A private equity partner once told me that buying industrial assets is much like real estate – one makes money “on the buy”. That insight has proven consistently true. Although many PE firms can bring significant expertise to improve performance, the pulp and paper industry is littered with deals that have gone bad because buyers overpaid.
At the same time, and to paraphrase the legendary investor Ben Graham, “Mr. Market” can present acquisition opportunities at prices significantly below a company’s long-term value. We’ve seen this firsthand in transactions such as HIG’s acquisition of Caraustar and Brookfield’s acquisition of Longview, to name a few.
At ResourceWise, we offer unique datasets and analytical models that have been proven to provide buyers with critical insight into asset fundamentals, cost position, and market dynamics. These tools are designed to strengthen valuation work and help you make the best recommendation to your investment committee. Below, I summarize them.
Why it Matters:
The pulp and paper industry is cyclical – the present value of future cash flows can differ dramatically depending on where in the cycle you invest. Moreover, some markets are more exposed than others to substitutes, macroeconomic factors, and cost pressures.
ResourceWise’s system dynamic forecasts simulate market behavior to provide confidence in future price forecasts and its sensitivity.
Key Questions:
- What do mid-cycle and downside pricing look like for the mill’s core grades?
- Is the market tightening or facing prolonged oversupply? When are the turning points?
- How sensitive is valuation to pricing assumptions?
ResourceWise Support: System Dynamics Price Forecasts
ResourceWise’s forecasting capabilities are built on advanced system-dynamics models that go beyond traditional trend extrapolation by simulating how key market drivers—such as supply, demand, inventories, order rates, imports, exports, and price interactions—actually behave and influence each other over time. These models are reinforced with scenario optimization and sensitivity analysis so investors can test a range of potential outcomes, understand turning points, and assess the impact of strategic choices before they commit capital.
By focusing not just on point forecasts but on how and why markets move, ResourceWise forecasts help investors anticipate price dynamics, potential inflection points, and the consequences of capacity decisions, enabling more informed timing of investments, contract structures, and risk management strategies.
Further Reading: Forecasts - ResourceWise Business Intelligence Solutions
Why It Matters:
In commodity industries, the cash-cost curve is paramount. When used effectively, it can bring incredible insights into market structure, pricing dynamics, and a mill’s profitability. ResourceWise is long recognized for providing reliable mill cash cost curves to help you understand the competitiveness of your target mill, the risks, and what might be possible.
Key Questions:
What is the effective "floor price" in downturns - can the mill win orders?
ResourceWise Support: Manufacturing Cost Benchmarking
ResourceWise’s cost-of-production modeling, delivered through the FisherSolve® platform, provides a transparent view of mill economics by modeling real-world production costs across raw materials, energy, labor, and process inputs. Built on a deep asset-level database and mass-energy balance engine, it breaks costs down by product, machine, mill, and region—revealing true cost drivers and competitive positioning. These insights enable investors to benchmark performance, identify improvement opportunities, and make more informed capital and operational decisions to strengthen long-term profitability.
Further Reading: FisherSolve's Manufacturing Cost and Mass-Balance Benchmarks
Why It Matters:
Although cash cost curves are critical to understanding a mill’s competitiveness, other factors, like technical age and capital requirements, have proven to be strong predictors of a mill’s likelihood to “survive” through cycles. Viability benchmarking also provides unique insights into competitors' likelihood of shuttering capacity during demand downturns, which could result in more profitable operations for the mills that remain.
Key Questions:
Where does the mill sit on the global viability curve?
ResourceWise Support: FisherSolve's Mill Viability Benchmarking
Understanding a mill’s long-term potential requires looking beyond costs and cycle timing. Mill viability benchmarking provides a data-driven view of which assets are truly positioned to survive and create value through downturns. ResourceWise’s framework benchmarks intrinsic factors such as capital intensity, cost structure, and technical age to show how a mill compares with peers and where structural risks exist. For investors, this approach helps distinguish durable assets from those at risk of closure and informs where targeted investment—or exit—can meaningfully improve outcomes
Further Reading: FisherSolve's Asset Quality and Viability Index
Why It Matters:
For most pulp and paper mills, fiber (either virgin, market pulp, or recycled) is the largest input cost. For recycled mills, fiber costs can easily account for 50% or more of direct cash costs.
At the same time, wood fiber prices can be local and are greatly influenced by local supply/demand, as well as national factors such as housing starts. Conversely, recycled fiber markets are often significantly exposed to global trends. Knowing where you stand and the future of fiber pricing is critical to evaluating a mill.
Key Questions:
What are the true delivered fiber costs? Does the target mill buy well in the market?
ResourceWise Support: Transaction-Based Fiber Price Benchmarks
ResourceWise’s Recycled Fiber 360 platform brings much-needed transparency to recycled fiber pricing, one of the most volatile and material cost inputs for many pulp and paper mills. Unlike traditional indices that rely on surveys or estimates, Recycled Fiber 360 is built on actual transaction-level data, delivering more accurate, region-specific benchmarks by grade and delivery point. This granularity allows investors to better assess true cost competitiveness, benchmark a mill’s fiber purchasing performance against peers, and reduce uncertainty in fiber cost assumptions—strengthening both due diligence and ongoing operational decision-making.
Further Reading: Solutions -Recycled Fiber 360 | ResourceWise
Why It Matters:
Some segments are more exposed to secular and external trends than others. For example, Chinese overcapacity and fiber integration continue to pressure global markets, but the impact varies widely by specific grades and companies. At the same time, the pulp and paper industry is benefiting from consumer shifts toward lower carbon products and away from single-use plastic. ResourceWise data can help you understand the exposure a given asset has to structural risks, which is something that can either destroy a business outright or greatly impact future value.
Key Questions:
ResourceWise Support: Global Cost Curves, Supply/Demand and Trade Intelligence
ResourceWise’s cost-of-production modeling, powered by the FisherSolve® platform, provides clear visibility into the true economics of mill operations by modeling real-world costs across raw materials, energy, labor, and process efficiency. Using a deep asset-level database and mass-energy balance modeling, it enables precise cost breakdowns by product, region, and machine to assess competitive positioning. These insights support stronger pre-investment decisions, competitive benchmarking, and identification of targeted operational improvements that can materially enhance returns.
Further Reading: [Webinar] China’s Pulp and Paper Boom: How Overcapacity Is Reshaping Global Trade
Why it Matters:
Some assets can serve as platforms for future acquisitions, providing synergies and creating significant value.
ResourceWise has helped many buyers understand the possibilities of expansion through future acquisitions and risks due to regulatory scrutiny.
Key Questions:
Does the asset strengthen the buyer's existing portfolio?
What other assets might be available to lower platform costs and offer market synergies?
Are there concentration risks?
Further Reading: PCA to Acquire Greif’s Containerboard Business: What This Means for the Paper Packaging Landscape
Why It Matters:
Usually, there are a few inputs in a cash flow model that drive all of the present values of cash flows. At the same time, input forecast curves can have different shapes based on the market cycle, and constraints. For example, input and sales prices have floors and a non-linear distribution.
ResourceWise employs stochastic forecasting methods to simulate hundreds of futures, providing an accurate distribution of returns versus a point forecast. This approach improves risk awareness and highlights mitigation strategies.
Key Questions:
What do downside return scenarios look like?
ResourceWise Support: Scenario-Based Forecasts
ResourceWise’s forecasting capabilities use system-dynamics models to simulate how real market drivers—such as supply, demand, inventories, trade flows, and pricing behavior—interact over time, rather than relying on simple trend extrapolation. This approach highlights likely price turning points and allows investors to test “what-if” scenarios around capacity changes, pricing assumptions, and timing decisions. By quantifying sensitivity and downside risk, these forecasts help stress-test valuations and improve confidence in investment decisions before capital is committed.
Further Reading: Strategic Consulting: Consulting Services from Global Experts
In the end, successful pulp and paper investments are rarely about finding the “perfect” asset—they are about understanding risk better than the next buyer and paying a price that reflects it. Cyclicality, cost position, fiber exposure, and structural industry forces can quietly compound or quickly destroy value, depending on how well they are understood at the time of acquisition.
A disciplined, data-driven diligence process does not eliminate uncertainty, but it does turn unknowns into measurable risks and manageable decisions. In a sector where fortunes are often made or lost at the moment of purchase, the difference between a great deal and a costly mistake is usually not hindsight—it is preparation.
For further insights into how ResourceWise can help you, check out our solutions page.