To all our friends and business colleagues:
As events have unfolded over the past month, Graphic Arts Advisors has been working closely with our clients, in accordance with government guidelines, to maintain continuity of our advisory services. The spread of the coronavirus has seemingly changed everything, threatening our health and lives of loved ones, while also upending the long-term sustained economic expansion that has benefited our industry.
As you may know, we track transactions and publish The Target Report, the industry source for data and commentary about M&A activity in the printing, packaging and related graphic communication industries. Based on our research and what we see over the past month here at GAA, it's my view that the Covid-19 pandemic has created a sudden and dramatic shift in the landscape for M&A transactions in our industries. Several transactions we have been working on between financially healthy buyers and sellers that were scheduled for closing in March and April have been put on indefinite hold, at least until the owners see a path back to some level of normalcy. At the same time, clients that were financially challenged before the virus hit have accelerated the sale process and/or have begun seeking alternatives to stem the losses that are sure to come. Other GAA clients are seeking our advice about how to communicate clearly with their lenders, trade suppliers, employees and other constituents as the need to conserve cash becomes paramount.
My partner John Hyde, GAA Managing Director of Special Situations, has noted that “while we hope for the best in the coming months, we realize that many owners in the printing and related industries will be facing new challenges created by the near total shut down of many sectors of our economy. In these situations, we leverage our printing industry-specific legal and financial expertise to advise owners and structure creative M&A transactions in cases where the seller has too much debt. The buyer’s M&A offer, by itself, may be insufficient to get the seller out from under their obligations. We offer proven, non-bankruptcy procedures for resolving debts while treating creditors fairly.”
While many of you know our firm, Graphic Arts Advisors, for our core business serving profitable, well-capitalized companies, GAA has also built a niche practice unique in the industry assisting companies that require specialized restructuring and turnaround skills. It remains to be seen what the impact of the government stimulus and aid programs will be and how long it will take to re-open public spaces, but regardless we expect consolidation to pick up across most, if not all, of the industry segments we serve. If prior experience is a guide, some owners will see opportunity to gain market share through strategic acquisition, and others will seek to gracefully transition from ownership under the backdrop of M&A and non-bankruptcy orderly wind-down options.
In closing, I want to add that our team cares deeply about our industry and the many business friends and relationships we have across the US. For those owners who need assistance, please know that GAA is open, operating on all cylinders and here to help owners navigate the potentially rough water ahead, assisting both buyers, sellers and those wishing to stay the course.
Mark and the GAA Team