A Perfect Fit
Any large market that is served by a fragmented spread of suppliers or practitioners will, in time, undergo a process of churn and consolidation. Among small companies, this is often driven by the movements of key personnel. Many leave to start businesses of their own or join other concerns for the promise of better conditions or bigger rewards. Among larger companies, however, there is a different dynamic.
Notable mergers and acquisitions in the sign industry over the past twelve months include DeSigns’ acquisition of Action Signs, the merger of Integrated Sign Solutions and Limited Space to form Limited Space Media Group, EFI’s acquisition of GamSys and PrintLeader, Canon’s acquisition of Océ, and Xerox’s acquisition of Impika.
Shaping up
Acquisitions are made for many reasons. Filling in of voids in geo-graphical coverage is one example and has the attraction of removing what might otherwise be a competitor from the market. Companies also acquire to buy into a capability or for access to a technology or market that would take time and considerable expense to achieve otherwise. Possibly the most common motivator is for two companies in a similar market to join together or acquire, in the belief that more mass and market can be won and some of the collective expense can be reduced.
Xerox president Jeff Jacobson spoke at length
about the importance of its acquisition of Impika
for its global product portfolio and customer
service
Xerox has long provided multiple technologies that give customers choices to help them best meet their needs and achieve their business objectives. Xerox Europes’ Robert Corbishley, explains more about the firms acquisition of Impika: “Impika’s proven aqueous continuous feed equipment complements our current portfolio and provides customers with a broad set of choices for their printing solutions.
“The acquisition allows Xerox to participate more aggressively in the attractive global production inkjet market, projected to average a 21 percent compound annual growth rate through 2015 according to market research firm IT Strategies.”
At the other end of the spectrum, but of no less importance to the UK is sign-maker, DeSigns. The Hull based vehicle livery, signage, and large-format digital print specialist, has acquired signage suppliers Action Signs, a move that will enable DeSigns to expand the signage side of its business. DeSigns already produces all types of signage for customers nationwide, from simple printed banners, panels and fascias to more complex bespoke signage, while Action Signs, also based in Hull, produced signage primarily for the retail sector.
Rob Daysley, managing director of DeSigns, comments: “I am very optimistic about business at the moment. We are currently celebrating our 20th anniversary and have seen encouraging growth in recent months. This acquisition is part of our strategic development plan to strengthen our signage division.”
Canon announced its intention to acquire Océ and to capitalise on the excellent complementary fit in product mix, channel mix, research and development (R and D), and business lines, resulting in an outstanding client offer spanning the entire printing industry”
However, mergers and acquisitions do not happen overnight. Under Phase III of its Excellent Global Corporation Plan, launched in 2006, Canon outlined its goal to join the ranks of the world’s top 100 companies in terms of all key measures of business performance. As a principal strategy toward the realisation of this goal, Canon stated that its target was to achieve the over-whelming lead position worldwide in all of its core businesses, including the provision of products and services to the printing industry.
To that end, Canon identified Océ—one of the world’s leading providers of document management and printing for professionals—as a company with sufficient expertise and strengths in the areas of production printing, wide-format printing, business services, and outsourcing to help Canon achieve its goal.
Duncan Smith, wide-format group director, Canon UK and Ireland, believes that the
combined strengths of Canon and Océ places the company in a stronger position than
ever to support customers in meeting their challenges
“Therefore, in November 2009, Canon announced its intention to acquire Océ and to capitalise on the excellent complementary fit in product mix, channel mix, research and development (R and D), and business lines, resulting in an outstanding client offer spanning the entire printing industry. Within the UK, the comp-letion of the integration of Océ within Canon was announced on May 1st this year,” says Duncan Smith, wide-format group director, Canon UK and Ireland.
Joining forces
Sign industry expert Mark Godden observes: “Acquiring going concerns can be an expensive undertaking for bigger companies, and the vehicles used for paying for the deal are often complex. Prior to any acquisition, ‘due-diligence’ must be conducted to check out the overall health of the deal. Assuming all is to both parties’ liking, the ‘deal’ is done. Post-acquisition, there is usually a process and period of integration, in order to mesh the two companies together.”
Smith continues: “As a result of the acquisition, Canon is now able to offer its customers a wide range of products and services that are unsurpassed in the industry and, through significant investment in R and D, it will continue to develop innovative technology to enable customers to remain compet-itive and profitable.
“The product portfolio now meets the needs of print-service-providers in the areas of wide-format, transactional and transpromotional print, book and newspaper printing, high-quality pers-onalised print, and cross media app-lications. By harnessing the strengths of both Canon and Océ—Canon from a strong image heritage and Océ from one of print and business process outsourcing—the company is better positioned than ever to support customers in meeting their challenges, whatever they might be.”
Impika gives our dedicated world-wide graphic communications sales team another offering to take to the market in what we believe is the next big technology—inkjet”
Commenting on the Impika acquisition, Corbishley picks up on this point about challenges, explaining that the company fits very well in Xerox’s global graphic communications strategy: “Impika gives our dedicated world-wide graphic communications sales team another offering to take to the market in what we believe is the next big technology—inkjet. Currently, we are focused on expanding our relationships with the top European and US printers, prime targets for production inkjet. And by offering multiple, complementary inkjet prod-uct lines, we give our customers a choice of technologies from what is the broadest array of production inkjet solutions in the industry.”
DeSigns Daysley similarly promotes the values of the firm’s recent acquisition. “This is a win-win sit-uation for DeSigns and Action Signs,” he asserts. “We had wanted to develop our signage operations to meet growing demand. By acquiring the dedicated and skilled team at Action Signs, as well as its in-house installation service, we were immediately able to enhance and expand our service to our custo-mers. At the same time, we were able to retain Action Signs’ employees.”
Charlie Petrie, former managing director of Action Signs, weighs in, adding: “DeSigns shares our own approach to quality and customer service so there was a good fit in terms of bringing the two companies together. The move included the re-employment of Action Signs’ staff, and our customers now experience the added benefits available from the wide range of additional facilities and resources available in DeSigns,”
Multiple purchase
One of the most prolific companies when it comes to acquisitions is EFI. Marc Verbiest explains why the firm views this as important to its business strategy: “As the leading supplier of productivity software worldwide, EFI finds increasingly that users in all print disciplines expect to the find the company’s applications available to them. All acquisitions have behind them the requirement to provide full MIS, ERP, and web-to-print resources for businesses that want to grow their efficiency and increase profitability.”
Mergers and acquisitions take place for many reasons, including geographical coverage,
removing competitors, or buying access to new technology
He continues: “EFI is able to inc-orporate its own expertise into the MIS and ERP applications that have been acquired from third parties, bringing its leadership and technical skills to a broad range of print-related customers that need a streamlined solution, which enhances their business productivity. As a result, EFI is the safest MIS investment for customers, whether they are a small business or a large enterprise with multiple sites.”
Two particularly significant acqui-sitions that EFI made this year were GamSys and PrintLeader, each bring-ing their own set of benefits. GamSys is particularly relevant to French-speaking countries, while PrintLeader has a North American customer base and will be integrated into the browser-based PrintSmith Vision.
Verbiest concludes: “The overall impact is to strengthen EFI’s position globally as the leading supplier of business productivity software. This, in turn, gives users of all sizes the security of knowing that their MIS and ERP requirements are accommodated by a company that drives innovation and develops feature-rich products.”
Cementing relationships
It is extremely rare that companies mesh perfectly and, therefore, it is common that a painful grinding of gears accompanies the combined companies’ early days together. Change can be uncomfortable for some, particularly for senior people who have a large stake in the business that has been acquired.
O Factoid: The distinction between a ‘merger’ and an ‘acquisition’ has become increasingly blurred. From a legal point of view, a merger is a legal consolidation of two companies into one entity, whereas an acquisition occurs when one company takes over another and completely establishes itself as the new owner. O
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Empires are built by acquiring and merging, and customers often benefit from greatly enhanced service levels or access to more products. However, there is also the flip-side where long established relationships may be upset.
“Continuity will be maintained for Action Signs’ customers, who will continue to deal with their usual contacts but also benefit from the additional services available through DeSigns,” confirms Daysley, adding: “In addition, the former managing director of Action Signs, Charlie Petrie, has become business development director for DeSigns.”
Canon’s Smith is similarly keen to assure customers they can remain secure and confident in the service they will receive.
He explains: “It is still early days for the new organisation. However, Canon is now positioned to be able to support customers to fulfil any and all of their printing requirements. Customers can be confident that, no matter what print application they’re considering for the growth of their business, Canon can deliver the product and service that will enable them to meet their customers’ demands.
“It may be a bit of a cliché, but Canon really is now the ‘one-stop-shop’ for all print-service-providers’ needs.”
Former Impika president
and chief executive
officer, Paul Morgan, has become Xerox’s chief
operating officer, inkjet division
Corbishley believes the acquisition of Impika means that customers choose Xerox as a brand, rather than choosing a technology; he explains: “The bottom line is that we offer multiple technologies because our customers want us to. Our customers are very excited about the opportunities that Impika brings, and now they know that we have a long-term commitment to this set of solutions.”
He continues: “By offering both Impika’s technology and our own waterless inkjet production systems, we now go to market with the industry’s broadest range of digital presses, in general, and production inkjet solutions, in particular.
“Xerox also markets the only waterless inkjet press, the Xerox CiPress Production Inkjet Systems, which is complementary to Impika. The acquis-ition is about industry leadership. Xerox has a long history of leadership in digital print technologies and our customers look to us to continue this.”
Changing times
By and large, mergers and acquisition mean change; by and large people have a preference for stability but welcome change for the better.
Mark Godden concludes: “Sign companies that would acquire or are targets for acquisition, need to satisfy themselves that the deal is ‘accretive’. More than the sum of the parts should result in terms of overall cash generation, service levels, market reach, and other key measures. It’s on this basis alone that the value of the deal stands the test of time.”
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