Is the Printing Industry Old School or New-Tech Cool? – August 2013 M&A Activity
In a double-header listing this month, SCICOM Data Services is included on our bankruptcy log and our deal log. The company filed a pre-packaged Chapter 11 proceeding with the bankruptcy court, accompanied by a simultaneous motion to sell itself to Venture Solutions. Venture Solutions, a division of privately held Taylor Corporation, provides transactional communications, by definition relying on variable data printing and e-delivery, to meet the compliance and privacy requirements of insurance, financial, healthcare, utility and telecommunication companies. While we have seen signs of contraction in the “transpromo” sector, as more and more consumers opt for e-delivery of their statements, the underlying need to manage the data and deliver secure documents seems assured; and at least a portion of those documents will be printed. Venture Solutions appears to have made a solid bet that this is a game worth playing.
Could it be that Cenveo is buying its own worst enemy? The company announced late in the month that it has entered an agreement to purchase substantially all of the operating assets of National Envelope which has been operating under the protection of the bankruptcy court. Just three weeks before, Cenveo, in its report of second quarter results, blamed falling revenues on “lower average selling price from our direct envelopes due to our initiatives to gain market share as well as pricing pressures primarily from a competitor now in bankruptcy protection.” The data-intensive trend that supports Venture Solutions’ deeper dive into transpromo processing and printing, combined with the constant pressure on consumers to opt-in for e-delivery of their statements, works against the envelope printing business. Every click that a consumer makes to “save a tree” means one less envelope printed every month, year in and year out.
As we expected, the print management business continues to experience pressure. In a deal that effectively transforms the former print broker, Workflow One, into a real live printing company, the company was acquired by Standard Register in deal that was primarily an assumption of Workflow One’s long term debt. This is the third month in a row that deals have been announced in the print management business, changing the landscape and growth curve in what has been a very disruptive model for commercial printers. I suspect that there are many commercial printers that are not unhappy to see the declining fortunes of the print management firms and that eagerly look forward to the potential to restore their direct relationships with their corporate clients; in effect disintermediating the intermediators.