‘It’s a funny trade, it’s inherently relationship based’
Monday, July 23, 2018
Rapidity managing director Paul Manning might be fresher faced than your average print boss, but don’t let his appearance fool you – he’s learned many a hard lesson.
And that education has paid off. Having bought the business with his brother Ben from his dad Leslie in 2014, in four and a bit short years, he’s overseen three acquisitions, bought the property and is on the verge of having doubled the size of the company. Not bad for someone who pretends to have no ambitions for the business.
Darryl Danielli I suppose the obvious question, bearing in mind it’s a family business is: how does it work with four brothers in the same business?
Paul Manning Amazing, we never fight over anything [laughs]. Actually, it’s pretty good. It’s fallen in a nice way. Ben is production director and I’m managing director, so we occupy separate sides of the business really. It’s a real partnership, we both have our strengths and weaknesses and they interlock really well.
So, you’re almost like joint managing directors then?
Kind of, but not quite – although I suppose it has become almost like that over time.
But you have equal standing in the business if you like?
Yes, we’re not very formal, because we’re brothers we just talk all the time – it helps that we get on really well. I do hear about some family businesses where the family just don’t get on, but we make decisions based on talking things through. Jack [production manager] and Sam [customer services manager], our other two brothers, are also in the business, but they’re 10 years younger.
But you and Ben own the business?
It was a genuine MBO, it wasn’t just a case of dad saying here’s the business, I’m off, good luck with it. Unfortunately.
But it was a staged, structured sale?
Exactly. We bought the business and provided we kept up the payments it was fine, but I’m sure if we missed one then he would have come back [laughs]. Next April it will be five years since we took over, and we would have finished making the payments by the end of this year.
Would you recommend a structured payback MBO to others, because I guess it must minimise the risk of failure compared to, say, when the management team have to refinance kit to finance the purchase?
True. We’ve also had this unbelievable patch of business since we took it on. Which is really funny, because dad is always saying ‘I think I’ve undersold this’, because the business has really skyrocketed since he left.
And you just wave the contract at him?
[Laughs] The good thing about doing it that way was also that it made his exit more comfortable. I think if we had a really tough time, or had borrowed too much money then it would have made things difficult for him. It would have also clipped our wings and stopped us from doing some of the things we wanted to do. I think structuring the deal over five years was the right way of doing it.
So, was it at the time of the MBO that you became managing director?
I became MD just before. I suppose what really happened was that me and Ben had already grabbed the business well before he retired, we had done a lot work digitising the workflow and, I suppose, getting away from the ‘old’ way of doing things. And through that process, although not on purpose, he had less and less to do. He used to come in every Saturday to do his [physical] job bags, but then we didn’t have job bags. Then it was pricing the work, but we put that into a proper workflow, so he didn’t need to do that either. It was a natural progression.
How did the business start?
It wasn’t a family business – it just ended up that way. Dad started it 1986 with his partner and a minority partner on the finance side. So, dad was sales and his business partner Jim [Barr] ran production.
So, it’s bit like the model you have now really?
It is, strangely. It’s come a full circle. And actually, their model was a roaring success – late 80s, which I still hear about a lot...
…When printers were making money hand over fist…
For the love of... not you too [laughs].
People still talk about it today, even people born in the 90s.
I know. But you’re right, there are parallels with now, and this was the late 80s and the 90s and the business just grew and grew, and then they moved to this site in 1990, just the basement originally [the business now also has the ground floor].
It’s a great building.
I’ve looked into this and it’s fascinating. It was built in 1930 for C&A to make women’s shawls for the West End and trade buyers. When we moved in it was an office block, but not long after we moved in they converted the offices into flats. We actually very recently bought our part of the building.
How did that come about?
We had a rent review, and any London printer will tell you that’s the scariest thing. Our rent tripled, but when we spoke to the landlord, and it was almost a throwaway comment, we asked about buying and they were up for that, so we did a deal.
Back to the history, though, when did it become a family business?
Because Jim was older, he retired around 2003, and Dad owned it outright from then because the finance guy was even older and had retired a few years before. But frankly their best times were probably when there was two of them running it, and it’s the same now, so the parallels are uncanny. We’re having one of the best times we’ve ever had – which makes you wonder if having two [business owners] is a better model?
And I suppose the economy timeline was a factor too?
We got hit hard in 2001; I didn’t start until 2003 but I remember. It was the Twin Towers. We did loads of event work, and that killed the event market and we were producing loads – we even had customers who were in the Towers when it happened. At that time training and conference materials for financial training companies was probably our biggest market, so that really hurt the business. 2008 definitely had an effect too, but it wasn’t too bad for us. Even in our worst times we’ve always managed to be sensible, maybe cutback if we had too, and then grow back. We decided that would be our approach, take a step back if it meant we could take two steps forward.
I had a quick look at your numbers before coming and even as your sales increased, your headcount has never really changed?
Nope, that’s our number one ambition. The number I always bring up, because I find it interesting, because I know the back story: in 2007 we had litho and we turned over £3.8m with 65 people, and this year we’re trying to hit £10m and we’ve got 60 people. That’s down to embracing digital and automation. Essentially, in the nicest way possible, we’ve cut out the middle admin, a lot of printers are still full of middle admin, I still see it today. So, we lost the middle tranche of staff, but we also pared things back to embrace digital. So, when we let litho go in 2010, we took it as an opportunity to really strip things back and grow it back from there. Print is such a competitive market the only way to make it work is to produce as much work as possible with as few people as possible. I know, because we’ve been there, that most businesses probably have too many people. The days of being able to run like that are gone. But maybe everyone here is just really knackered and whispering behind my back that we need 20 more people.
But it makes sense, because you’re offering security to 60 people, rather than having 80 people worried about the business and their jobs?
Exactly. And talking to people that have lost their businesses, so many had cut wages by 10%, say, rather than addressing the real problem of needing to bring staff numbers down. People find a way to make it work. Things take as long as the time prescribed, so if someone thinks it should take two hours to do something, they will take two hours, but it might be that it can be done just as well in half the time. You have to help though, so, for example, we built our own workflow system and oiled it to enable people to be more productive.
But does that mean that its harder for you to find the right people for the business, because they need to do multiple roles?
That is the biggest problem with the model. It’s definitely the right one, but if we employ someone that has worked in a traditional print workflow, which has its merits, don’t get me wrong, but they might find it quite difficult, if they’re used to working in a silo. Especially in the office, the account manager is king or queen, they will do the quote, book it in, chase the artwork, buy the paper if you need to – they will own a job from the minute it comes to when it goes out the door. We think it’s the best way to serve the customer.
Provided you give them the tools to do it?
Of course, the right tools and the right training. We have a fantastic team, but we have to give them the right support as we expect a lot from our people.
So, back to you, you joined in 2003, was that straight out of College?
Erm, kind of. I had a gap year after A Levels and went to university, but didn’t stay very long. So, I had a few jobs, worked in a school as a teaching assistant and was then going to train to become a teacher, but during the summer my dad said that I couldn’t sit around not doing anything, so I had to come and work for him. So I did. And never left, but if I’m honest in those first few years it was just a job, I wasn’t interested. It wasn’t a family business then, which was good as it meant I didn’t get a free ride, I was the lowest paid person for years, I was literally sweeping floors, driving vans – whatever was needed.
Is that because in your mind it was just temporary?
But was that in your dad’s mind too?
[Laughs] He says it was all part of his masterplan, but I’m not convinced. I quit three times. Number one, I didn’t want to be the person that went to his dad’s business. I still hate that tag now. Number two, I didn’t see print as an industry I wanted to be in. And number three, if I’m honest, this wasn’t a great place to work. It had had a run of bad luck and was not doing particularly well and it was a bit old fashioned even for then.
But you’re still here...
Then, and this is genuinely true, 10 years ago, 2008, I was living with my now wife and I woke up one day and I said to her ‘I’m going to make a go of this’. I was in band at the time and I wanted to be a rock star, but I knew that wasn’t going to work.
I was the singer and occasional guitarist. I had long hair, a beard, I used to come into work and not really care because I thought ‘I don’t need this man, I’m gonna be famous’. By the end, we even had a manager, who used to manage the Small Faces. We never got signed, but for too long I was convinced we would, typical mid-20s nonsense really. But I woke up that day, and the one area I felt I could really contribute was, because I had done it at A Level and was really interested in it, was IT. I also thought there was a real opportunity here to grab this business from an IT perspective and get the workflow going. And it was around that time that some of the staff had begun to retire or leave, and these were sometimes the people that still talked about litho being ‘new’, so they weren’t interested in embracing digital. So, there was an opportunity then to get more involved and I was genuinely interested in the business by then. Then in 2010 we made the decision to go digital only – which looking back now was scary as hell.
Who was driving that?
Me and Ben really. There wasn’t much of an argument within the business to keep litho by then – a lot of the die-hards had left, and the accounts we were losing were litho. We also knew that if we were going to stay in central London then we couldn’t really do litho here competitively. We were right, and it was the right thing for us to do, but it was still hard. The process was brutal; we completely changed the model, we rearranged the business, changed some of the staff and streamlined everything that needed it.
And did your dad support all the changes, I mean he still owned the business then?
He did, he agreed. This was at a time when the business wasn’t really making any money. It wasn’t horrendous though, we weren’t losing, we weren’t in danger of going out of business – but we weren’t really going anywhere. Remember he’d led the business when everything had been great and it was making loads of money, but I think we all realised that those days weren’t going to come back if we didn’t change.
And you had the safety net of his experience, he’d been running a successful business for decades, he knew the industry?
Exactly. We ran the numbers a million times and we made sure it would work. The maddest thing was that we knew that by going digital only we would lose overheads, but we also had to factor in that we might lose business, lose contribution. But only one account left us, he was a lovely guy, but he liked press passing and we didn’t have a press anymore.
I suppose it was more a migration then, because you already had digital before you made the switch?
We did and we already had a fairly decent volume. We understood it and already had the finishing capability. In fact, looking back Printflow was one of the early adopters of digital.
But as you had a decent-sized digital business already, you effectively just scaled down to that as your baseline and run the numbers on that. Staff it accordingly, and if hadn’t have grown in year one the business was still secure?
Exactly, we modelled it on worst-case scenario and best-case scenario. But all this impacted people, which was hard. We knew we were going to re-employ, but if we hadn’t been brutal at that stage, if we had wimped out and been half hearted, it would have been much harder to grow back.
And was it the switch to digital that led to rebranding from Printflow to Rapidity?
It did, but not straight away – in January 2012. We chose it, because, well, of all the names we looked at, it was the only one that had ‘.com’ available [laughs].
Was it around that time you started to diversify the business into areas like wide-format?
After we went digital-only, we had to get into the habit of buying litho in. And then we started think, well if we can buy litho, why can’t we buy display. So, we started to offer that as a service, then we got an HP Latex and that really blew the doors open.
When you got out of litho, was it always part of the plan to add wide-format then?
It suits where we are. Having litho presses in a basement in EC1 was okay in the 70s and 80s, but its time had gone. Putting digital display in instead made sense, because if we were producing material for an event but not the display work it was ridiculous, so we wanted to get back into the fight. So, we went to Fespa [in 2015], a great show, and got the [Canon Océ] Arizona and the Kongsberg [cutting table]. It’s gone from strength to strength ever since. The learning curve was massive, but we got a specialist in.
So, what are your ambitions for the business?
I have no ambitions, none. I want to stay exactly as we are for ever [laughs]. We need to grow litho, which we’re already doing. I think one thing we’re missing is a website.
You mean transactional website?
Yes, because I think as a trade we’re being asked to do less but for more customers. But increasingly people just want to go on a website and place an order without talking to anyone. They just want to get it done. I think that’s our missed market.
And I suppose its fairly straightforward because you already run web-to-print embedded with clients?
That’s the nuts part: we have the expertise, there’s just always something more pressing to do.
What about other growth areas?
One of the things I’m looking at is London online trade printing service. If a printer outside London needs a job delivered to London in a hurry then we could help. And if it’s time critical then we both still get a good margin.
And more M&A?
We’re not actively looking, but you never know.
What have you learned about making successful acquisitions? You’ve had a few now...
The biggest lesson is probably that two and two isn’t four. And if you think it is you’re going to come unstuck, and we learned that the hard way. People who are really good at acquisitions probably run the brand name that they bought for much longer than we do too, we’re too impatient. It’s a funny trade, it’s inherently relationship based, it’s like running a restaurant where all the customers bring their own ingredients. In the commercial market, everything starts with the customers, from day one [of an acquisition] you have to do everything you can to not unsettle that relationship.
You’re being very honest about some of the things you’ve learned from, have there been any others?
One was we got involved in cross-media marketing [pre-2012], we decided to offer direct marketing, personalised marketing – it was going to be the next big thing, we put in lots of time, effort, resource, and real cash. It was a massive mistake because there was an established direct marketing market out there who knew much more than we could ever have known about it, and not getting the right people in at that stage was a disaster. So, we learned from that and when we decided we were going to do wide-format we made sure we had a bloody good wide-format person. I think in the past we maybe dabbled in things, but if you’re going to do something you have to do it properly.
So, you don’t do any cross-media work anymore?
No, other people do and they’re brilliant. We don’t do direct mail either. We do some transactional and mailings. But we learned from the cross-media experience. It’s like packaging: it sounds like a great opportunity, everyone is talking about it, especially the vendors, just like they were with photobooks five years ago. But actually, packaging is a massive market with massive players, and to say you’re just going to start offering it is the most naive thing. Yes, you might get some work, and there’s definitely an opportunity for some, and yes we do offer short-run packaging...
…Because that’s the kind of packaging that your client base wants?
Exactly, but too many take a step into market based on, sometimes, overhyping from vendors. They tell you that if you put in this bit of kit, with this software then in two years you’ll be raking it in. The classic photobook nonsense. And we made that mistake a couple of times, get this kit in, get that guy in and just watch it go. Not thinking that hang on there’s already a multibillion industry that is perfectly placed to do it. But when we made those mistakes, we clawed the business back, got it to where we wanted it to be and focused on adding the services that we knew our customers wanted. It’s about keeping within your sphere of influence, everything that has worked has been customer driven.
What’s been your proudest achievement?
From a business point of view, probably buying the property; it was something we talked about for years – having an actual asset that would become more valuable over the years. But personally, probably the Olympics, that was just so cool, the best thing. And it turned into a great account, it really kicked 2012 into unbelievable territory.
You’ve mentioned your location a few times, how important is being in central London?
We have thought about leaving in the past, but staying in London is probably the best thing we ever did. We wouldn’t ever move, but we did acquire a business in January with the idea that growth can happen outside of London.
I suppose in your market, you’re the right size, in fact you’re probably a big player in terms of being a central London printer?
In our market, I don’t know of anyone bigger. I’m not saying there isn’t, I just don’t know of anyone. Also, I’m not saying that we dominate the London market, there are loads of printers in London and there are loads of printers outside London that say they’re in the London market too.
Back to buying Lefa Print though, so as well as having a site outside of London – you’ve got back into litho?
We’ve jumped in the deep end, maybe deeper than we expected. But it was a really good, sensible deal. A lot of times when you first start talking to someone about buying a business they say, ‘well I think it’s worth £1bn, based on what you could do here’. We all know that acquisitions rarely work out as two plus two equals four, it usually equals three – at best. But buying Lefa has turned out to be a really good thing.
I was looking through the archive though and since your dad officially retired, you’ve bought a business every year – turning into a bit of a habit, isn’t it?
I know. I remember the accountant that we had for years, who facilitated the whole dad exit thing, and at the exact same time a business around the corner came up for sale, and it would have been a perfect marriage. So, I told him that we should look at buying them and he said ‘whoa, you’ve just bought your dad out, that would be a ridiculous thing to do’. So, we got rid of that accountant, because I thought you’re not seeing the opportunity and I can’t sit around for five years waiting to complete dad’s buyout before we do anything. I genuinely think it’s a great time in print for M&A. Also, I think you need to be bigger these days. I think we would be struggling if we were still turning over £3m now, but I think £10m is about right for us – and we’ll see where the future takes us.
Your acquisitions haven’t just been about buying versions of Rapidity, though? The deal for 1st Byte’s Press4Print business added a corporate stationery business...
True, and we knew we could do it better, with respect, because of the automation we had already implemented, not just on business cards but on all products we can automate. I love that side of the market because it is a totally under exploited. And we have some great clients, like Shell.
And the Tapestry deal added high-end display?
Tapestry was a learning curve. They were literally over the road. Again, it was an easy deal, wasn’t horrifically expensive, it was more about taking on the staff and learning a new market – fine art. Although we don’t do the photographic side anymore, I quite like niche, but that was too niche – but we got some great staff and some great customers.
And you added luxury binding services too?
I met someone who used to work for a company that had gone [under] and I said that I wanted to have a go at this, paper over board essentially. The hand crafted work really suited us. Again, turnover’s not high, but margins are good – but that work is also great for marketing and we produce some truly beautiful work. And I have to say, you can produce the best flyers in the world, but it doesn’t impress anyone, but a case-bound book really does. The only danger is that people only think of you for the high-end work.
Which leads to the final question: how do you describe the business?
I really struggle with that myself. After the initial rebrand, we had a mini rebrand again and added the tagline ‘London’s leading printer’. Some people thought limiting ourselves to London is a bit narrow, but I disagree because it’s probably one of the biggest print markets in the world. That said, we deal with people all over the UK, the world even. But I struggle to convey just how many services we offer, so it seems simple to focus on our local market, if you can call it that, as a USP. But I suppose the bedrock of the business is normal printing, that’s what pays the bills, we just do it exceptionally well.