Commentary & Analysis
Small Printers are Big Business – May 2017 M&A Activity
Global franchise system owner of Mail Boxes Etc. acquires US-based printing franchise system PostNet, Standard buys Epic, ICV Partners moves upstream with LeadingResponse, and more.
By Mark R. Hahn
Published: June 12, 2017
MBE Worldwide, owner of the international franchise system, Mail Boxes Etc., moved back into the United States with its strategic and decisive acquisition of PostNet. With over 300 stores in the US and another 400 distributed throughout Central and South America, Australia and South Africa, the PostNet franchise system brings the MBE network to almost 2,300 locations in more than 33 countries.
PostNet is a US-centric storefront-based system of franchised printing, marketing and shipping stores focused on serving small businesses. The acquisition pits MBE Worldwide into direct competition in the US with the UPS Store locations which were rebranded with the UPS moniker in the US and Canada when UPS acquired Mail Boxes Etc. in 2001. UPS subsequently jettisoned the Mail Boxes Etc. stores outside the US and Canada in 2009, selling the global system to the Fineffe Group based in Milan, Italy. Owned by the Fiorelli family, Fineffe also owns other retail franchise systems under the Western Union, Direfarestampare (printing centers) and Credit Planet brands.
The business of “micro” print shops is now dominated by franchise systems all competing on a crowded playing field. In addition to the UPS Store, the design-print-ship business model is crowded with other storefront systems: FedEx Office, Alphagraphics, Fastsigns, Allegra and the Minuteman Press systems. For the Fineffe Group, all those independently-owned and operated franchisees add up to a significant global business bolstered and able to compete in the US market with the addition of the PostNet brand. Total combined system-wide revenue for Fineffe’s print stores equals $580 million, based on 2016 results.
While we are on the topic of small franchised printing companies, it’s worth noting that some franchise owners build a sizeable business by acquiring other small companies or aggregating a portfolio of separate stores, usually within a region. The owners of the Minuteman Press franchise in Levittown, New York purchased an independent commercial printer, Fullstop Printing, and tucked that business into its Minuteman Press franchise. In another May transaction, the owner of the Minuteman Press franchise in Parker, Colorado purchased an independent printing company in Castle Rock, Colorado, converted the company to a Minuteman Press franchise, and is planning to keep both locations open.
Commercial Printing and Diversified Services
Consolidation has picked up steam in the commercial printing segment. The Standard Group in Reading, Pennsylvania announced the acquisition of Epic Litho, the rebranded identity of the former Bentley Graphics and Rowland Printing which joined forces in 2010. Standard has built its business at least partially through a series of acquisitions, beginning in 1996, with the latest being the most impactful due to the very high-quality work produced at Epic, according to the CEO.
Mossberg & Co., a commercial printer in South Bend, Indiana announced the acquisition of Foster Printing in Michigan City, Indiana. Auction notices went out shortly after the announcement for the equipment at Foster Printing as that location will be shuttered after 94 years, moving production to Mossberg’s two facilities in South Bend. On a personal note, having printed many beautiful projects for IBM in the 1980’s that made playful use of graphic designer Paul Rand’s famous logo design for the company, I must express my appreciation for Mossberg’s logo, designed by the master himself in 1991.
The two largest commercial printing companies in Edmonton, Alberta decided to join forces; The Burke Group taking the lead and acquiring cross-town rival McCallum Printing Group. Print management and marketing services company Winbrook, in Billerica, Massachusetts, acquired RPM, a Hingham, Massachusetts-based company focused solely on providing New England banks and credit unions with printing, marketing and inventory control programs. Talient Action Group in Manchester, New Hampshire acquired the business of Proofing House Press in nearby Salem, New Hampshire.*
Moving Upstream from Print
As noted recently in The Target Report, private equity investment firms have recently shown increased interest in the commercial printing segment after several years of either no interest or quiet exits from failed attempts to establish a robust platform (private equity having never lost interest in the packaging segments). An example of the renewed, and you could say robust, activity in the commercial printing segment is PE firm ICV partners, which recently acquired a commercial printing company, FuseCreates, to add to the Colorado location of OneTouchPoint (Revenues = $150 million) (see The Target Report – January 2017). ICV completed this deal right on the heels of its acquisition of the much larger direct marketing printing company SG360° (Revenues = $300 million) (see The Target Report – December 2016). Before that, in November 2016, the fund bolted a smaller commercial printing company, PrintManagement, onto OneTouchPoint. On May 9th, ICV was back in the market and announced the acquisition of LeadingResponse, a client acquisition and lead generation specialist firm serving professional practices. A major buyer of direct mail printing, the acquired company is data-focused with revenues of approximately $70 million.
On a smaller scale, but still indicative of the trend to bolt marketing services onto print-centric companies, Didit, located on Long Island, New York acquired New York City-based The Halo Group, a provider of marketing and branding services.
* Graphic Arts Advisors, publisher of The Target Report, served as exclusive advisors to Proofing House Press in this transaction.