Leaders Summit - M&A Update and Macro Issues for Digital Print with Ken Stack, Proximus

At the FuturePrint Leaders Summit 2022, Ken Stack, Co-Founder of Proximus, discussed some recent mergers and acquisitions in the digital printing industry as well as the impacts of inflation and rising rates. Stack has been in the inkjet printing industry for 30 years, beginning his career as an engineer and now having started his own company, Proximus, which focuses on M&A within the digital print world. But what does the M&A landscape look like, and what are the issues to be aware of?

Update on M&A Deal Dataset

Stack reflects on his time in the industry, explaining that “in 2012 the industry was young, then from 2014-2016 there was a real boom, which was followed by a flatline on deals from 2016 onwards as funding hardware projects got progressively harder. 2022 is set to be a massive record year, as through June we’ve already equalled 2020, 2019 and 2018.” The team at Proximus are forecasting an impressive 16/17 deals this year, the vast majority of which are in Europe.

The Landscape

Stack provides a breakdown of the different areas covering the M&A landscape:

-       The wide format graphics industry is large but relatively flat

-       Textile roll-to-roll was the hottest market around, but has been severely hit by COVID

-       Labels is a great business and has been growing rapidly, but is a crowded market

-       DTG/Promotional will be big over the next few years

-       Laminates are expecting lots of interest

-       The direct-to-product market is the exception to the rule. Shrink wrap will be eliminated from our lives so direct to product marketing finally works and will thrive

-       Flexible packaging is something everyone wants but there are not a lot of startups

-       Corrugated is also something everyone wants but there are not a lot of startups

-       Ink is seeing lots of activity but there are no targets

-       Software is seeing lots of activity which will continue

-       Components/DEM is a tough market as there are not a lot of buyers

-       Integrators is the number one area from this year. This will be a huge change in our little world.

Effect on equipment purchases

The big question from Stack is: which has a bigger effect - rates or tranche size? He explains that “tranche size affects the ability to even fund the deal so there are fewer deals, which means it's very competitive to get a credit deal customer a loan or a lease. Access to credit matters more than rates, as most credit deal customers don't make ROI-based decisions and when they can't access credit, they will pay more for your equipment. Lender consolidation also feeds into credit access, meaning there are fewer and fewer local lenders.”

What can OEMs do?

Stark suggests that OEMs need to “elevate creditworthiness as a key parameter in sales funnels and projections, and sales ops and finance teams need to work directly with the lenders - remember lenders are very open and want the deal flow! You should also weaponize your balance sheet, offering backing for a portion of their credit deal tranches.”

To watch Ken Stack’s full presentation click here.