Peter Schaefer on Wide-Format M&A Trends

Peter Schaefer, partner at New Direction Partners

With so much going on in wide-format mergers and acquisitions, now is a good time to take a closer look at the trends driving the space, and what to expect in the coming months. We sat down with Peter Schaefer, partner at New Direction Partners, to get his perspective on what wide-format printers need to know about M&A activity.

Looking at the M&A activity you’ve seen this year, what are a couple of overarching trends in that space?

Schaefer: “In M&A, 2021 was a record-breaking year and 2022 was even more. In early 2023, we thought we would see a slowdown – interest rates were high and there were recession fears. However, everything stabilized and 2023 turned out to be another blockbuster year. 2024 has been above average, but less than a blockbuster, and I believe there are two reasons for this. There are fewer sellers out there today, partially due to uncertainty over the election – everybody was consumed with that. Also, the industry has not had a great 2024. That said, wide-format continues to be an attractive segment for M&A because it is a hard segment to be in. Wide-format companies operating outside of the price-based, commodity printing area have figured out, for instance, how to produce and fulfill retail graphics for numerous locations. They’ve made themselves sticky to the customer.”

As the wide-format segment has become more saturated, do you still see wide-format businesses as being strongly attractive acquisitions for, say, commercial printers?

Schaefer: “Wide-format companies are attractive to commercial printers, other wide-format companies, and financial buyers. If you’re looking at a large wide-format company, that is likely to be sold to a strategic buyer – like Imagine or Taylor Corporation – or it will go to a private equity group that has wide-format as a platform. Private equity companies are still very active in acquiring wide-format. For smaller wide-format companies, you might see a commercial printer looking to get into wide-format to get out of a commoditized segment. We’re also seeing purchases of wide-format companies for geographic expansion, though I think that’s hard to do unless each plant has the same equipment and capabilities.”

To what degree do you see the effects of industry convergence as driving either mergers or acquisitions in the wide-format space?

Schaefer: “I see the term ‘convergence’ a bit differently from some because I see the industry merging into ‘haves’ and ‘have-nots,’ and in wide-format, there is a distinction between them. For instance, if you have a strictly wide-format company doing retail and events – they are the ones who have mastered kit packing and distribution to hundreds of locations. They are more attractive companies because they offer more specialized services and a very loyal customer base. Wide-format continues to be a smart space for commercial printers to get into.”

How do you see the transition to a new Presidential administration affecting print industry M&A activities in the near term?

Schaefer: “My hope with the election was that whoever won, it would be a sound, clear victory, and we would come out of it without contention. That’s healthy for the economy, and it will be good for M&A. I feel good about the pace of M&A going forward. Republicans tend to be for deregulation, and I think 2025 will be a healthy year for the economy and the industry. Hopefully, interest rates are going in the right direction. Tariffs are a tough one … I kind of suspect that it’s bluster to get Canada and Mexico to help the administration on immigration.”

For companies looking to acquire or be acquired in the next year, what can they do today to better ensure that quest?

Schaefer: “If you’re thinking of buying that company, sit down with your team and hone in on the criteria you’re looking for. Don’t just look for a ‘wide-format’ business. Create a refined list that is manageable. If you’re doing a valuation, meet with your lender to see if they’re on board. For both buyers and sellers, manage your balance sheet – it is likely not the time to buy a brand-new piece of equipment. You may have to wait on that purchase. For sellers, if you absolutely need the equipment and don’t buy it, that will come off the value of the company. Be aware of high customer concentration. That can be a concern. Also, be sure you have a management team that will stay with the company after the transition. If you’re the owner, that might be you."