Consolidation--Moguls of M&A
Tevis: One-hundred percent of the 10 company presidents are on board.
PI: What is the ultimate objective; where are you taking these companies, direction-wise?
Tevis: We are not consolidating companies to meet classic roll-up objectives. Our goal from the beginning was to build a national company that capitalizes on the skill sets and market potential of regional dynamics. While 95 percent of the work comes into the platform within a 50-mile radius, there are those corporate accounts that want JIT to major markets, variable data for their customers and the ability to deal with one company that specializes in a value-added platform.
We are building a company based on the market demand, not supply. Hence, we only buy companies in the major cities with solid sales growth. Once we reach the critical mass necessary to meet Wall Street's IPO requirements, we will move in that direction.
A public offering will limit our debt leverage and provide capital to continue the business development. Some consolidators went to the market too soon and their stock suffered from this early entry. We do not want to make that mistake.
Carl Norton, chairman and CEO
THE city of Houston, it seems, is big enough for acquisition giants Consolidated Graphics and Nationwide Graphics. Nationwide has definitely found its chunk of the action, registering a lusty $70 million in consolidation investments thus far in 1999, overshadowing a 1998 figure of $40 million that deserves an asterisk, since the company only began making acquisitions midway through that year.
PI: What types of companies are targeted?
Norton: Nationwide Graphics targets commercial printing and graphic arts companies with annual revenues ranging from $5 million to $30 million. Once one or more companies of that size are acquired in a particular geographical area, Nationwide is interested in acquiring smaller companies that can be "tucked in" so long as they are located in the same geographical area.