Consolidated Graphics, Inc. announced that they had acquired PBM Graphics, a North Carolina based niche printer with revenues of $135m.  In addition to traditional commercial printing, PBM is a leading producer of trading cards and similar collectibles.

What Makes this Deal Work

Deals have to work on the financials, but the PBM deal is interesting as a true strategic play for both parties.

Adding a Niche Market

How many trading card printers are there out there?  This is no doubt a niche that is going to have some protection to it.  As an entrenched player, PBM certainly holds a strong defensive position.  Given that "defensible market niche" is the mantra of every M&A team and PEG, it's clear why PBM was an attractive target given this segment of their revenue stream.

Channel Access

While PBM has some strong niche markets, they also have deep experience in other commercial printing facets, as well as a packaging and fulfillment line.  Getting these products and services to market is always an issue when a company tries to scale.  That said, Consolidated Graphics has a national presence with over 650 sales professionals.  By teaming up with Consolidated, PBM now has channel access that would have taken years (and significant investment) to develop independently - assuming it could be done at all. 

Corporate Culture

Consolidated often keeps management teams in place after an acquisition- which was attractive to PBM.  As indicated in the deal announcement, PBM's management team - to include their founder - will continue on post closing. 

Conclusions

This is a deal where it is fairly easy to see the "1 + 1 = 3" synergies that companies strive for in a successful acquisition.  Each company benefits, adding deeper product lines and expanding channel access- all while retaining key management.  It will be interesting to see how the integration proceeds, but at face value this is a solid deal that makes a lot of sense for both parties.