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1998 Hall of Fame--A Mentor, An Advisor, A Leader

October 1998
Joe R. Davis has taken the industry by storm with his novel approach of acquiring well-managed commercial printing operations.


If all you knew was that Joe R. Davis is the chairman and CEO of a printing company with annualized revenues in excess of $575 million, you might wonder why he was chosen as a 1998 Printing Impressions/RIT Printing Industry Hall of Fame inductee. After all, there are larger printing companies. But when you know more, the reason becomes clear.

In its frequent dispatches to the press, Davis' New York Stock Exchange company, Consolidated Graphics, routinely states that it is "the fastest-growing printing company in the United States." It is not an exaggeration. The Houston-based industry consolidator began in 1985 with just one, $5 million, 50-employee establishment. Today, Consolidated Graphics has forged a coast-to-coast network of 50 printing companies, is among the continent's most powerful purchasers of graphic arts machinery and supplies, and shows no sign of slowing the pace of its growth.

And in addition to its own success, Consolidated Graphics' acquisition strategy—of which a noteworthy element is a policy that the management of purchased companies stays in charge and the company name stays on the door—has sent shock waves through the entire industry, sparking a raft of imitators and a wave of consolidations in the extremely fragmented commercial printing industry.

Heady Ascension
Consolidated's heady ascension is a long way from—and yet somehow an extension of—Davis' boyhood days in Ogden, AR, where his parents built a successful, local business that grew into a general store/gas station and extensive farming operation.

"We weren't open 9-to-5," he recalls. "We opened at 6 a.m. and we stayed open until the customers stopped coming. That's a service mentality that gets in your blood."

His consolidation strategy itself was conceived following Davis' experience at the prestigious accounting firm of Arthur Andersen, where he had observed other fragmented industries being consolidated. The strategy to keep each company's name and its management team, says Davis, is a no-brainer.

"If you've got a successful company, there's some reason why it's successful," Davis explains. "Typically, clients patronize a business because they are getting good service and a good product at a reasonable price."

Chris Colville, Consolidated's executive vice president of mergers & acquisitions, says that this is part of Davis' recipe for success.

"There is a depth of experience from the individual company presidents and their management, and Joe is smart enough to step back and let those teams do their jobs," he says. "He's very involved and gives significant input, but at the end of the day he is willing to let his management team in their areas manage and run their businesses. Instead, he has become a leader, Mentor and advisor."

"I don't run these companies," Davis maintains. "The company presidents do. If they achieve good results, I want the presidents to be able to take credit for that. If they have poor results, I don't want them to be able to say: 'I'd be doing better if it wasn't for Joe in Houston.'

"Key to our philosophy is giving the presidents what they need to run their companies," Davis says.

Notes Colville, "Most company presidents from whom we've purchased companies are now millionaires; they don't have to work. But they like working in the industry, they like working with us and they like having the chance to run a growing, more profitable business."

"Many of them say that they are happy to get back to being printers again," Davis agrees.

Dennis Rampe, president of Precision Litho, a Consolidated Graphics company, can confirm that. He first read about Davis and his acquisition strategy in industry publications. "I understood the dynamics of the changes going on in the printing business, and it seemed to me that what Joe was doing was very congruent with where I thought the industry was going."

Rampe eventually called Consolidated Graphics, and says he was delighted to discover that Davis was a financial person who really did understand the printing business. "Those types of folks are very hard to find. Often we end up dealing with banks and lenders who don't understand what makes a printing company go."

Davis foresees a "pretty strong" growth rate for Consolidated over the next several years.

"In the last six months, we have announced acquisition of 14 companies, and we expect a run rate of at least $600 million by March 31, 1999," he says. "People ask me why our operating percentages are better. The answer is that these were better companies when we bought them. But we do take credit for using a high degree of judgment in cherry picking the best companies."

Fair Guy
It's that sort of attitude that first caught the interest of Colville.

"I'd heard that Joe was a really smart, hard-working guy, and also a great entrepreneur and risk-taker. Those are the qualities that first attracted me. But in the years since then I've found him to be an incredibly honest and fair guy. From my perspective, that's what really made our relationship."

Colville adds that, while it's been easy to see Davis' financial and strategic acumen at work, "people may not focus as much on the time he has invested to learn the industry and become knowledgeable, both in technical and management aspects. He brings a financial background to the table, but I think he is underappreciated for having the industry knowledge that he does. To be a leader of the individual company presidents—which often means working with people who have grown up in the industry—he's got to have their respect and confidence in terms of industry knowledge. And Joe does."

"Joe Davis is more than willing to share the mistakes that he's made in running a printing business," Rampe adds. "In that way he helps me avoid the same mistakes in the way I run my business."

This is an attribute that's also been noticed by Gary Forbes, a portfolio manager at Houston-based investment firm Equus Capital Management, and who also serves on Consolidated's board.

"Not only does Joe bring an incredible amount of energy to an organization, he's also well-known for the caliber of the people that he attracts. He has found some of the best managers with whom I've ever worked."

"Joe has a real innate sense of somebody's value," Rampe agrees. "It's every bit as important to him that the people he's acquiring fit into this group, and he can sit down and ascertain whether somebody is going to be able to do that pretty quickly."

Davis and his team have also been working hard to keep the companies current on technology. "The level of automation in the front-end is incredible, but we also see it in the pressroom and bindery. We've made substantial investments, and we're finding good returns on that capital investment. The trend in the industry is 'quicker, faster and at a lower cost,' and that means everything has to be less labor-intensive."

"There are really no restrictions on the future growth of the company," Forbes observes. "And that's because it has such a remarkable depth of talent."

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