Grafenia has made a further acquisition with the purchase of Manchester-based wide-format printer Image Everything for £3m, its second and largest buy since it revealed its intention last summer to upscale through M&A.
The two businesses first started discussing the possibility of an acquisition late last year and the deal was completed late on Friday (14 July).
Grafenia chief executive Peter Gunning, who announced earlier this month that he was aiming for a “year of progress”, described the coming together of the two businesses as “serendipitous happenstance”. He said earlier this month that he was planning further acquisitions in the signage space, having acquired the much-smaller Liverpool-based ADD Signs in January.
The initial consideration for the deal comprises £1.15m cash together with £1.25m of vendor loan notes. A further £600,000 earn-out fee is payable contingent upon the achievement of certain profit targets over the first two years. The cash element of the deal is being funded in the most part (£900,000) by asset finance facilities from Close Brothers, provided by way of sale and leaseback of some of Grafenia's fixed assets.
“The coming together of these two businesses wasn’t something we were looking for but makes sense because it allows us to scale up quickly,” said Gunning.
“A lot of Image's clients are stadiums, where they fulfil the brand changes that are required; they take away a lot of the headaches that businesses have around dealing with complicated projects. We had a meeting of minds when we went round to their production hub, it was obvious they had a similar culture to ours, and that’s one of the areas where you make or break acquisitions.”
Described by Gunning as Grafenia’s new “Manchester sign hub”, to complement its existing “Manchester litho hub”, 41-staff Image Everything provides merchandising, retail graphics, signage and site branding services. It runs two EFI Vuteks, two Zünd cutters and a number of HP Latex machines, operating from a 5,600sqm facility near the Manchester Trafford Centre. It counts Manchester City Football Club, English Rugby and Center Parcs as clients.
All staff are remaining with the 19-year-old business, which will also retain its branding, and managing directors Neil Cousins, John Fitzgerald and David Brunt are staying in their roles.
In the year to 31 May 2017, the business had sales of £5.5m and pre-tax profits of £600,000. Grafenia said it starts the year with “a strong order book”.
Cousins, who co-founded the business, said joining forces with Grafenia was an “organic fit” and would be the catalyst to reach more customers.
Gunning added: “They’ve got a pretty large manufacturing site and it means we can immediately start to sell their product through our network.
“We are still looking for smaller business to do pairing and convert into Nettl business stores and then we’ll be able to produce locally what makes sense to produce locally and produce nationally either from the litho hub or sign hub.”
It is likely Grafenia, which posted a £1m loss in its most recent annual results, will acquire other smaller signage companies before the year is out.