The consolidation within
commercial print continues as both RR Donnelley and Quad make significant
acquisitions. Multiples for smaller deals tend to be trending above 5X for
those companies with solid management and consistent earnings. Several mid-cap
deals were a little over 6X when one PE firm exits and another
takes a position in commercial print. A sale to a strategic buyer tends to be a bit lower.
With money awash and LTM
print shipments 3% ahead of last year and reversing a 15 year LTM slide, it is
a good time to be a seller. Those companies with EBITDA over $10MM or a
percentage to sales above 10% may see the 5.5-6.5 multiple we saw in the 1990’s.
While print and EBITDA growth
is important, it is the expansion of the value proposition that adds to a small to mid-cap valuation. The graphics company should include wide
format, content management, digital variable printing, creative services, analytics,
and fulfillment along with a great portal. A web to print portal that is as
robust and it is customizable will enable the mid-size printer to better serve
its customer and its investor.
