Consolidation--Moguls of M&A
Faucetta: The majority of the purchase price would be paid in cash, with a small part in IGI stock. We want to retain existing management and the stock portion provides an incentive for management with a lot of upside potential.
PI: What formula do you use to place a value on a company?
Faucetta: We do not have a set formula—the value is determined by the strength of the company, its customer base, the quality of the management and its fit with IGI. Ultimately, this translates into a multiple of EBITDA.
PI: How much cost savings does your company bring to an acquisition after buying it, and in what areas (paper, consumables and equipment)?
Faucetta: The amount of cost savings depends upon the size of the acquisition. By taking advantage of the combined purchases across the IGI companies, we have achieved significant savings. Also, we've reduced cost in a number of administrative areas such as insurance and health benefits.
PI: What percentage of company presidents have stayed on after the acquisition?
Faucetta: All of the plant presidents have remained after the acquisitions, except one. However, in that situation, we knew the president was planning to retire and it was agreed that the vice president would remain and run the plant.
PI: What is the ultimate objective; where are you taking these companies, direction-wise?
Faucetta: Our ultimate goal is to become the most comprehensive graphic arts service provider in the industry with service hubs strategically located throughout the country.
Kelmscott Communications LLC
Ron Jensen, president and CEO
The newest of the new consolidators, Kelmscott recently closed on its first three acquisitions. The San Rafael, CA-based company is privately held and chose not to disclose any figures.
PI: What types of companies are targeted?
Jensen: We are building a national printing company, both sheetfed and web. While we are primarily targeting companies in the $5 million to $35 million range, we will acquire a much larger company (or companies) if we feel the addition creates strategic advantage.