Is our Forecast for the Printing & Related Industries on Target? – December 2013 M&A Activity
Do the transactions in the printing and related industries during the past year provide a view into what we can expect in 2014? We went back through our deal logs from 2013, analyzed the transactions and identified several trends that I believe are likely to continue and/or accelerate over the next year. Predicting the future is always a risky endeavor, however using the data from the past year gives me confidence that these trends will show up in The Target Report in 2014:
Consolidation of Commercial Printers Continues at Brisk Pace. This may be the biggest “no-brainer” on my list, given the steady decline in demand for traditional commercial printing services. As reported in the most recent NAPL State of the Industry (Eleventh Edition) report, total commercial printing revenues have declined more than 20% from the all-time peak of approximately $100 billion in the year 2000. Projections for the next year indicate that sales will increase between 0.5% and 1.5% from the current depressed level, essentially flat when you consider inflation.
As 2013 drew to a close, Imagine! Print Solutions in Minneapolis, Minnesota acquired Classic Graphics in Charlotte, North Carolina. Before December was out, Imagine! announced another deal, acquiring Creative Marketing Solutions, also in Charlotte, and will be rolling the operation into the Classic Graphics facility. The company reported that it expects combined revenues to exceed $300 million.
Commercial Printers Continue their Evolution to MSP’s. Many printing companies will add services and change the company’s name in hopes of rebranding themselves as “Marketing Service Providers.” Possibly more telling than the decline in total revenues in the commercial printing sector, NAPL reported in the State of the Industry (Eleventh Edition) that the percentage of total industry revenue (in the commercial printing sector) that comes from traditional offset printing has declined from 86% in the year 2000 to 61% in 2012. The percentage from offset printing is projected to fall even further to around 54% of total revenues in the coming year. That means that if a commercial printing company hopes to just stay even with its past, it must replace the sales once obtained by providing traditional offset printing with sales from new services.