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Mark Cuban and Print Shop Owners Score with Shark Tank – November 2014 M&A Activity

Less than a year after swimming with the sharks on the popular TV show Shark Tank in January 2014, husband-and-wife team and printing company owners, Julie and Brian Whiteman, sold their digital photobook app, GrooveBook, to Shutterfly for $14.5 million.

By Mark R. Hahn
Published: December 15, 2014

Digital Printing – Photobooks / Mobile Apps

Less than a year after swimming with the sharks on the popular TV show Shark Tank in January 2014, husband-and-wife team and printing company owners, Julie and Brian Whiteman, sold their digital photobook app, GrooveBook, to Shutterfly for $14.5 million.

When the Whiteman’s pitched their concept on the show, two of the “sharks” bowed out of the bidding because they were concerned that the GrooveBook deliverable is an old-fashioned printed product and also that the production was tied to the Whiteman’s printing operation. (I suspect that the two reticent sharks regret not taking the plunge and that they let this one get away.) The Whiteman’s wisely turned down an offer of $750,000 from another shark, electing instead to accept a much smaller investment from big fish investor Mark Cuban in return for certain rights to market the service to other photo sites.

The notoriety and exposure from the show created an instant and huge demand for GrooveBook’s Android and iOS compatible app that serves as the front-end for subscribers who upload photos from their smart phones and receive a printed and bound photobook each month. The number of paid subscribers jumped from 18,000 to over 500,000 after the show, with over 1 million downloads of the app.

The Whiteman’s intimate knowledge of printing and binding processes led to an “aha” moment when they realized that using a grooved spine made the finished books flexible. This in turn allows the books to be mailed bulk rate through the USPS, rather than delivered via much more expensive alternatives.

Combining the cost advantages of bulk mail delivery with the scalability and mobile-enabled user interface proved to be the winning combination for the sellers. If all the current subscribers stick with the service, the company is on-track to meet its projected run-rate of $18 million in revenues, and Shutterfly will have paid only 80% of projected annual current revenue for this rapidly growing service. As for the Whitemans, the price equates to more than 22 times the company’s revenue prior to their dip in the Shark Tank.

Packaging & Labels

Consolidation and global roll-ups continue at a brisk pace in the packaging segment. Multi Packaging Solutions, a portfolio company of Carlyle Group and Madison Dearborn Partners, acquired the North American and Asian print divisions of the AGI-Shorewood Group from Atlas Holdings. The seven acquired plants boost Multi Packaging Solutions’ global capability to more than 50 manufacturing plants in the US, Europe and Asia. Before November was out, Multi Packaging Solutions completed another transaction, adding the specialty packaging company Presentation Products Group in Arbroath, Scotland to its roster.

Hilex Poly acquired a new name, Novolex, concurrently paying $600 million to acquire flexible packaging manufacturer Packaging Dynamics in Chicago, Illinois. With backing from Wind Point Partners since 2012, Hilex Poly acquired Duro Bag Manufacturing earlier this year (See The Target Report – June , 2014), and the flexible packaging unit from the Clondalkin Group in April, 2013. The Clondalkin Group, headquartered in Amsterdam, shed more assets last month, selling its Specialty Packaging Division to UK-based Essentra. Included in the sale were US and European packaging manufacturing facilities.

Eureka Growth Capital entered the packaging market with its acquisition of Jansy Packaging, based in Congers, New York. Jansy Packaging provides packaging design and outsourced management services, coordinating the production through its third-party suppliers overseas.

Book Printing

Courier Corporation purchased a majority interest in Brazilian digital textbook printer Digital Page Grafica e Editora for $9 million, in a recast deal that increased its share of the company from 40% to 60% due to changes in the condition of the company. Courier has previously licensed its proprietary textbook customization platform to a Brazilian textbook publisher, and plans to use this latest acquisition as the production platform to produce the printed books.

Commercial Printing & Marketing Service Providers (aka MSP’s)

Commercial printer/MSP Graphcom, in Gettysburg , Pennsylvania, expanded its range of product offerings with the acquisition of Designs of the Times, an outdoor signage company in Frederick, Maryland.

Victory 360, an MSP in Baltimore, MD, acquired Valley Printworks in Middletown, Maryland. Valley Printworks specializes in data management and printing services for non-profit fundraising campaigns, and has provided production capabilities in the past for its new owner.

Midstates Printing in Aberdeen, South Dakota acquired A to Z Printing and will merge the acquired operations into its previously acquired Jacob North unit in Lincoln, Nebraska. Midstates Printing acquired Jacob North in June, 2013 (See The Target Report – June , 2013).

Complemar Partners, headquartered in Rochester, New York, has acquired the printing operation of CP&i in Buffalo, New York. Complemar plans to consolidate its own Buffalo-based print production in CP&i’s existing facility. Reimold Printing in Saginaw, Michigan, is merging nearby Campbell Printing into its operation.

Publications & Newspapers

New Media Investment Group announced the acquisition of Halifax Media Group for $280 million, bringing an additional 36 newspapers, including 24 dailies, under the New Media umbrella. Halifax’s properties are primarily in the Southeastern US and will be added to New Media’s portfolio of more than 450 community newspapers, 370 websites and six yellow page directories.

The TVA Group, a subsidiary of Quebecor Media, is acquiring the Consumer Magazine Group from Transcontinental for $55.5 million. As part of the deal, Transcontinental extended its contract for the printing of the titles. In its explanation of its rationale for shedding the editorial and ad sales functions of these predominately French language titles, Transcontinental noted that the company is focusing on the local advertising markets it serves through over 180 community newspapers it publishes throughout Canada.

Paper Industry

CCL Industries acquired Label Connections in St. Neots, UK. CCL paid $2.4 million for the manufacturer of pre-diecut label stock which reported revenues of $4 million and EBITDA of $600,000 (4x EBITDA, 60% of revenues). In another, but much larger deal for a producer of label stock, Platinum Equity paid $170 million for MACtac, a division of Bemis Company.

View the complete M&A report for November

Mark Hahn is a Managing Director and Founder of Graphic Arts Advisors, a boutique strategic financial advisory and consulting firm focused exclusively on the printing, packaging and related industries. He assists company owners and management, as well as their lenders, investors and shareholders in the following areas: mergers & acquisitions, sale of business, strategic and financial advisory, capital structure & funding, financial analysis, interim & turnaround C-level management and business valuations. Mark is the author of The Target Report and is regularly published and quoted in printing industry trade and management journals. Mark can be reached at 973-588-7399 or mark@graphicartsadvisors.com.

 

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