Paul Reilly of New Direction Partners talks M&A trends
Published on February 14, 2011
In a difficult market companies look to mergers and acquisitions as a strategic option that can help them grow their business. Paul Reilly of New Direction Partners talked to us about the current state of the M&A market. He highlights two growing trends: tuck-Ins and cashless mergers.
Hello, I’m Paul Reilly, Partner at New Direction Partners. We see many reasons today as to why the M&A activity is so high. The one that’s most compelling is the need to grow. It’s very, very difficult in today’s marketplace which hasn’t been growing to go out in the marketplace and get that new customer, bring in the new business. But we’re seeing large, small, and medium customers they’re growing through acquisition and it’s a better alternative. It’s a better way to execute your strategy.
Recently in a very large acquisition we’ve seen Quad Graphics buy-in World Color. And the medium and small size we actually see a growing trend of M&A activity and we see two structures driving it. One we call a cashless merger. Actually two medium sized company’s get together, they merge their companies. One doesn’t buy the other and the owner’s of the two previous companies actually have part ownership in the new business. The reason why this works is that you get the synergies of merging the two companies together, the cultures of those two companies still exist, and it’s the best way for these two companies to grow in such a difficult market.
In the smaller end of the market we see a structure we call tuck-in And a tuck-in is essentially purchasing the sales of another company and we’ve said for years the value of printing companies are in the customer base. Well, the tuck-in is exactly what is happening here. It’s that you see companies buy another business and most of the compensation that’s being transferred from one to the other is for the value of that customer base. Sometimes they buy the equipment, sometimes they don’t. Sometimes they buy the receivables and inventory, sometimes they don’t. But what’s really important is that they buy the sales of a company and then they merge those two companies together.
To post a comment Log In or Become a Member, doing so is simple and free
From Photolabs to FASTSIGNS
Published: April 6, 2020
Todd Fitzgerald, owner of FASTSIGNS Wappingers Falls, N.Y., talks to Kelley Holmes about his journey from running several camera stores/photolabs to the sign industry. When the photo business started to change, he saw the sign business as a natural progression, and took advantage of FASTSIGNS’ Co-Brand program.
The Wrath of Frank
Published: April 3, 2020
Frank argues vociferously that print is an essential industry and print businesses must remain open during this very difficult time in our history. Our trade associations have been active in contacting government representatives to plead our case.
Waren Werbitt Says, “We Will Come Back From This”
Published: April 1, 2020
Print evangelist Warren Werbitt is going a little stir crazy—as is everyone—but insists that we will come back from this crisis. Although he has no one to sell to at the moment—his customers are busy trying to figure out how they’re going to get through this—he feels it is important to keep in touch with customers, not to sell them anything, but to make sure they’re OK, and let them know you’re there for them.
Memjet and the Expansion of Single-Pass Inkjet Printing
Published: March 30, 2020
Kevin Shimamoto, CMO for Memjet, talks to David Zwang about how Memjet’s inkjet technology platforms and OEM partners are expanding single-pass inkjet into the mainstream printing market and beyond, into new and different applications.
Frank Goes Viral
Published: March 27, 2020
Frank comments on the postponement of drupa and its effect on the printing industry. Vendors who were planning to introduce new technologies in Dusseldorf will now use fall events like Brand Print America and PRINTING United to do so—or, like HP, host their own virtual events. Regardless, the COVID-19 crisis is going to make this a challenging year for the industry, but hopefully we will come out on the other side.
Warren Werbitt Says, “You Still Need to Get in Front of Your Client!”
Published: March 25, 2020
Flushed with excitement, print evangelist Warren Werbitt asks, “Now how are we going to reach our customers?” He plumbs the depths of direct mail, which is the best choice for customer outreach, and encourages everyone to use direct mail to stay in front of customers. If you haven’t taken the plunge and tried direct mail before, it's not to late to start showering it on your clients.