Commentary & Analysis
A Print Business Pro Takes the Long View of an Industry in Transition
In real estate, they say, it’s all about location, location, location. In business consulting, the triple crown is perspective, perspective, perspective. The most recent addition to the consulting team at New Direction Partners brings a long and multi-angled view of the printing industry to his new role as an architect of mergers and acquisitions within it.
By Patrick Henry
Published: January 14, 2013
In real estate, they say, it’s all about location, location, location. In business consulting, the triple crown is perspective, perspective, perspective. Albert J. Reijmer, the most recent addition to the consulting team at New Direction Partners (NDP), brings a long and multi-angled view of the printing industry to his new role as an architect of mergers and acquisitions within it.
He’s a son of the industry, having grown up in a family-owned printing business in Michigan that his parents sold for health reasons as he was about to enter college. His alma mater, Wayne State University, was unusual in that the campus was home to a large commercial printing plant where Reijmer worked between classes. After graduation, his career path took him to another large printing firm where he eventually became plant manager.
His perspective on the industry shifted when he was recruited for what would turn into a 25-year stint on the supplier side with Heidelberg. Leaving Heidelberg as a senior vice president, Reijmer went on to top management positions at TD Global, a graphic arts equipment supplier, and at manroland, another press manufacturer.
The common denominator among these diversified assignments has been Reijmer’s close and constant contact with printers, a group whose business issues he has come to know well. Today, Reijmer says, many of them are facing existential questions about the future of their companies—questions that often keep many business owners awake at night.
One is succession—the orderly transfer of management to the next generation of ownership or to others close to the firm. But, as Reijmer has seen all too often over the last decade, the challenges of the industry in recent years have often changed the perspective of owners and their children regarding potential family succession plans.
Growth and investment can’t be taken for granted, either. In a shrinking market, says Reijmer, many printing businesses inevitably arrive at a point where further organic growth—building on the base the company already has—becomes exceedingly difficult to achieve. Sensing this, banks and other lenders often take a harder line when printers come to them in search of capital.
Once, says Reijmer, “banks held a different perspective on printing, and attractive financing terms were much easier to attain”. Not any more: now, many lenders insist on personal guarantees, shorter repayment periods, and other restrictions that complicate borrowing. Taking on additional debt in these circumstances, says Reijmer, is an increasingly tough call for owners who may not have a clear succession plan or exit strategy in place.
The industry’s contraction since 2008 has intensified one of its perennial downsides: the tendency of some companies to cut prices to unsustainable levels. Companies resorting to cutthroat pricing have failed to realize how much better off they might be by combining with their competitors instead of waging no-win price wars, Reijmer says.
Bringing about mutually advantageous M&As is the primary business of NDP, a provider of investment banking and financial advisory services to graphic communications firms. After years of counseling business owners about purchasing equipment and deriving maximum ROI from their production operations, Reijmer feels that he has both the strategic acumen and the emotional sensitivity to help NDP’s clients make what in many cases will be the most important business decisions of their lives.
Keep It Simple To Start
Many owners are often unaware of how to take the first step toward selling their companies or acquiring other firms, Reijmer says. After all, most owners are very engaged in provided leadership within their companies and often are too busy to spend much time on this issue. The good news is that the process can begin with a simple conversation: a dialog between owner and adviser about options to explore as well pitfalls to avoid.
Next comes an assessment of what the business is worth—an exercise where the assistance of professionals specializing in business valuation is essential. Reijmer says that setting a realistic expectation of value and determining the most essential goals of the seller or the buyer are the keys to a successful and satisfying transaction.
The form that the deal will take depends on many things, not least of all the wishes of the principals. But, says Reijmer, in an acquisition, the size and the condition of the business being purchased will have major influence on the type of transaction ultimately chosen.
Larger firms are often acquired as going concerns, with plant, equipment, and personnel kept intact. Acquisitions made on this basis can work well for businesses with complementary, non-overlapping capabilities: for instance, the 40" sheetfed house that buys a half-size plant to better serve customers buying print in smaller formats.
A Graceful Exit
Firms not large enough to be attractive for sale as going concerns often need to look closely at structuring the deal as a tuck-in, Reijmer advises. Here, the seller transfers active accounts to the buyer in return for a payout over time, liquidating plant and equipment and retaining those proceeds.
The seller may then choose to remain active with the business or take leave of it, depending on what has been negotiated with the buyer. Tuck-ins can provide precisely the kind of exit strategy that many sellers are looking for in a downsizing market, says Reijmer, particularly those without succession plans.
Many other types of M&A transactions are possible, and Reijmer believes that the opportunities for dealmaking are richer than many in the industry may realize. Despite consolidation and competitive pressure from other media, he says, the printing industry remains a sector where firms wishing to continue with the right vision can grow and thrive.
The consequences of clinging to the wrong outlook can be harsh. The industry has changed dramatically, and what worked well in the past is no guarantee for the future. Today’s owners and managers are challenged far beyond what they could have imagined just ten or 20 years ago. Today, Reijmer says, “the slogan of a successful printer must be much like the Army’s ’Be all you can be.’” That is why the ranks of those who still insist on living in “a simple, ink-on-paper, analog world” will continue to shrink.
But, Reijmer has high hopes for “those who get it”: progressive printers open to growth by acquisition and ready to capitalize on selling graphic media products and services that didn’t exist even a few years ago. If his long and varied perspective on the industry has taught him anything, it’s the art of spotting winners—the same firms he looks forward to advising as clients of NDP.
“Although I’ve been in the print game for more than 40 years, a day rarely goes by where I haven’t learned something new.” Reijmer says. “I really enjoy being a lifelong student of this exciting industry.” Anyone wishing to explore the possibilities is invited to contact him directly at (586) 530-8600 or by email at firstname.lastname@example.org