Commentary: Pace of Printing Industry Consolidation Is on Fire

Rarely does a day go by, it seems, that I don’t hear of at least one printing industry M&A transaction. Sometimes it’s a tactical acquisition to gain a geographic footprint, an expanded book of business or even a greater production proficiency, such as data-driven digital or wide-format printing expertise. Other times it’s an asset sale where the future of the acquired company, its equipment mix and employee base remains murky. Less often, it’s a true merger of equals seeking economies of scale and believing that 1+1=3. No matter the reason, industry consolidation continues to heat up — with no end in sight.

In an industry long regarded as being highly fragmented and family-centric, many of today’s larger M&A transactions are remarkable from the standpoint that some entire print market segments are being consolidated as more midsize, independent businesses continue to be gobbled up. In many cases, these acquired companies date back several generations of family ownership.

Thomas Quinlan

Take LSC Communications, led by CEO Thomas Quinlan in Chicago, which acquired third-generation, family-owned Creel Printing of Las Vegas (click here for more analysis), and subsequently purchased what had been the five-generation, Simon family-owned Publishers Press (click here for more commentary), in Lebanon Junction, Ky.

Will Consolidation Thwart Innovation? Job Creation?

The combination of acquisitions provides publicly-held LSC Communications with a strong foothold over what’s rapidly become a shrinking magazine and journal printing sector. These aggressive moves to eliminate smaller competitors will help give LSC more pricing power with its publishing clientele, but the impact of consolidation like this on the printing industry as a whole from the standpoint of entrepreneurial-driven innovation, nimbleness, and job creation and stability, becomes debatable.

Another print market segment currently in turmoil is book manufacturing. Regarded just a few years ago as a potential casualty of growing consumer demand for e-books, the outlook for the book market has rebounded as more studies confirm that consumers prefer and place more trust in what they read in traditional books. Students also learn and recall more from paper-based books in comparison to the same educational content they could read on a computer screen.

Despite this rosier outlook, an industry-wide shift to high-speed production inkjet book printing and just-in-time order fulfillment has occurred, driving the necessity for book manufacturers to disband their web offset-driven business models and invest heavily in new digital equipment. Those unable to adapt workflows and make needed large capital equipment investments are being acquired.

Two Active Consolidators: CJK Group, Mittera Group

Chris Kurtzman

CJK Group, the holding company for Bang Printing in Brainerd, Minn., that's led by CEO Chris Kurtzman, has been on an acquisition tear in the book printing space. On the heels of purchasing The Sheridan Group (click here for analysis), a producer of shorter-run books, STM journals and catalogs, CJK most recently bought the assets of educational book manufacturing specialist Webcrafters (click here for more commentary), a family-owned business that has called Madison, Wis., its home for more than 150 years.

Or take the direct mail and marketing services sector, where EarthColor’s assets were recently acquired by Des Moines, Iowa-based Mittera Group — another industry consolidator that has been on an acquisition spree. Likewise, direct marketing powerhouses SG360°, in Wheeling, Ill., and Hartland, Wis.-based OneTouchPoint are now backed by the same private equity firm, ICV Partners.

New Ownerships at Printing Franchisors

Curtis Cheney

The printing franchise space is also experiencing a sudden wave of upheaval. On two consecutive days earlier this week, it was announced that AlphaGraphics, in Salt Lake City, was divested by a different private equity firm to MBE Worldwide (Mail Boxes Etc.) (click here for more analysis), which had already acquired the PostNet franchise earlier this year. And, the ICED family of franchises (notably Kwik Kopy) - celebrating 50 years under control by the Hadfield family - was sold to Curtis Cheney of Fortusis LLC.

The musical chairs of ownership changes continue to play, and the M&A drum beat has grown louder. Cover your ears, even momentarily, to drown out the music - and you’ll quickly be asking, “Who’s on First?”