Former Cenveo Commercial Printing Plants 'Quietly' Sold to JAL Equity as Part of ColorArt Formation

ColorArt and Eran Salu, managing director of Sarasota, Fla.-based private equity firm JAL Equity, are not household names within the commercial printing industry. But perhaps they will be one day. Salu has quietly built ColorArt into a national, 15-plant network by acquiring multiple smaller printing companies that offer commercial printing, direct mail, signage, envelopes, labels, and promotional products.

The consolidator's most recent, much bigger, M&A deal — completed last June without any publicity or fanfare — was to acquire the Cenveo Commercial Print Div., which included Cenveo printing plants in Eureka, Mo.; Amarillo, Texas; and San Antonio. It appears that the Cenveo Dallas facility was not part of the transaction and has closed. Outreach by Printing Impressions seeking more information about the transaction to both JAL Equity and Cenveo has gone unanswered.

These three former Cenveo manufacturing locations join other companies that were acquired by JAL Equity, mostly in 2020, and a handful purchased in 2019. They include wholesale trade printer Express Printers; commercial print shops Modern Graphics in Peru, Ind., and Lafayette Printing in Lafayette, Ind.; signage fabrication company Elemoose in Springfield, Mo.; commercial printer Golden Circle Graphics in Jackson, Tenn.; commercial printer and mailer Master Printing (Master Marketing Group) in Jonesboro, Ark.; Capital Signs & Awnings in Bunkie, La., and advertising specialties provider Credeur's Master Promotions in Opelousas, La.; and envelope manufacturer Desert Paper & Envelope (EnvelopesDirect.com) and healthcare printing specialist Topform Medical, both in Albuquerque, N.M. Digital content producers ColorArt Digital Direct in Tustin, Calif., which was a former joint venture in 2019 between Cenveo and Katana Studio LTD, and ColorArt India in Mumbai, round out the current ColorArt network.

Based on ColorArt's website, verticals served by the network include finance and insurance, healthcare, retail and e-commerce, food and hospitality, education, technology, manufacturing, and nonprofits. ColorArt's Kadena storefront technology provides ordering, production, and fulfillment requirements through a portal and suite of plug-and-play modules. Features include a customizable e-storefront, design and template-building, digital asset management, sourcing and tracking tools, daily reporting, and marketing analytics.

Who is Eran Salu, of JAL Equity and ColorArt?

Eran Salu

According to his LinkedIn profile, Eran Salu boasts an impressive educational resumé, including a BS in accounting from the University of Maryland, a law degree from the University of California-Berkeley, an MBA from the University of Pennsylvania Wharton School, as well as a CPA certification through Arthur Andersen, and a real estate brokerage license.

Salu worked as an associate in the Technology M&A Group at Morgan Stanley in the San Francisco Bay area from 1998 to 2001, before becoming the managing director of middle market investment banking firm SG Capital in the greater Los Angeles area. He then launched JAL Equity in Sarasota, Fla. — a boutique private equity investment firm that acquires and manages small businesses — as its managing director in 2007.

Salu indicates he is still seeking to acquire printing companies based around a buy-and-build investment strategy to create a consolidated group of companies. His criteria, as outlined on LinkedIn:

Seeks to complete 5-10 acquisitions per year that meet the following criteria:

1. Revenues between $3 million and $100 million
2. Seller looking to sell all or at least half of the company
3. At least 5 years of operating history
4. Management team is in place
5. Located in North America or Europe

JAL Equity is currently targeting the following sectors:

1. Commercial Printing
2. Sign Manufacturing & Installation
3. Screen Printing & Promotional Products
4. Direct Mail
5. Data Services
6. Lead Generation

The Rise and Fall of Printing Industry Consolidator Cenveo

This latest divestiture of the Cenveo Commercial Print Div. marks another chapter in the saga of Stamford, Conn.-based Cenveo Worldwide — once one of the printing industry's most active consolidators — and its exit from the commercial printing market to focus its efforts on label printing and envelope manufacturing.

Cenveo (formerly Mail-Well) filed for Chapter 11 bankruptcy protection in February 2018. Cenveo exited from Chapter 11 protection in September of that same year as a privately-held company, enabling it to eliminate more than $800 million in debt. Robert G. "Rob" Burton Jr. and his brother, Michael Burton, remain in charge, although it did mark the official departure and retirement of their father, chairman and CEO Robert G. Burton Sr. (Click here to read a commentary written in July 2018 about the "tarnished" industry legacy left by Robert G. Burton Sr.).

Some of the more noteworthy news surrounding Cenveo during that time period to the recent sale of Cenveo Commercial Products Div. included a lost major GPO contract and multiple divestitures of assets.

• Despite initially being awarded the $61 million term contract to print the 2020 U.S. Census, the U.S. Justice Department, in conjunction with the Census Bureau and GPO, terminated the agreement in July 2018 due to concerns about Cenveo's ability to complete the project in light of Cenveo's Chapter 11 bankruptcy filing. Despite not being able to fulfill the contract, Cenveo didn't walk away empty-handed; a settlement agreement was negotiated to avoid litigation whereby Cenveo received a $5.5 million termination fee (payed by the Census Bureau) and payment for what initial Census test work it had completed. The 2020 Census contract was subsequently awarded to RR Donnelley.
• In April 2019, Cenveo sold its long-run labels and receipt paper assets to Iconex LLC (a portfolio company of Atlas Holdings). The sale included the Joplin, Mo., and Jefferson City, Tenn., plants, as well as certain assets located in the Vernon, Calif., plant.
• In August 2020, Lancaster, Pa.-based Intellicor Communications purchased the assets of the former Cadmus operations in Lancaster, Pa., and in Hurlock, Md., from Cenveo — effectively marking the final chapter for the storied Cadmus Communications name in the printing industry. In May 2020, Cenveo  shuttered the over-century-old Cadmus printing facility, located on Byrdhill Road in Richmond, Va., impacting 184 workers.
• In September 2020, current book manufacturing industry consolidator CJK Group acquired content services business Cenveo Publisher Services and Cenveo Learning from Cenveo, and merged them with its own content business Sheridan Journal Services and hosting platform Sheridan PubFactory to form KnowledgeWorks Global Ltd. (KGL).

As a fledgling industry consolidator, ColorArt certainly is no where near the size and scale that Cenveo once rose to. The current state of the printing industry and financial lending markets dynamics make the ability to create an industry rollup of that size unattainable today. But one can only hope Eran Salu looks to the missteps made by industry consolidators in the past to help guide his future M&A moves.