Sterling North America Acquires Ocean Group
MOUNTAIN LAKES, N.J. - October 16, 2018 - Graphic Arts Advisors (GAA), Mountain Lakes, NJ-based strategic financial advisory and consulting firm devoted exclusively to the graphic communications industry, announced today that Sterling North America, Hauppauge, NY, has acquired Ocean Group, Ronkonkoma, NY. Mark Hahn, Managing Director of GAA, which represented the Ocean Group in the transaction, noted that “in today’s consolidating print industry, the merger of the Ocean Group into Sterling North America represents a perfect marriage, combining Ocean’s considerable expertise in commercial printing and mailing services with Sterling’s extensive digital printing and financial printing capabilities.”
The merger yields considerable benefits for both organizations and their owners. John Harkins, owner of Ocean Printing, a 40-plus year veteran of the printing industry, recognized that “in today’s ever-changing printing industry, you have to continue to invest in the newest technologies or be left behind. I was at the stage of my life when I didn’t want to make those kinds of investments.”
Mr. Harkins made the decision to sell his printing firm which, all-in, logs about $4 million in sales, but only with the stipulation that his employees be hired by the acquiring firm and his customers would continue to receive the high-quality service they had come to expect. “I knew my company had value—in my equipment, but more importantly in my very experienced employees and in my book of business. I knew I would not be prepared to make a deal that did a disservice to either,” he said.
As an initial step in the process, Mr. Harkins contacted GAA to do a valuation of his company. “Mark did a thorough valuation that told me what I should go to the market with. I was very satisfied with that number and I now had a starting point with which to approach potential buyers,” he noted.
Numerous conversations with various Long Island printers resulted in a number of non-starters, Mr. Harkins recalled, noting that “most were interested in buying my customer list, but did not want my employees, and that was a deal-breaker for me.”
When Sterling North America began discussions with Mr. Harkins, things changed. Ed McAllister, President and CEO of the offset and digital printing firm, which serves the business and financial services sectors, saw how acquiring Ocean would help his company continue to grow. “Since we opened in 2007, we have experienced steady growth and are now approaching $30 million in sales,” he said. “To build on that growth, we need to continue to strengthen our workforce and expand into new areas to offer our customers an even more complete solution.”
By acquiring Ocean, Sterling North America achieved both those goals. Like most printers, finding new, qualified employees has been a challenge for Sterling. The many baby boomers that make up the current workforce have retired or are approaching retirement. The apprenticeships and secondary school trade programs that once produced a steady stream of skilled workers no longer exist. And many young people view printing as an industry on its way out—a view Mr. McAllister does not share.
“The internet wave came through and caused disruption in the industry that has now evened out,” he observed. “It made for a very different and ultra-competitive industry, but a company that continues to evolve can be very successful in today’s marketplace.”
Mr. Harkins points out that the main ways printers add skilled employees in today’s industry is either by acquiring them through the purchase of another company or “lifting them” from a competitor. “Ed recognized this and knew my employees are seasoned professionals in all areas of the operation— including production, prepress, pressmen, bindery, mailing and drivers. The fact that most of them have joined Sterling gives our clients a comfort level that they’ll continue to receive the same level of service or better,” Mr. Harkins noted.
Sterling offered positions to all of Ocean’s employees and about 80% have made the transition. Mr. Harkins also has joined Sterling, where he will continue to serve the clients brought over from Ocean and aid in business development for the combined firm.
Incorporating Ocean’s mailing operation into its service offerings means Sterling North America no longer needs to buy those services. In addition, business from the financial services industry—which comprises the majority of Sterling’s clients—is cyclical and taking on Ocean’s clients helps even out workflow throughout the year. In addition, Sterling North America acquired key equipment from Ocean, including the firm’s entire mailing operation, prepress that supplements Sterling’s existing capabilities, and additional bindery equipment.
Mr. Harkins owns the real estate that had housed Ocean Printing—three units in a commercial condo complex. By selling the business to Sterling, he was able to obtain value for his printing company, secure new positions for his employees, ensure that his customers will continue to be well served, and free up his real estate assets for monetization.
Both Mr. McAllister and Mr. Harkins are now focused on merging the processes of the two companies and developing a workflow based on the best practices of both organizations. Ocean had operated on a single-shift basis, whereas Sterling is a 24/7 operation, “which will mean optimal job turnaround time for all our customers,” noted Mr. Harkins.
Both executives credit Mr. Hahn and John Hyde, Director, of GAA, with helping structure an agreement that was a win-win for both organizations. “Mark brought so much knowledge to the deal that my attorney Jim O’Brien would consult with him before any agreements were signed and Mark always had comments that made the agreement that much better,” Mr. Harkins recalled. “Mark is a former printer, so he’s been in my seat and knows the ins and outs of the industry. He and GAA Director John Hyde know how to run a meeting and stay on topic—they wouldn’t turn the page until all issues were addressed and resolved. That made for a very efficient and productive process.”
“John and Mark were very professional,” noted Mr. McAllister, “and exactly the kind of people you need to have in a room to put together an agreement that benefits all parties.”
“In today’s hyper-competitive printing industry, it’s very gratifying when two companies with such synergies come together to form a stronger and more robust organization,” said Mr. Hyde. “We wish all involved much success.”
The preceding press release was provided by a company unaffiliated with Printing Impressions. The views expressed within do not directly reflect the thoughts or opinions of Printing Impressions.