Anatomy of an Acquisition
Insiders offer their perspectives on this industry trend
By Stacey Wenzel
Mergers and acquisitions played a major role in shaping the industry last year. Not surprisingly, the first few months of 1998 have shown no signs of the acquisition explosion slowing down.
"It's the wave of the future," said George Allman, vice president of diversified operations for DFS Business Forms, Townsend, Mass. Allman should know from his recent acquisition experience.
On Dec. 23, DFS announced the purchase of Bridgeton, N.J.-based manufacturer Newshire.
"This is part of the demand and drive for companies to become more efficient," he said. In addition, Allman noted another motivation behind many acquisitions is that companies look "to leverage systems to improve capabilities over an even bigger sales base."
Some secondary reasons companies may consider merging with another company is to gain additional product lines as well as add a wider customer base that is complementary to their own foundation of clients.
"It's sometimes cheaper and quicker to acquire a company rather than develop additional businesses, customers and skills," said Allman. He noted that both DFS and Newshire will end up having more resources available, such as equipment and people skills, to do their jobs more proficiently.
With this in mind, it is easy to realize that both companies are able to benefit from an acquisition, not just the acquiring company.
"It allows us to become more competitive," said Richard Barbuto, vice president of Newshire. He added that the acquisition makes it easier to grow sales in a maturing market place.
Also, it is more cost-effective to move more jobs across the press, lower paper costs by increasing volume, lower set-up costs and reduce the number of plate changes and ink colors, said Barbuto.
"Newshire was growing sales faster than it was able to grow production," he explained. The temporary answer was to increase staff instead of investing in new equipment. That solution resulted in the equipment being used 90 percent of its available operating time, with an increase to three shifts for Newshire employees.