INKISH.NEWS -

Mergers, acquisitions often result in restructurings, which is mostly another word for firing people. As bad as it can be for the people involved, it's, unfortunately, a natural part of operating a business. The people that are directly involved are, of course, the ones that feel the pain most, but I know from previous jobs, that it is something that influences everybody. Often you sympathize with the ones laid off, but you also sometimes feel that some have been laid off on an unfair ground - or at least less obvious!

Mergers and acquisitions are tools that the management needs to use from time to time. Restructuring is something that all companies will have to do so that the companies can ensure labour, competitiveness and value for the shareholders.

In the printing industry, you can find several motivations for mergers and acquisitions. The more colourful ones like the attempt from Xerox to take over HP is in whatever way you look and in my opinion, mainly because of investors such as Carl Icahn and his appetite for short-sighted profit. You can wonder if he has ever created real value - look on his investments in, i.e. TWA.

The more "normal" and on the surface friendly ones are like the one between Komori and MBO, announced last week. The motivations for this acquisition may be driven by technology, market, competitive situation in the market. In a decreasing market, the major companies are ALSO about what market share they can gain from each customer. Komori has until the acquisition mainly sold printing equipment. Their biggest competitor, Heidelberg, has a much broader product range, and of course, Komori needs to speculate about how they can ensure a more significant portion of the market.

Then there are the mergers/acquisitions of printers. In a market where demand is decreasing, it's evident that printing companies need volume to operate profitably and efficiently. The need is obvious, but the underlying facts are, of course, that some segments in the industry are declining.

One of the significant results of these changes came with the restructuring of Keypoint Intelligence, formerly known as Infortrends. The organization hasn't made any public announcements but following several people from Keypoint Intelligence on LinkedIn, clearly showed how fearful the changes in the market is. Several people (as far as I can see so far) have been laid off. Keypoint Intelligence is a research company, and they have been through a couple of acquisitions themselves - lastly back in late 2019 by Private Equity firm Atar Capital. Since there haven't been any public announcements, one can only speculate, but my take is that this is, of course, is a result of a decreasing market. Maybe also that Keypoint Intelligence hasn't been able to renew themselves and adapt to the new reality!

Where the future is for organizations like Keypoint Intelligence, and honestly also other "legacy" organizations, and companies that haven't been able to find their new role in the new future will have difficulties in the future. You can't preach without taking, the medicine you preach yourself.

Feb 15, 2020

Author: Morten B. Reitoft