Acquisitions aren’t for everyone. They’re expensive. They’re risky. They’re complicated. They’re stressful. If mishandled, all that output of time and money can actually send a company backwards. Few print shops would have the stomach to roll the dice and almost immediately start plotting more M&A deals.

But experience counts for a lot. Brisbane-based Print Approach had successfully integrated two previous acquisitions when it bought the customer list of fellow Brisbane outfit ABC Printing in May. Two months before, ABC had been forced into liquidation with $3.7 million of debt after the $2 million damages bill from the 2011 Queensland floods proved fatal.

Print Approach paid a five-figure sum to acquire the job history and artwork of about 400 clients, according to managing director Tom Eckersley. He told ProPrint at the time that it was a “punt”, because there was no guarantee of winning any of those clients. He also wasn’t allowed
to examine the list in advance, although he was told how many names it included and the value of their business. 

Yet he was confident of success. At the time, he said: “We knew the market pretty well. We’ve been in the market a long time.” 

Five months on, he believes the gamble will pay itself off many times over. He says Print Approach looks set to capture 15-20% of ABC’s $4.5 million turnover, which translates as up to $900,000 of extra revenue per year.

Eckersley is pleased with how ABC’s assets have been integrated into the business. He attributes much of the success to the recruitment of its former co-owner, Alan Atterton. Being able to exploit his relationships was important – but equally important was having a new employee who could dedicate his time to winning all those clients, says Eckersley.

“It’s gone really well. It’s been pretty seamless for them. We’ve made it easy. We were a very like-for-like organisation, not just from a manufacturing point of view, but also a service point of view. We were both companies that were prepared to go that extra mile and were pretty versatile and produced a quality product.

“There are a lot of clients that have spoken highly about their time with ABC, so ABC was obviously doing a lot of things well. We feel we offer a similar sort of experience to the customer.”

The first thing Print Approach did after acquiring ABC’s database was to email the news to the hundreds and hundreds of contacts on the customer list. It then began contacting the 400 clients in order of priority – a job that has only just been completed. Most of those calls were made by Atterton. 

Some clients had already moved on, although others were glad to follow Atterton to the Narangba-based company, says Eckersley.

“It’s not easy for one person to move from one printer to another. There are a lot of idiosyncrasies. It’s like having a hairdresser that gets to know a person. People don’t like to move all the time, because you’ve got to re-establish what you want and how you want it done, so the fact we had that information at our disposal and had Alan to add any other necessary input gave people a lot of reassurance.”

Eckersley is happy with how the ABC deal played out, but admits it was not without its frustrations.

The biggest problem was the confusion the 400 clients faced when ABC entered liquidation. For seven or eight weeks, they had no idea what was going on, as nobody had set up an automated response to handle their calls and emails.

“At the initial instance, everyone is panicking, because they don’t know what’s going on,” says Eckersley.

“That’s the time the liquidator is dealing with matters. He doesn’t owe anything to the end client. His concern is to service the creditors, not necessarily the debtors. So the clients are ringing up and the phone isn’t going anywhere and the liquidator isn’t interested in answering.

“That created anxiety across the debtor base. Once we were able to finalise the deal and could put some communication out there and divert the phones, there was a sense of relief that the people could move on or move forward,” he says.

Record keeping

Requisitioning ABC’s records turned out to be another headache, says Eckersley. ABC had racks and racks and pallets and pallets full of files – but Print Approach was only given a limited amount of time to access them, resulting in a disorganised removal. Sorting through the files was “a mammoth exercise” that took three or four months.

“Mergers and acquisitions can take lots of different shapes and forms, but ideally the earlier in the piece something happens, the best results will be achieved in maintaining the revenue base. The longer the exercise draws out, the more difficult it is to capture the client base. But, unfortunately, a lot of these things aren’t dealt with up front but after the event.”

Eckersley remains bullish about M&A in general. “We’re looking at growth through acquisitions,” he says. Once the 20-staff operation had completed the ABC deal, it started conducting due diligence on two other companies, which Eckersley describes as direct rivals. One deal fell through in mid-September when the company fell into the hands of another bidder; the other should be concluded one way or another some time this month. 

ABC and the two other potential acquisitions fit into Print Approach’s strategy of growing its traditional business so it can fund a move into higher-margin sectors. Eckersley says the company currently derives 90% of its turnover from traditional print and 10% from specialty items such has wall prints, file folders and promotional scratch-and-break-open tickets. 

The plan is to continue doing the same amount of traditional printing, but for its share of revenue to drop to 60% by June 2014. The move into new markets should largely account for a projected rise in revenue from $3 million (ABC included) to $4 million.

One new revenue source will be a web-to-print service called Generator due to launch in October.

“We subscribe to the thinking that within the next 10 years, a growing amount of print will be procured online. Some pundits would say 10-12% is currently procured online. Some of those pundits would say by 2020, 60-70% will be procured online. If that’s even half correct, it’s still a big upward trend,” says Eckersley.

“Generator will be tied in with our other service offerings, without a doubt. Our existing customers will get a systemised approach to procuring their print as opposed to a series of random ad hoc orders. It also sets a platform for us to be able to store and manage all of their artwork in a controlled, cloud-based environment. It also gives us an ability to take specific products to market. They will tend to be products we’ll market in our own way and will be vertically driven. They won’t be general print items.”

Eckersley expects the company to have invested $150,000 in Generator by the close of this financial year. That’s on top of the $100,000 he says has already been spent on Roominate, an interior design division that will launch in late 2012.

Print Approach will design, produce and install wall prints for commercial and residential buildings and public spaces. Roominate will allow the firm to differ-entiate itself from all the other printers who have turned to large-format printing in the same attempt to boost margins.

Not Vistaprint

“Our strategy is based on getting more work from higher-margin products. We don’t want to compete with the Vistaprints of this world. Anything that becomes saturated or a big player goes and services, we will diminish our presence in that particular product. We’ve got to have flexibility and an ability to manoeuvre reasonably quickly, but as a smaller, dynamic company we can do that.”

Eckersley notes that many businesses have fallen into the trap of thinking that major investments automatically generate major changes. “Developing new things doesn’t happen by chance,” he says. Buying new technology and launching new products is the easy part. The hard part is getting people to change their thinking. Pushing into new markets demands new thinking and new skills, he says.

That’s why Generator and Roominate will be separate divisions. Roominate will also gain three new employees and its own landing page. 

“If a printing business like ours has done what it’s done for the last 40 years and we’re trying to bring in new products and serv-ices, we’ve got to find a balance between the traditional and the new. That’s a change of culture that needs to be undertaken,” 

Online ordering, digital printing – such advances wouldn’t have been envisaged when Print Approach was founded in 1971 by Tom’s father, James. There have also been profound changes since Tom and his brother, Luke, bought out their father in 1991. With print being sourced across city and state boundaries and quality now a given, pricing has become much more competitive, says Eckersley. That’s why
he stresses the importance of evolution.

The early days

The emphasis on change is nothing new. Tom and Luke returned from Drupa 2000 convinced that the company had to evolve from a traditional sheetfed operation into one that also did digital printing. Technology was improving rapidly and efficiency was soaring, but prices kept falling; the result was that a lot of businesses – even good ones – found themselves over-capitalised, says Eckersley.

That allowed Print Approach to acquired two CBD-based outfits: Imprint in 2003 and QA Copy in 2004. They were then merged and sold in 2005 to Salmat, which was looking for a digital presence in Queensland, says Eckersley. As part of the deal, Eckersley joined Salmat for two years, which then stretched into five, before returning to Print Approach in 2010.

Eckersley has an open mind about future acquisitions. They could be cash deals like ABC or they could involve debt. They could be value-for-money buyouts of traditional printers like ABC or be non-traditional businesses that help Print Approach’s diversification strategy.

“We subscribe to the philosophy that the old norm isn’t the new norm. What we have before isn’t what we can have again in the future,” he says.

“It’s important for printers to try to diversify. But it’s difficult for a lot of printers to choose an area. At the end of the day, it’s got to have sustainable margins and a sustainable market. If it’s not, you’ve got to chop it and go to something else. We’ve all got to pursue greater margins.”

Factfile

Established: 1971

Location: Narangba, Brisbane

Headcount: 20

Turnover: $3 million

Sectors: Offset, digital, large-format, signage, design

Owners: Brothers Tom and Luke Eckersley

Acquisitions:

• ABC Printing

• QA Copy

• Imprint

Business briefing: Print Approach

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