture, Growth Capital, Recapitalizations, Mergers, Management Buyouts, Acquisition Advisory and Financing

• Industries Served: Manufacturing, Business Services, Consumer, Technology and Healthcare

• Highly experienced and personalized client relationships: 25+ years experience, 200+ transactions and mandates, customized solutions

The opinions expressed herein are those of 555 Capital Advisors. There is no guarantee that any predictions/projections as to certain market activity or events will come to fruition or past market or transaction performance referenced within will yield the same results as transactions previously conducted by 555 Capital Advisors.

Transportation & Logistics: March 2022 Market Update

GENERAL TRENDS

Logistics Industry Outlook and Observations

• Growth in the global logistics market was strong in 2021 as it reached a value of $9,525.1 billion and is projected to further grow at a CAGR of 5.7% between 2022 and 2027 to reach a value of approx. $13,326.3 billion by 2027, according to Research and Markets.

• Many of the challenges that have been caused or exacerbated by COVID-19 are expected to persist in the short-term

  • Labor shortages, supply chain disruptions, and tightening cargo capacities are all factors that continue to exert pressure on logistics providers

  • Rising inflation and evolving consumer demands are also increasing supply chain burdens across all industries

  • For the first time in decades, consumers are spending more on goods instead of services with a heavy reliance on imported products

• Despite these challenges, new opportunities for technology-driven growth have emerged as the pandemic transitions to an endemic stage

  • Ever-increasing fuel costs and advancements in development are driving significant interest towards electric vehicles in all transportation related industries, as companies and consumers alike look towards more sustainable solutions

  • Autonomous vehicles are also poised to transform road and rail freight transport, with companies like DHL, UPS, and others investing heavily in research

  • With the proliferation of digitalization and cloud-based computing augmented by AI and data analytics, new software solutions present opportunities for logistics providers to increase reliability, reduce costs, and improve overall efficiency

• Overall, transport rates and expenses are expected to steadily escalate in response to global logistics cost pressures and high product demand, but freight carriers are well positioned to capitalize on this perfect storm by expanding capabilities and adding tech-integrations to transport infrastructure

Industry Insight: Shifting Workforce Dynamics

The foundations of work are evolving, as COVID-19 initiated a revolution towards remote work, balanced lifestyles, and workforce prioritization. With labor shortages impacting suppliers, carriers, and receivers across the logistics landscape, leaders in the industry are being challenged to incentivize and retain talent.

• The logistics industry is experiencing an unprecedented labor shortage due to a number of factors, such as an aging workforce leading to high retirement numbers, overwhelming gender imbalance, lifestyle challenges, and barriers to entry such as low truck driver training school output and stringent hiring standards

• The American Trucking Association estimates that the industry will have to recruit 1 million new truck drivers over the next decade to replace drivers and hire additional ones to sustain current growth trajectories

• While job openings are plentiful, the workforce needed to fill them has contracted despite wage increases, suggesting that employees are placing greater value on relational elements such as having positive and inclusive workplace environments and incentives beyond pay

The labor mismatch in supply chains is a complex issue that is unlikely to be remedied quickly, but companies that implement meaningful changes and address fundamental shifts in the labor supply can reduce attrition and retain quality workers.

M&A ACTIVITY

Logistics Deal Activity Heating Up

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DEAL SPOTLIGHT

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SELECTED 555 TRANSPORTATION TRANSACTIONS

ABOUT 555 CAPITAL ADVISORS

• Investment bank and advisory firm providing bespoke M&A, capital raise and related services to middle market companies

• Transactions: 100% Sale or Divestiture, Growth Capital, Recapitalizations, Mergers, Management Buyouts, Acquisition Advisory and Financing

• Industries Served: Manufacturing, Business Services, Consumer, Technology and Healthcare

• Highly experienced and personalized client relationships: 25+ years experience, 100+ transactions and mandates, customized solutions

The opinions expressed herein are those of 555 Capital Advisors. There is no guarantee that any predictions/projections as to certain market activity or events will come to fruition or past market or transaction performance referenced within will yield the same results as transactions previously conducted by 555 Capital Advisors.

Healthy Living: February 2022 Market Update

GENERAL TRENDS

Nutrition & Wellness Overview

• The global dietary supplements market is estimated to grow at a CAGR of 6.7% from 2022-2027, with growth driven by a fundamental shift among consumers towards preventive healthcare

• Recent growth in the sector continues to be driven directly by the COVID-19 pandemic, with sales in vitamins and nutritional supplements surging by an unprecedented 21% last year

  • Although this tremendous growth is unlikely to be sustained at its current breakneck pace, the overarching trends in consumer health developed amidst the pandemic are expected to persist

  • Before COVID-19, over 75% of American consumers were already using some type of vitamin, mineral, or nutritional supplement

  • The pandemic not only strengthened existing consumers’ commitment to the product segment and increased their intake, but also drove new, health-conscious consumers to enter the market

• The nutritional supplement market landscape has shifted dramatically to meet ever evolving needs, as consumers have increasingly adopted a tech-enabled, holistic approach to health and wellness

  • E-commerce continues to be the fastest-growing channel in the industry as “brick-and-mortar growth in 2019 was 2.8% while e-commerce grew at nearly 10 times that rate” according to Nutrition Business Journal

  • The market is also putting intensified pressure on manufacturers to increase transparency, with high ingredient quality and ethical, sustainable sourcing entering the forefront of consumer awareness

  • Natural, organic, and functional supplements were once hindered by cost barriers, but are now among the top attributes that consumers are willing to pay a premium for

• The shift towards holistic wellness has given way to a number of new, more niche product categories beyond established categories such as multivitamins

  • While gummy supplements have quickly been cemented as a mainstream delivery form, the category continues to expand to serve new needs such as sleep quality, stress management, CBD and immune system support

  • Consumers are increasingly looking to dietary supplements as an intersection between health and beauty, with demand for collagen and fish oil continuing to grow

  • Genetic data-driven, personalized nutrition solutions designed for an individual’s specific health requirements have also garnered strong interest with a number of startups emerging this category

Preventive Health: Healthcare + Consumer

COVID-19 appears to be in its final stage as a pandemic and may be entering an endemic stage. Many of the fundamental shifts among businesses, consumers and healthcare providers may be permanent fixtures. Preventive health has emerged as a key driver of growth in the wellness industry, blurring the distinction between consumer goods, professional healthcare and technology.

• Owed to growing awareness of general health and nutrition practices, rising median incomes in developed nations, and increased focus towards holistic wellness, preventive healthcare looks to address risk factors for disease before they affect the individual

• Pandemic-related factors such as tremendous pressure on healthcare systems and a need for health and immunity solutions have increasingly driven consumers to seek remedies via consumer goods channels, such as over the counter supplements

• Preventive health has also infiltrated the technology sector as the pandemic accelerated digital transformations across the board, driving growth for tech-integrated fitness and wellness solutions such as Tonal, Peloton, Mirror and Oura

Overall, the pandemic has transformed the consumer health landscape, with a new focus on holistic wellness and balanced lifestyles augmented by readily available, tech-enabled solutions.

M&A ACTIVITY

North American Healthy Living
Deal Activity at Record Levels

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DEAL SPOTLIGHT

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555 HEALTHY LIVING TRANSACTIONS

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