Take your first steps along the M&A trail

Jez Abbott
Monday, November 13, 2017

Transactional corporate finance is, in the words of printer Tim Black, a “movable feast”. Or should that be a ‘moving target’? Regulators have had a field day in recent years following the dotcom collapse of the early noughties, the banking crisis of 2007, the following global recession, and now Brexit, he says.

So why would the joint managing director of Black & Callow undertake the risky business of acquisition in the midst of this maelstrom? For when it comes to acquisitions, even the most experienced leaders and strategic thinkers can come a cropper weighing up the scale, scope and change involved in such a move and all its implications on cash, management and integration.

The challenge

And this would be the first acquisition of its kind undertaken by Black and fellow managing director Chris Callow. Black & Callow is a leading global financial printing and communications company, based in the shadow of St Paul’s Cathedral. A couple of miles away, in the shadow of the Shard skyscraper, was the company’s mailing partner of 25 years Master Mail. The latter’s managing director Ricky McCarthy was looking to retire and sell up.

“The market has moved more in the past couple of years than at any other stage in the last 10 to 15 years, so it’s an exciting, if unpredictable time,” says Black. Though he took over the print company with Callow in a management buyout (MBO) from parent Mercurius Group three years ago, the business dates back to the 1890s. In its heyday its publications included Parliament’s official recorder, Hansard. 

More recently corporate finance, annual reports. insolvency and restructuring print work has filled the order books along with online services such as research into initial public offerings (IPOs). Typical jobs involve 200-500-page text-heavy, monochrome prospectuses with a constant flow of legal changes sent through on an hourly basis – very confidential, very secure jobs as big on typesetting and proofreading as printing technology now mostly rolling off Xerox digital machines.

“Though we had recently undertaken the MBO we realised there would be a number of benefits to acquiring Master Mail. It was very well known to us – we were its biggest customer – and it enabled us to offer more services in house. What we do is confidential, so we are always looking at ways of bringing things in house to increase flexibility and make processes even more secure.”

The 300m2 London premises is also one of the few mailing houses left in central London and operates around the clock, he says. This would give Black & Callow’s clients maximum efficiency at crucial final sign-off stages of their deals. Having an extra site meanwhile would help in the very unlikely event of problems at the main base near St Paul’s. 

The method

When it came to preparing for the takeover Black & Callow had form. Mergers and acquisitions take up a large part of the the company’s work. Meanwhile Chris Callow has been head of operations for 21 years. And he worked on print for
3 million copies of a monster tome for Europe’s largest ever fully underwritten capital-raising exercise, the whopping £22.5bn recapitalisation of Lloyds Banking Group in November 2009.

“Planning for this kind complexity is a damn site harder than planning an acquisition,” says Black. “Given our experience in financial markets, the deal for Master Mail was not too hard or enormously complex. We had to base our budget on ensuring the mailing house would be a profitable standalone entity by the end of this year.”

If the maths didn’t add up and the healthy profits took more than two or three years to start rolling in, Black, Callow and their team would need a rethink. Setting the budget for the acquisition involved working into the equation the cost of the purchase, legal fees, due diligence and other costs such as those for staff training.

As well as his team’s own expertise Black could also call on those of the lawyers who helped draw up paperwork for the MBO in 2014: “Management buyouts involve lots of negotiations, and these primed us for the acquisition just over two years later. Second time around, the talks on areas such as standard purchase agreements were much simpler.”

Requiring more delicacy, however, was the cultural fit. Black and Callow were keen their 25 staff would work well with Master Mail’s three employees, and something Black had heard or read about some time or other from Richard Branson struck a chord: “‘Why buy a company and get rid of the people, because it’s those people who make the company what it is?’ When you buy a company you are buying the expertise of its staff and we were very keen all staff embraced this change as a positive and progressive forward move both personally and in business terms. It would almost sinful to get rid of people in such circumstances.”

The result

The deal was signed on 2 March 2017 and Master Mail, which had a £161,000 turnover, has rebranded as Black & Callow, nudging overall turnover to around £5m. The mailing operation is managed by David Cutting, who joined Black & Callow last year with a background in both data and project management and product development. 

Black says: “We are treating the two sites as separate cost centres to keep a close eye and make sure both run profitably. But culturally it is one company under the name of Black & Callow. The key hurdle was integrating all the staff and this has been very successful. It feels like stepping out of one room and into another one right next door.”

The only slight issue was with Master Mail’s existing client base, some of whom were competitors to Black & Callow, but any possible fallout was factored into all that background financial work, and “it hasn’t had a dramatic effect”, according to Black. 

Callow says: “We were delighted to have acquired the assets of Master Mail on the retirement of Ricky McCarthy. The acquisition accelerates our growth plans and means we can now offer additional mailing and printing capacity within the group, just a few minutes from our head office in Coleman Street.

“And because everything’s kept in central London, it means we can also avoid the cost of transporting urgent documents outside London for mailing, as well as the worry of potential transport delays which might jeopardise our clients’ critical deadlines.” 

Black adds: “This acquisition bolsters the confidentiality and security of our offering. In an age where so many of our peers sub-contract everything from typesetting to mailing, it means we can offer clients greater flexibility at the most crucial stages of their deals.

“Confidentiality is an increasing concern for clients in a world undergoing massive technological change and dealing with crazy things like Bitcoin and Blockchain. It is now even more critical clients who entrust companies like ours with price-sensitive information can do so in complete confidence.” 


Black & Callow

Location Central London

Inspection host Joint managing director Tim Black

Size Turnover: £5m; Staff: 28 

Established 2014

Products Transactional corporate finance documents such as annual reports and international prospectuses in runs ranging from from hundreds of copies to millions for leading investment banks, law firms, financial advisers, sponsors and corporates

Kit Xerox digital printers, print management of specialist financial production, Apple Macs, software, typesetting and proofreading techs

Inspection focus Making your first acquisition


Cover your back Set out your strategic reasons for making an acquisition and question each one, taking in second opinions, says Tim Black

Talk to the experts It’s unlikely you can complete the transaction alone, so use dispassionate third parties such as lawyers and M&A consultants

Be sensitive Take time to build a good relationship and rapport with the owner and staff to reassure them the move is good for them personally and for the company

Follow through Keep listening to staff well after the deal is done to ensure their buy-in endures and you don’t lose experienced talent


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