Discussion

By Kate Dunn on Mar 12, 2010

When management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
Warren Buffett

By Clint Bolte on Mar 12, 2010

The banks holding the debt may be forced to let them off the hook because of the bankruptcy process. However, if Nationwide were able to cherry pick the corpse, it would not be surprising if all of the suppliers who were screwed would not put Nationwide on a "cash only" basis for a long time to come.

Nationwide, being smart executives, may think it would be easy to move their business to other suppliers. The stench will probably follow them for at least this generation of top management.

But this is the way business is conducted during "repressions."

By Tommy Anderson on Mar 12, 2010

It's a shame. McQuiddy Printing was a 100 year old family business privately held and vastly profitable for many years. Unfortunantly Mr. David McQuiddy Jr. passed away and the company was sold. My fond memories will always be 1987 and forward when they were the first company to acquire the Harris Digital in Nashville. Hats off to David III,Webb, and Leslie McQuiddy

By Randy on Mar 12, 2010

The economy has taken its toll on many companies and industries. The liquidation of these facilities and its assets is a win-win for Nationwide Graphics and the Premier Print’s holding companies in a time like this. May we NOT forget what put Premier Print Holdings in its position in the first place; it was once Master Graphics Inc. It was bad management, poor decisions and unscrupulous spending. These companies have every bit to gain by the purchase with Nationwide Graphics.

As for the suppliers, mentioned by another commit posted, I’m sorry but Nationwide Graphics wouldn’t and shouldn’t be held responsible for what the Premier Print (Master Graphics) organization did before Nationwide Graphics and its management team took the administration role.

I being a supplier can advise you that since Nationwide Graphics and its management team came to supervise these facilities my organizations been treated very fare. The management team of Nationwide Graphics and its reputation is very well own in the industry. They do business right.

The fact is it shows strength and potential for a company like Nationwide Graphics to be making this purchase, in this economy of Premier Print Inc.

By Bob Rosen on Mar 15, 2010

If you're thinking that Premier Print Holdings is a victim of this recession, you should think again.
Premier is its own victim, playing the hero in a multi-act tragedy - starting with Master Graphics' inability to properly finance its lofty dreams, and compounded by its inability to make its grandiose plans pay off.
The last act has played out slowly but with a sense of inevitability - as Nationwide Graphics' management was unable to overcome a difficult capital structure in large measure because they couldn't add any value to Premier's operations.
The entire tragedy proves three things:
(1) Having large amounts of other people's money to invest doesn't make you smarter.
(2) Buying companies successfully requires doing more than just changing the names on the stock certificates. It requires real operating changes.
(3) Nothing matters unless you can add value for customers and improve your operating effectiveness.
The funny thing is, I learned this third crucial thing from a very senior Master Graphics executive!
Premier Print Holdings... it's all a long sad story, with a sadly predictable outcome.

By Robert Johannes on Mar 18, 2010

While the saddest thing about this is the effects on hundreds of families that are potentially getting placed into an emotional and financial chaos, it is another symptom of what has long plagued this industry: The weak are not allowed to fail.

GECC and Nationwide are playing the same old game of trying to blow life into a corpse. GECC is minimizing the damage while it is "politically acceptable" to take huge losses and Nationwide is hoping that reducing debt, in and of itself, will magically save these 5 companies.

By the reckoning above, this group should have long ago disappeared and has been on life support for a long time. The far more logical decision should have been addressing this at the operational management level of the 5 companies that Premier has remaining and challenge them to revitalize what were good companies in their markets, rather than playing the Nationwide vulture card. A stock deal that allows GECC to share in the profits, gives ownership to the employees and tell the executives and owners of Premier Group to take a hike, may have been a better solution. No telling how much could be saved in executive pay and management contract costs to Nationwide, maybe enough to service the debt?

I guess what it really comes down to is GECC allowed this to happen. They extended what was obviously far more debt than could be successfully serviced and they should be the ones to solution it out. But instead, they are taking the easy way out and placing the vegetative patient on life support.

By Pat Berger on Mar 18, 2010

This getting to be the same story different day. Debt is greater than serviceably. Declaring bankruptcy does Nothing to the debt.

It is still there, it doesn’t change, it doesn’t go away and is rare for it to completely be paid back.

Why is it that the banks, lawyers or financiers always receive there money first and the suppliers are let to fight over the scraps.
The suppliers are whom financed the business every day with supplies and consumable yet that are treated like crap.

The banks could care less about how much is borrowed. If it goes to pot they know that they will always get their money first and the others are left to fight over another batch of table scraps.

It just isn't ethical for the supplier to always take the brunt of any liqudation or bankrupcy.

By Michael J on Mar 19, 2010

Pat, Very good point. When it happened to me back about 10 years, it was the leasing company that had to be paid.

If I were merely accounts payable financed, it never would have come to head. I wonder if someone will invent family owned bonds that could be issued to suppliers and customers. It would be a nice way to get all the incentives aligned. Any real person that has a stake knows it goes up, it goes down. If the owner is not a crook, the money will be good.

Sure there's lots of crying and complaining. But banks don't cry or complain. They just close you down. Nothing personal , just business.

By Robert Johannes on Mar 19, 2010

Pat and Michael, I think the financier on this one, and I am sure others, aren't going to come out so good. I am sure they will record an 8 digit loss on this skunk.

But you're right, vendors are going to have to think more like secured suppliers, which banks and financiers basically are nothing more than that.

We have seen more of that in recent years where major suppliers are taking personal or business "hard assets" as collateral, however this speaks to that vendor "propping up" a weak player just to try and protect his interests, while the littler guys down the hill get rolled on. It's an ugly game, with bad rules.

But no one could of or would have predicated the precarious upside down ratio of hard assets to debt we would see in such a short time. We have seen used equipment prices halve in less than two years on some equipment.

This sad tale told does have a happy ending for the employees of Premier and for Nationwide, who I am sure laughed all the way from the bank, or lawyers office in this case, with a pocket full of assets for a song. Get ready vendors, you are about to pay for Nationwide's golden opportunity fed to them by GECC.

By Pat Berger on Mar 20, 2010

For over 25 years we have always used a very basic rule for any financing.

Pay cash or can you meet your debt obligations if yours sales drop by 50%.

Interest expense is money being urinated in the wind.

By Michael J on Mar 20, 2010

Robert,
Your point is well taken, but it is usually a finance company or bank that puts the nail on the coffin. True they take a hair cut. But a well run bank plays by their rules. They have pretty reliable numbers about risk and benefit. Sometimes it gets really out of whack as we've recently seen.

The point I'm trying to make is that in addition to Pat's sensible advice, the other reality is that local lendors or vendors can be more flexible and are even more attuned to risk than a formal bank.

The risk of giving a bad loan strikes close to home. They are much less prone or incented to give easy money. In the old days, they simply would not lend if the risk is too high.

The great business people and entreprenuers are driven by their dreams. The good banks are driven by their fear of risk. Once the banks act dumb, it only makes sense that people take on much too much risk. The winners have learned discipline and focus to thread the needle.

Sure, everyone bears responsibility. But if you look at from 30,000 feet the problem is under priced risk. Same stuff that we are seeing every place we look. The good news going forward is that everyone is now highly sensitized to risk, and sooner or later, it will be priced correctly.

By Michael J on Mar 20, 2010

I apologize for two in a row, but wanted to get this on the table.

If the vendors assumed part of the risk of new equipment AND received a going forward benefit from the printer's investment of time it would probably get the incentives nicley aligned.

If the globals really believe that this X is going to "increase your profitability" and open fast growing "new markets" and XYZ, why don't they have some skin in the game.

I bet any printer would be happy to give a piece of new business or profit growth in return for getting the globals on their side with money, not just promises.

Next time a printer is approached with the need to be "educated" how about "If you're so sure this is going to work" how about placing a bet?

It might separate the bullshit from the reality pretty quickly. The good news for the globals is that instead of "telling the printer what they should do" it would speed the efforts to help the printer do what every one wants to happen.

I bet that any marketing costs associated with "educating the printer" could immediately shift to the "going forward sustainable revenue" side of the ledger.

By Pat Berger on Mar 20, 2010

I agree with Michael J

We have been approached by numerous marketing consultants. They always have their hand out before any wisdom?? comes from their mouth. I have never communicated with a single one who would put his money where his mouth is. It is always pay us $$$ and we will get you more business. I have asked if they would do it for free and reap a percentage of the profits generated.

The answer is always there are no guarantees' that is why we must be paid upfront.

If they had any confidence in themselves and their ability to get you more sales and profits they would DO it for FREE and reap the rewards that they say you will be generating for yourself and them.

By Michael J on Mar 20, 2010

A maybe interesting experiment. Just a litte substitution of words. See if it makes sense:

If Vendors had any confidence in their solutions and their ability to get you more sales and profits they would DO it for FREE and reap the rewards that they say you will be generating for yourself and them.

OR

If Printers had any confidence in their solutions and their ability to get their customer more sales and profits they would DO it for very close to FREE and reap the rewards that they say they will be generating for their customers and themselves.

Note that the most successful services sold on the internet and the grocery business have just the same strategy : "Try it, you'll like it."

In all the talk about "new business models" we tend to ignore that a "business model" is the method of making money. Not offering a new product of service.

By Bert Murray on Mar 21, 2010

I heard that on Friday, Nationwide Graphics was the winning bidder for Premier Graphics' assets.

By Randy on Mar 22, 2010

I thought twice about responding to the post and then thought to myself I just have to.

First, the subject matter has gotten so fare way from the real topic because the people wanting to try and sale their services here and sound like they know what they’re talking about is crazy.

Nobody in their right mind would do a solution sale for FREE. I can tell you myself from doing many that it’s because you don’t know how the clients are going to handle the leads or prospects that are generated from these types of campaigns to truly make them successful. For more times than I can remember the client drops the ball on handling the leads correctly.

People there is no silver bullet to making a solution program successful, data, creative, the message, the offer – all of these things go into account and then once you do get it all right, what about the follow up and how its handled. Give me a break. Solution sales are great ideas if each and every department is in sync.

Now back to the main topic, Premier Print Holdings. Do you really believe some of these entries here? Very easy making such commits from the sidelines (Sunday afternoon couch coaches is what I like to call them) you would need to dig deep into the Premier’s past and understand how they got to the bankruptcy and last the foreclosure in order to make some of the allegations and commits that you are making and I don’t believe any of you have this. Kate Dunn, Clint Bolte, Bob Rosen, Robert Joannes, Pat Berger, and Michael J, I truly don’t believe any of you have the back ground or expertise in making any of these commits.

Unless you are currently and I mean currently not even two years ago operating a corporation with multiple locations, in an economic downturn and industry that’s shifting as this industry is, I don’t believe you are qualified to make the commits you have made.

The industry isn’t what it once was; even the great industry leaders from the 70’s, 80’s and 90’s wouldn’t stand a chance in today’s printing industry. Without an online presents in both B to B and B to C, digital print on demand, fulfillment, solution sales, an IT department and marketing technology most printers don’t stand a chance in today’s market.

If Nationwide Graphics won the bid to purchase Premier Graphics assets great for both of them, they are a strong company with lots to offer in client services and with many people on their team that understand the changes in today’s market and either know or have one of the best ideas for the direction the industry is headed, they are truly a company to watch.

By Michael J on Mar 22, 2010

Randy,
Just two notes.

My personal "qualification" is that I've left the industry to focus on my investments. In a print centered portfolio, you can pretty much see the list on my website, I'm up over 149% and retired. I don't know if that makes me "qualified." But I'm at least making some lucky guesses.


And "I can tell you myself from doing many that it’s because you don’t know how the clients are going to handle the leads or prospects that are generated from these types of campaigns to truly make them successful"

Fair enough. But it might be a better business model to focus on delivering profits or lower cost production instead of leads..

By Robert Johannes on Mar 22, 2010

Since I am a printer, I can ring in on this marketing expertise issue without a horse in the race.

I like Eli Goldratt's approach to consulting. He is very selective about who he use to consult with and the price was easy. You would write him a check for what you thought his services brought to the table after the first 90 days. He never did a job for free and was well paid for expertise in teaching organizations Theory of Constraints. He was of course careful in pre-screening the opportunities that fit his expertise.

Consultants who know they can deliver the goods to an organization and bring value don't worry about getting paid. They are begged to remain much longer than they want to be and even asked to be hired full-time. A rainmaker is always going to be paid top dollar. The rest of the pack, well... we have choice descriptions for them.

By Michael J on Mar 22, 2010

Robert,
Thanks for putting that on the table. It was all new information to me. I thought it might be useful to put the wiki link here for visitors.

http://en.wikipedia.org/wiki/Theory_of_Constraints