CGX’s M&A Criteria — Wanted: Industry Leaders
This company was attractive to us because it was highly profitable and operated in a niche (large-format packaging and POP), which we knew would be attractive to our 650 salespeople and 22,000 customers. It also isn’t a cliché to say that it’s all about management. With the Birds, for example, I knew early on that the cultural fit was ideal.
In the case of the Hennegan acquisition, I first reached out to the Ott family soon after I started at Consolidated Graphics because it didn’t take long for me to figure out that they were running one of the highest quality printing companies in the United States (500-line screen, anyone?). What I really liked about Hennegan, aside from their stellar reputation and first-class customer base, was the fact that it was founded in 1886 and was being run by the fourth generation (Bob Ott Jr.).
Family Owned Businesses
Many of the companies that we buy are multi-generational family businesses, so Hennegan’s history was something we could appreciate and understand. In my initial discussions with the Otts, I became even more interested as it became clear that they were committed to participating in Hennegan’s future after the transaction was completed. Today, almost two years after the acquisition, not only is the fourth generation still leading the company, but the third generation (Bob Ott Sr., who is 85 years old) still works full-time and sells several million dollars worth of print.
The Cyril-Scott acquisition, like Annan & Bird, was a little different for us in that the company did not look like our typical acquisition (a commercial printing company with web/sheetfed/digital capabilities producing mostly marketing materials). Instead it had a specialized niche (direct mail) that we knew our 70 sister companies could cross-sell. The attraction here (and it was a favorite of our CEO’s) was that Cyril-Scott was, in our estimation, the most sophisticated direct mail printer in the country (with 18 in-line webs that print, diecut, fold, glue and personalize–all in a single pass, often in patented formations).