Mergers

While mergers and acquisitions are nothing new in print, the latest PrintWeek Top 500 found that there were at least 77 deals involving UK printers between March 2018 and March 2019 – the busiest period in M&A activity in recent years.

And things have not slowed down since, with deals involving companies big and small still happening in nearly every corner of the industry.

Among those finalised in the past month alone include DG3’s purchase of Newnorth, Bell & Bain’s merger via acquisition of J Thomson Colour Printers, and Positive ID Labels’ double buy of Banbury Labels and Dabbon Labels.

Suppliers have also seen their fair share of action, with Japan Pulp and Paper’s acquisition earlier this month of Premier Paper Group heading up the recent moves on that front.

Hopefully all these deals will prove successful, but acquisitions can, and do, go wrong for companies that cannot financially or strategically support their ambitions or, indeed, for a myriad of other reasons.

“Acquisitions can make sense, but be wary and be very clear why it’s advantageous to your business,” warns BPIF chief executive Charles Jarrold.

“Similarly, be sure to understand the business and do your due diligence on the acquisition before finding out late in the day that things are not what you expected. I used to work for a big US company who used the term ‘deal zeal’ – the buzz of getting caught up in an exciting acquisition can impede clear judgement.”

But acquisitions are nevertheless very popular in print as the industry continues to consolidate to ease overcapacity and increasing labour and raw materials costs.

They are also far and away the most popular form of M&A activity, with true 50/50 mergers proving incredibly rare in print, the only one listed in the latest Top 500 being Bright-source’s merger with Signal, which was already its sister company to begin with.

Many acquisitions, however, are promoted as being a merger via branding, communications with clients and PR.

“Mergers ae often billed as 50/50, but the reality is that this is rare in practice,” says Jarrold.

“There isn’t room to duplicate all functions, so one team or another, or one person or another, need to lead and businesses need clear structures and management processes. There is however room for making sure that the best of each business wins through – probably not 50/50, but a dispassionate look at what’s best.”

Richmond Capital Partners director Kevin Barron says true 50/50 mergers are often a “needs must deal” that happens when two companies that cannot afford to buy each other join forces to eliminate excess capacity.

“Generally you would start a new company that acquires the two companies, then at some point there is a rationalisation that goes on but that generally takes six to 12 months to work its way through, because you can’t merge companies in five minutes.

“So you end up with duplication for a while. We knew of one company who didn’t rationalise quickly enough and ended up with four finance directors.

“And egos can get in the way with 50/50 mergers – ‘my business is better than yours’.”

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