Industry M&A Activity : Deals Are in Full Bloom
“We have saved hundreds of jobs with some of the distressed acquisitions we’ve made over the last two years, and the owners have been rescued from financial calamity,” he states. “Many owners think that if they’re losing money, there is no option other than to shut down. This is not necessarily the case. We have a lot of experience working with lenders to structure acquisitions that save companies and jobs.
“It is true that some companies are too far gone and cannot be saved; the ‘walking dead.’ We’ve looked at a lot of those over the last year,” Cohen adds. “These are the companies that will shut down with greater frequency over the next couple of years, or merge with another distressed printer.”
As with Cronin and Hyde, Cohen believes the next 12 months will see a diverse mixture of acquisitions and, sadly, the continued trend of contraction by those unable to improve their financial results or secure dance partners. “The contraction will continue for at least another couple of years as lenders wake up to the reality that some problems will not get better with time,” he says, and fewer distressed deals may occur as companies decide the risk is too great for the rather limited upside.
Who are the most attractive acquisition candidates? Cohen sees those firms that have effectively managed their head counts and invested in technology and print-on-demand solutions as heading the list of favorable targets, as well as those companies that are truly innovative “solutions sellers” or marketing service providers. Commodity print order takers, as well as companies that rely heavily on work from print management concerns or brokers, will become more vulnerable as business becomes more solutions oriented and digital, according to Cohen.
“Companies involved in variable printing with digital technology solutions will grow at much higher rates than traditional offset printers and will be more attractive acquisition candidates,” Cohen concludes. “The reality, however, is that very few of these companies exist, at least today.”