Stronger together
Increasing market share, gaining more of a presence in a certain sector, gaining skilled workers and experienced teams, and increasing revenue are all reasons a business could decide to either sell or buy another company.
Completing a merger or acquisition can also require a lot of resources and knowledge and of course use up a great deal of funds. However, if done in the right way they can also see companies reap great rewards.
As the industry stabilises after a rocky few years, we take a look at some of the mergers and acquisitions that have taken place over the past year and the reasons for these.
Room to grow
Marktlink is an independent mergers and acquisitions advisory firm that boasts over 25 years’ experience helping businesses through the process of mergers and acquisitions. Over the last year, the company advised over 120 transactions across a range of sectors.
Jonny Parkinson, managing partner of the company says the benefits of a merger or acquisition can differ on a case-by-case basis. This is because the benefits to a seller will be different to the buyer. The benefits will also vary depending on whether the seller is a sole entrepreneur or a multi-partner owner. However, generally, he says mergers and acquisitions open up businesses to a variety of avenues for growth and also get rid of barriers that could be stopping business owners from achieving strategic goals.
Jonny Parkinson, managing partner of mergers and acquisitions advisory firm, Marktlink UK
One benefit Parkinson notes is the opportunity to gain market share which in turn gives a business more of an influence and the chance to increase profits. Alongside this, a merger or acquisition can also allow a company to enter new markets, open the doors to new customers, acquire new products and solutions, and also expand to new regions.
There are a number of reasons a merger or acquisition could benefit a business
“Following a merger, the greater size of the business also improves the economies of scale for a business, which now boasts greater negotiating power as a larger company when dealing with customers and suppliers,” Parkinson explains.
“Ultimately, one of the key factors for businesses looking to engage in mergers and acquisitions is the financial returns that the company can see as a result. The benefits mentioned provide commercial and operation synergies that, if exercised successfully, will drive an increase in revenue and profits.”
Ultimately, one of the key factors for businesses looking to engage in mergers and acquisitions is the financial returns that the company can see as a result”
One company that recently completed an acquisition in a move that will see it expand its integrated inkjet solutions presence in Europe is Fujifilm. The manufacturer of wide-format print equipment acquired UNIGRAPHICA AG in order to strengthen its Integrated Inkjet Solutions offering globally.
The company has worked with the European inkjet system integrator for a number of years and as a result of the acquisition, UNIGRAPHICA AG has become a wholly owned subsidiary of Fujifilm and has been rebranded as FUJIFILM Unigraphica AG.
Founded in North America 15 years ago, FUJIFILM Integrated Inkjet Solutions is a service within Fujifilm that provides custom inkjet systems across the EMEA region and Japan for brands in markets such as commercial imprinting. With its head office based in the Principality of Liechtenstein, the location of Unigraphica AG was something that appealed to Fujifilm, as well as its long history within the print industry and its network and reputation.
Greg Balch, vice president and general manager of FUJIFILM Integrated Inkjet Solutions explains that this is because as FUJIFILM Integrated Inkjet Solutions has been implementing its strategic growth plan, it has been clear that there would be benefits from a more localised presence in Europe. Not from a sales standpoint, but from an integration capability, manufacturing, and aftersales support viewpoint.
In addition to this, Balch explains that there are a number of complimentary technologies between the two companies. One example is that Unigraphica AG brings transport knowledge in terms of web-to-web, sheet-to-sheet, web-to-sheet, and finishing capability knowledge. On the reverse, Fujifilm can offer Unigraphica AG the stability of a larger company so when there’s opportunity to scale, it can enable this.
“We’re just really excited about the combination of the two teams,” Balch says, adding: “We’ve worked with Unigraphica as a partner for an extended period of time now so we know them and they know us. We believe there’s a really strong fit between the companies and we can’t wait to get started.
“We’re thrilled to have the knowledge, expertise, and strong reputation of Joseph Schweiger and the entire Unigraphica team joining us. I am confident that this addition will support and accelerate our business expansion.”
Joseph Schweiger, chief executive officer of Unigraphica, adds: “Through this acquisition, Unigraphica’s services will be strengthened with Fujifilm’s portfolio of inkjet printing technology. We are excited about the additional resources and the access to new inkjet printing solutions that Unigraphica can provide to customers by joining the Fujifilm group.”
Aligned company cultures
Back in January, Avery Dennison, a full-service provider of embellishment solutions and application and printing methods kicked off the new year with the acquisition of Rietveld (RTVPRINT).
Whilst financial terms of the deal weren’t disclosed, it was confirmed that Rietveld became part of Avery Dennison’s Retail Branding and Information Solutions (RBIS) Apparel Solutions division.
With its headquarters in Zoeterwoude, the Netherlands, Rietveld operates out of the Netherlands and Turkey and employs around 70 members of staff. Avery Dennison described the acquisition at the time as offering exciting opportunities for both businesses to capture new segments and explore additional capabilities.
Another benefit of the business move was to drive further growth in external embellishments.
Michael Barton, vice president and general manager of RBIS Apparel Solutions, said at the time: “Rietveld is an excellent strategic fit for RBIS that will expand our position in high-value segments. We have accelerated our progress with external embellishments over the past few years, driving strong results through an agile approach and a renewed innovation process.
“Rietveld’s innovative products and capabilities, and strong customer relationships, in combination with our own, will enable us to unlock a new level of growth and deliver value for all of our stakeholders.”
More recently but in keeping with the wide-format print sector, manufacturer and distributor of digitally printable wide- and superwide-format media Soyang Europe, has acquired wide-format kit reseller Josero.
As a result of the acquisition, both brands can now offer more to the industry as they can provide both hardware from manufacturers such as Agfa, Ricoh, Mimaki, and Fujifilm, and media solutions up to 5m in width.
Mark Mashiter will remain as managing director of Soyang Europe and Sarah Winterbottom, formerly managing director of Josero will become group sales director for the Soyang/Josero partnership.
Soyang Europe has acquired wide-format kit reseller Josero and as a result, both brands can now offer more to the industry
Other changes include Loic Delor, format director and owner of Josero becoming operations manager of Josero, and Andrew Simmons, former sales director at Soyang Europe becoming product development director.
Commenting on the business move, Delor says: “Through many years of hard work, we’ve developed Josero into one of the key players within the UK wide-format print industry. The integration of the Josero business into Soyang Europe makes complete sense; Soyang will drive Josero’s growth plans, while Josero provides Soyang with the diversification and expertise needed for the hardware segment.”
Over in the software sphere and Fiery, the digital front end (DFE) and workflow business of Electronics for Imaging (EFI) has acquired software company CADlink Technology Corp.
Based in Ottawa, Canada, CADlink delivers solutions for digital direct-to-garment and direct-to-film printing, digital cutting and engraving, digital wide-format print, and vehicle wraps. These products are sold globally to customers through OEM partners and a network of resellers.
Toby Weiss, chief operating officer of EFI Fiery describes the synergies between the two companies as “tremendous” and says he looks forward to providing customers with more software and support for their digital print and imaging needs. Weiss adds: “This acquisition will directly benefit our customers and it significantly strengthens and expands our presence in growing markets.”
Greg Cholmondeley, principal analyst of Keypoint Intelligence’s production workflow service, adds: “The technology to produce customised and personalised garments, engraved products, vehicle wraps, and other merchandise has transformed the printing industry and requires capable software to create and layout those designs.
“CADlink and EFI are well positioned to integrate the design, layout, RIPing, and printing processes in ways that will be key to meet evolving customer demands.”
Another company that has recently completed an acquisition is provider of digital entertainment technology such as digital signage solutions, Uniguest, which has purchased Otrum AS.
[L to R] Stein Surlien, chief executive officer and majority owner of Otrum AS; and Matt Goche, chief operating officer and president of Uniguest
According to chief executive officer of Uniguest Jeff Hiscox, Otrum is a “superb addition” to the business due to its impressive technology and team. The company’s culture is also something Hiscox says makes the business a good fit.
“As we carefully integrate Otrum into our business we will explore opportunities to extend the reach of our entire offering into our combined client base, enhancing our solutions and our customers’ experience with us,” Hiscox says.
Uniguest also recently acquired the hospitality division of CPI Global, based in Paris, France. It is said that this move will stregthen its presence in Europe within the hospitality sector.
Seek professional advice
We’ve looked at some examples of recent acquisitions within the industry and the benefits these will give to the parties involved. But what if you are thinking of buying a business or selling your own but don’t know where to start, or have little knowledge of the steps involved? Look no further, as Parkinson has offered some words of advice.
In terms of some of the main considerations businesses need to take when considering a merger or acquisition, Parkinson says it is important to assess whether you have the capacity, both operationally and financially. Identifying what synergies can be leveraged in these areas can reduce costs and make the process smoother.
In addition to this, Parkinson says the deal value and structure can be a very important factor in order to make sure financial returns are protected throughout the process. In this case, working with an experienced adviser can help to bridge gaps between buyer and seller valuations.
“For example, mechanics such as ‘deferred consideration’ which is when an agreed amount is paid after the completion of the deal,” Parkinson says, adding: “Or another example might be earn-outs where business performance after the deal can lead to additional payments which mitigates any potential risk of the business underperforming.”
Parkinson highlights that there are a number of finance providers available which could be another option for businesses to consider. An experienced adviser can also support with legal issues and tax legislation using their own contacts and knowledge.
O Factoid: According to the Office for National Statistics, domestic merger and acquisitions (UK companies acquiring other UK companies) was valued at £4bn in Q1 2022 O
Completing a serious business move such as a merger or acquisition doesn’t come without challenges and road blocks. One area that Parkinson says shouldn’t be overestimated is a synergy, where businesses engaged in a merger and acquisition merge parts of the two businesses in order to streamline the process.
“We often see that it can sometimes be harder to realise synergies than were originally expected. Acquire a business because it’s a good business and see possible synergies that can be realised as an added bonus.”
Another area that can cause challenges is making sure the two businesses that are merging have company values that align. Parkinson warns that if one company tries to change the way a pre-existing organisation works or how the employees operate, you could risk losing staff and “uprooting the fabric” of the business which has been operating successfully prior to the new move.
“More often than not, you are buying a business that is successful, so ensure you retain what makes it successful,” Parkinson says, adding: “Trying to change too much too soon can upset this and mean you inherit a very different business to the one you identified.
“Mergers and acquisitions can be an excellent strategy for growing your business, if done correctly. However, taking the right advice can be crucial in structuring transactions and integrating them correctly to ensure the expected benefits can be realised.”
Experts advise that it is crucial to seek the right advice before deciding on a M&A
As the industry continues to strengthen and stabilise following the challenges of the global pandemic, Brexit, supply issues, cost rises, and the war in Ukraine, Parkinson offers a final word: “Despite current economic challenges and uncertainties, the mergers and acquisition market remains really strong and very competitive, with plenty of options to access finance for an acquisition, which you can expect to continue to support a relatively buoyant mergers and acquisitions market.”
Despite current economic challenges and uncertainties, the mergers and acquisition market remains really strong and very competitive, with plenty of options to access finance for an acquisition”
With this in mind, a merger or acquisition could be the right next move to ensure your business continues to grow and capitalise on booming markets, with a strong and committed team behind you.
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