Business inspection: United we stand
Monday, November 10, 2014
Finding ‘the one’ can be tough. Digital tools like Tinder make casual hook-ups easy, however if you want a more deep and meaningful relationship, it’s often someone in your circle of friends that proves to be the perfect match. It’s less about sparks flying and more about a shared sensibility that can grow into something strong and long lasting.
So, what’s that got to do with print? Well, in the case of the coming together of ProCo and Concept Communications Group (CCG) it was a meeting of minds over time that paved the way for last month’s merger. In particular, it was through participating in Dscoop – HP’s user group – that the two firms got to know each other better before deciding to take things to the next stage.
CCG’s roots lay in two firms, Concept Digital and Concept Data Print, which merged in 2007 but were both formed in the late 1990s. Concept Digital as a copy shop and Concept Data Print as a print broker specialising in direct mail.
ProCo began life as a commercial printer in Sheffield and has, over time, moved beyond its litho roots to take on digital print and latterly marketing services.
“In the early days digital print was enough to give you the edge, but over time it became clear that we had to evolve,” says CCG managing director Giles Bowes. “We still do a lot of standard digital print with a focus on quality and service, but we recognised that is no longer enough alone.”
ProCo managing director Jon Bailey adds: “We looked at whether we could continue to grow organically, or did we need to work with others. Our business model has got to change, there is still a lot of print required output, but you need different ways to secure that business.”
As an example of that, Bailey says from 2015 marketing directors will have bigger IT spends than IT departments, according to a recent report.
Both companies had identified the importance of software systems for marketing and communications automation as the way they could meet customers’ needs and grow their own businesses.
“The market has shifted massively, for customers these days; it’s not about printed output, it’s the outcome,” says Bailey.
Fifteen months ago CCG began a business review and looked at its strategy.
“We changed our focus to the front-end, so that the print is almost a by-product of the services we offer, which helps customers meet their communications challenges,” says CCG commercial director Paul Cooke. “We started as a printer, now we’re a consultancy, although the results usually include print.
“It’s not just marketing, there are also internal communications; increasingly clients need to improve internal visibility.”
CCG also invested heavily in assessing what sectors and types of businesses made up its core clientele and then focusing on targeting similar firms. This led it to concentrate on automotive and financial services firms and to research those markets to understand their particulars.
That aspect of CCG’s business model was attractive to ProCo as something it could apply to its own operations.
“CCG is very advanced,” says Bailey. “In a way it’s harder for ProCo because we’re bigger.”
ProCo had also been looking at a presence in the South for several years, to serve clients with national and international operations.
For CCG ProCo’s in-house software development and deployment skills were a missing link.
“Off-the-shelf software doesn’t deliver what clients need,” says Cooke. “We’ve identified many gaps to fill with more bespoke software. The beauty of ProCo is that it has modular tools. While we could build systems from scratch, with the deal with ProCo we can deliver more robust software more quickly.”
It was also an opportunity to develop the business faster thanks to ProCo’s scale.
“I’d aspired to make a deal with someone for a while, as I think you can do better through leverage,” says CCG’s Bowes.
Bailey and Bowes met in Barcelona, in 2009, at an HP customer event. Subsequently, when HP launched Dscoop in Europe a couple of years later, both got involved.
“Dscoop has been important,” says Bowes. “The most refreshing aspects are the desire to share knowledge and the excitement at the opportunities – it’s a real eye-opener.”
Bailey adds that the event is explicitly an opportunity to search out potential business partners, who are likely to have the right attributes.
“Dcsoop is a chance to get in front of companies such as CCG,” he says.
And so, over time, Bailey and Bowes got to know each other and their businesses.
“At Dscoop conferences and seminars we met, and as we talked became more aware of the synergies,” says Bowes.
Following that at the start of this year Bowes invited Bailey to visit CCG.
“I went to visit, we got talking and realised there were opportunities,” says Bailey. “We went on talking over the next few months and it felt right.”
In May Bowes and Cooke made a reciprocal visit to ProCo, and following that visit the two firms decided to do a deal.
Both sides then started due diligence using their own legal and finance teams and the deal was structured with ProCo buying 50% of the share capital of Concept.
“It had to be 50% so Concept is fully on board and the team there get behind it,” says Bailey.
Over the summer the two firms carried out their due diligence while Bailey, Bowes and Cooke worked on the details of the deal to ensure the process went as smoothly as possible and the benefits were realised.
“Giles and I developed a vision and a plan for the two businesses,” says Bailey. “Including a 90-day programme for the integration, which we were working on for a few months before completing the deal.”
Shares were transferred on 17 October once all the details were in place. Until then it was always a risk the deal might not complete.
“We wouldn’t have gone ahead if we weren’t sure it was right,” says Bailey. “We both still had enough intellectual property to be happy to walk away despite having shared so much.”
Part of the integration is Bowes’ role across the two sites heading up production aligning operations, processes and MIS. He’s already embedded with both sets of staff. Sales and marketing integration has already started with both teams having had multiple meetings and joint training.
A crucial part of the process was communicating it to the staff correctly.
“We both went to both the businesses to talk to the staff,” says Bowes. “It took them a couple of days to get used to it.”
In addition to the site visits by the managers the firms also prepared materials for the staff to explain the process.
The first job to benefit from the integration was a marketing platform for Mercedes Benz Hertfordshire, which CCG had been working on.
“As we started to talk about coming together it became clear that ProCo could help,” says Cooke.
“In the early stages we planned to build it ourselves, however it became clear that if we used ProCo’s tools it could be developed more quickly and more robustly. When we specified the system we expected a 12-week build. In the end, by leveraging ProCo’s tools we had a test platform in less than a week.”
Although the deal was principally about top-line growth, with all kit and staff retained, Bailey also expects some bottom-line savings in purchasing and finance.
In terms of the top-line growth their plans are realistic rather than overly optimistic.
“Both companies had growth plans for the next year and together we can help each other to achieve that,” says Bailey. “It’s too soon to talk beyond that. However, in one of the first joint meetings we came out with a 100% uplift on the size of the job.
“It’s a ‘one step at a time, let’s see what happens’ situation. We need to make sure it works for customers and staff. So far we’ve talked the talk, now we need to walk the walk.”
VITAL STATISTICS: ProCo & CCG
Location Proco: Sheffield, South Yorkshire; Concept Communications Group (CCG): Stansted, Essex
Inspection hosts ProCo managing director Jon Bailey and CCG managing director Giles Bowes
Size ProCo: £11.8m; CCG: £2m
Established ProCo: 1993; CCG: 2007
Products ProCo: marketing services, including digital and litho print; CCG: communications services including digital print
Kit ProCo: HP Indigo presses, Manroland offset presses; CCG: HP Indigo digital presses
Inspection focus Implementing a partnership to develop both firms to the next level.
For customers, it’s not about printed output it’s the outcome. Focus on the front-end, so the print is almost a by-product of the services that help customers meet their communications challenges.
Assess what sectors and types of businesses make up your core clientele and then focus on targeting similar firms. That aspect of CCG’s business model was attractive to ProCo.
Use networking events, including user groups like HP’s Dscoop, Xerox Premier Partners, Kodak GUA and Konica Minolta’s Prokom, to identify partners from your peers.
Take time to get to know the business informally, including the key individuals, to make sure there is a good cultural fit and a shared vision, before attempting to formalise any deal.
Make sure you have a plan for how you will integrate the businesses with defined leadership responsibilities and clear, open two-way communication with staff.
Don’t expect too much too soon, and make sure that the integration has been successfully implemented before attempting to realise the full strategic vision.