Market Analysis – Promotional Product Suppliers in Canada
EBITDA Multiple Based on Market Comparables for Promotional Product Suppliers (Source: DealStats)
The average EBITDA multiple for comparable companies is 5.5x.
What is EBITDA?
EBITDA = Earnings Before Interest on Long-Term and Short-Term Debt, Taxes, and Depreciation.
EBITDA Multiple in the Professional, Scientific, and Technical Services Sector (Source: DealStats)
In the general professional services sector, the average EBITDA multiple over the past 12 months is 4.4x (Q1 2024).
Competitors and Number of Companies in Canada and Quebec in 2023 (Source: Ibisworld Inc.)
Market Share of the 3 Largest Promotional Product Distributors in Canada:
Proforma Inc. (4.4%)
4imprint Group PLC (4%)
Staples Inc. (3.9%)
Number of establishments in Canada:
5,633 establishments generating $2.5 billion in revenue
Number of establishments in Quebec:
1,184 establishments (21%) generating $503 million in revenue
(890 in Montreal, 133 in Quebec City, 161 elsewhere)
Note: 70% of businesses in this field have fewer than 5 employees.
Revenue Breakdown by Product/Service Segment:
Apparel: 31%
Drinkware, Household Items, and Other Home Accessories: 13.5%
Office Accessories: 8.3%
Strengths, Weaknesses, and Opportunities (Source: Ibisworld Inc.)
Strengths:
Low import rates High revenue per employee Low concentration of services and products Low capital investment required
Weaknesses:
Low barriers to entry High competition Lower profitability compared to the broader sector High customer concentration
Opportunities:
Expected revenue growth between 2023 and 2028 Anticipated increase in marketing expenditures
Key Success Factors for Businesses in This Sector (Source: Ibisworld Inc.)
Ability to offer remote work to employees
Ability to offer competitive pricing through favorable volume agreements with suppliers (a useful barrier to entry)
Offering fast delivery times within budget
Offering attractive, trendy, and diverse products
Proximity to suppliers and clients to maintain competitive delivery times and shipping costs
Relevant Financial Figures (Sources: Ibisworld Inc. and DealStats)
Average current ratio = 1.6 (2021)
Average accounts receivable collection period = 46 days (2021)
Expense breakdown as a percentage of revenue (Ibisworld):
Salaries: 27.5%
Purchases: 39%
Rent: 2.4%
Profit: 9.5%
Average EBITDA margin = 8% (DealStats)
Factors That Will Influence Industry Growth by 2028 (Source: Ibisworld Inc.)
- Future growth in advertising spending: Promotional products are well-suited for many small businesses that rely on their local markets. Additionally, promotional items offer the benefit of repeated brand exposure to target customers.
The ease of setting up online stores and digital payment solutions may lead to increased direct orders from customers seeking better prices.
The shift in corporate advertising budgets toward digital and mobile media is expected to place continued pressure on revenue in the promotional products industry.
Increase or decrease in the number of businesses (growth anticipated)
Increase or decrease in advertising expenditures (growth anticipated)
Increase or decrease in business profits (growth anticipated)
Increase or decrease in retail trade (growth anticipated)
Sources
Sources
IBISWORLD
“Promotional Products in Canada” – NAICS (54189 CA)
“Promotional Products in Quebec” – NAICS (54189 QC)
BVR:
DealStats – NAICS (54189) – Revenue between $1 million and $100 million
DealStats Value Index Q1 2024
Important Note
This analysis serves as a general rule of thumb. There are many positive and negative factors that can influence the above results. It’s essential to understand that each business is unique. Moreover, the sale price of a business largely depends on the number of interested buyers, their synergies with the target company, and the return on investment they are seeking.
Disclaimer
pntt makes no representation to any party regarding the completeness or accuracy of the data or information contained in this document. pntt accepts no liability and disclaims all responsibility for any loss or damage suffered or incurred by any person as a result of using the information contained herein.
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