Mandarino, however, is the consummate entrepreneur on which the Canadian printing industry was built. He embodies the strategy and ambition needed to move through some of printing’s darkest days... Today’s printing environment also provides opportunity for the wise entrepreneur and Mandarino’s C.J. Group has made three acquisitions over the past six months. This includes the November purchase of Prime Imaging and its interesting Océ LightJet photographic presses that produce an apparent 4,000-dpi resolution. Artwords, a unique logistics operation with large-format and short-run printing capabilities was acquired in June 2014 and, in December, Mandarino was wrapping up the purchase of another nearby operation called TPS, which went into bankruptcy on December 3. TPS is a screen-printing company with two massive Italian Sais presses, running 70 x 120-inch sheets, as well as a 120-inch guillotine, 56.5 x 96-inch die cutter, and 60 x 70-inch mounter.
With these three recent acquisitions, C.J. Group, which Mandarino started out of his parent’s basement in 1980, becomes a $30 million operation and one of Toronto’s largest independent printing operations. In February 2015, the C.J. Group will be putting the final touches on its new 80,000-square-foot facility located on the perimeter of Toronto’s downtown core. As a result, C.J. Group will be comprised of close to 160,000 square feet in total.
“When I finish all of this, I want to be the largest independent full-service shop in the country, so we are going to have to head towards $100 million,” says Mandarino. “It is becoming a goal. I wanted to get out, but now I am doing the opposite. I am committed.”
In addition to his company’s 18 acquisitions over the past decade, Mandarino explains he has also served as an intermediary, as an M&A facilitator, for at least 25 proposals between two third-party printing companies trying to reach a purchase agreement. In early December, PrintAction magazine sat down with Mandarino to discuss the state of mergers and acquisitions in Canadian printing.
PrintAction: What is today’s biggest challenge facing printing companies?
Jay Mandarino: They need more sales to grow. One way to get more sales is by hiring a good salesperson. There are a lot of order-takers out there and the really good salespeople are either becoming brokers, getting out of the business, or they are staying where they are because they have a job that is guaranteed. There is so much risk and uncertainty with so many companies closing. The only other way to grow is how we have and that is really from acquisitions.
How difficult are sales-driven M&As when salespeople might own the clients?
As a business owner, you do want to make sure that you are involved with those clients so that you have part of that ownership as well. If you leave it just to the sales reps, the danger is that when that sales rep leaves most likely all of their work is going with them. We try to tie people into our company with different systems and stuff so it would be harder for them to leave. We also make sure to take care of the sales reps, make sure they get what they need – make sure they are happy.
Why is there now so much focus on providing lead generation to keep salespeople happy?
I must get an email a day from someone who can provide us with lead generation. I was at a course a few years ago. It was a test for salespeople: How do you communicate with your customer? And everybody in the room was saying, “Well, I email them, twitter them, talk to them on Linkedin.” They gave every possible avenue of communicating without actually sitting in front of the customer and meeting with them, developing that relationship. Really it is all about the relationship that you have with your client, working as a team. Our staff are key to our success and growth; and honesty I am blessed to have the best of the best.
When you buy a company is book of business always more important than equipment?
The equipment is generally the last thing we are looking at. I’m sure some companies when they are doing this are probably looking at some equipment. There are always one or two pieces of equipment of interest. But generally you are looking at accounts. You are looking to see if they have any RFPs. Do they have any standing contracts with people, because those are generally grandfathered over when you take over a company. It is pretty hard to get into [new customers] these days.
How do you overcome the hesitation to share proprietary information about accounts?
It is always a challenge. If you had asked me a few years ago, I would have said try to do it on your own but I believe now that you need somebody, that intermediary, who is almost like a marriage councilor. You need someone to get the buyer and seller on the same page about what is realistic, what is unrealistic, and to do it without offending anybody.
As the buyer, I can really jeopardize that relationship or get the other party angry, which is not what I want to do. You can have a company that has been around for several generations in a family but the kids don’t want to take it over. Now all of a sudden, you are not just looking at a company, you are looking at family history, especially in printing. The first step is to sign a NDA to protect both parties and, of course, you do an Letter of Intent to agree on the basic facts and stipulate that you need to know what the accounts are and, more importantly, who is in control of those accounts.
Why is it so important to understand who is in control of the accounts?
We looked at one company that had some really fantastic accounts, but they were 90 percent tied into the owner. In most of the cases we have been involved with, maybe about half, the owners generally do not stay on. They either want to retire or just want to stay there for one or two years. It is a big risk if they leave and now suddenly there is no relationship with you. It is very easy for someone else to get in the door.