Public vs. Private — Wall Street Sways Fortunes
In the case of The MATLET Group, becoming a privately held company was a matter of survival. The five companies comprising the year-old firm (Acme Printing, Packaging Graphics, Central Florida Press, NOVA Marketing Services and Premedia Services of Detroit) were acquired from Quebecor World by a team led by Gary Stiffler, and the facilities were unrolled with original facility names under one umbrella, led mostly by their former company heads. Quebecor World had decided to go with its bread-and-butter platform, namely catalogs, magazines, books and retail. The divested companies that became MATLET were determined to be no longer core.
“Quebecor World enjoys long-term contracts, where they can see their presses are booked until next January. In our business, it’s more transactional,” Stiffler says. “I have longstanding clients, but I can’t tell you what’s going to run next month. That made it difficult for Quebecor World to justify investing in a new press when they couldn’t back it up with a long-term contract.”
As a private company with a flat corporate structure, Stiffler feels The MATLET Group is more nimble and can react better and faster to the needs of customers and employees. But they’re as cautious as a public company regarding equipment investments.
“We bought two presses in the first 18 months and have two more planned in the next 18 months,” he says. “But, we can’t afford to make a $6 million mistake. Buying the wrong press is more painful for us than it is for a larger corporation.
“We’ve implemented some of the same controls we had at Quebecor World as far as justification on capital. Any plant that’s looking at an investment has to go through the rate of return evaluation.”
Baksha disputes the theory that lower profit margins make it more challenging for privately held printing companies to garner capex financing. He says a company primarily needs to demonstrate good return on equity.