New Era Of Consolidation
Consolidation is back in the commercial printing industry. This could impact in-plants, who rely on these firms to handle a portion of their work.
by ERIK CAGLE
Who can forget 1998 and 1999? Those were easily the salad days of merger and acquisition activity in the commercial printing industry.
The dotcom craze was sweeping the nation, with venture capitalists seeking new avenues into printing. Wall Street coveted the printing industry, and a wave of consolidators embarked on the IPO-and-roll-up philosophy.
When Quebecor merged with World Color, eyes bulged as if witnessing the finale of a fireworks display.
An omen, perhaps...
A sigh of relief was let loose when January 1, 2000, passed without computer chips causing worldwide havoc. But the economy's circuitry had begun to smoke and fizzle in the fall of that year.
The industry followed suit as 2001 turned ledger books red. Dotcoms disappeared, leaving behind only customer lists to be scavenged. A national recession brought massive layoffs and plant closings. A number of consolidator models crumbled into bankruptcy.
M&A was DOA.
But a new dawn is breaking. Already there are signs that some of the biggest players in consolidation—those who remain—are mobilizing.
Strategic M&A On The Way
"We believe M&A activity will absolutely accelerate during the course of the year, but mostly in a strategic context," says Gregg Feinstein, partner with Berenson Minella, which offers investment banking services to the commercial printing industry. "The days of buying sheetfed printing companies as part of a 'roll-up' strategy preceding an IPO will not come back any time soon.
"What you will see are many of the traditional buyers coming back into the marketplace along with some new players, all buying assets that add something operationally to their businesses. They will be pursuing deals that accomplish a strategic objective for them and add scale to their operations. This could, for example, involve a product extension to assist in 'cross-selling' or a geographic fit, which fills a need in the markets they serve."