Consolidation--The Ties That Bind?
He adds that M&A activity has been beneficial for the industry on the whole for a number of reasons. The transactions have attracted large amounts of capital to the industry; public and private investors are interested and view the graphic arts industry as a platform for growth through acquisition.
Feinstein also believes the activity attracts additional quality senior managers to the business. It is easier to attract senior-level talent to any industry, he argues, when that industry is growing and presents an opportunity for enhanced growth and profitability through acquisitions.
Some of the most ardent independents have few qualms about the large "roll-up" companies. In fact, John Spenlinhauer, chairman and CEO of Spencer Press, feels his standalone company has benefitted from the merger and acquisition activity.
"Because of all the mergers, we're probably doing better," he says. "A lot of printing buyers don't want to be caught up with [consolidators] who are running multiple plants. The advantage that we have is that the owners are right here [at the plant]. It's much more of a personal relationship that you have with customers; they're not just one of the many. And there's a degree of stability in dealing with an independent."
Spenlinhauer points out that all negotiations, all aspects of conducting business, are tended to in-house, without the bureaucratic red tape of larger companies. This flexibility allows changes to be implemented seamlessly.
Not for Sale
Spenlinhauer admits that his company has been approached about selling to a consolidator. He feels it's not in the best interest of Spencer Press, which is currently enjoying expansion.
Some independents have accepted consolidators as an aspect of the business world. Ken Field, president of Continental Web Press, recalls hearing how hog farmers were being driven out by mega-hog producers because the price of pork had fallen to 15 cents per pound.