But is bigger better, especially from the human and community standpoints? How does a plant closure or major layoff in a small town impact a rural community? Yes, I know: Printers, like all for-profit ventures, are in business to make money, not to guarantee long-term employment or keep an unprofitable production facility open. But, then again, when looked at from a strictly financial standpoint, does the debt load taken on by the new entity become like an albatross hanging around one's neck? For example, did Quebecor Printing—whose stock price is currently in the doldrums—really achieve all of the benefits and economies of scale that were anticipated after its merger in 1999 with World Color?
Even so, assuming that the U.S. economy rebounds next year, I believe the consolidation craze that has been dormant during the prolonged recession will pick up again. But the multiples that buyers will be willing to pay will be lower than they were during the 1990s. Also look for more payouts being a combination of cash and stock. This new playing field will result because there are, and will remain, far more sellers than buyers. Still, look for industry consolidators such as Consolidated Graphics, Mail-Well and others to close more M&A deals in the coming year. When well orchestrated, one plus one can equal three; but it can also spell disaster when differing cultures are not considered, loyal employees are not nurtured and customer relationships get lost in the shuffle.
Let's all toast to a better 2004 for our industry. From the Printing Impressions family, happy holidays and best wishes for good times ahead.
Mark T. Michelson