When takeovers take off – Print21 magazine article

Takeovers are an important part of business, but they don’t always work out the way either party would have liked. Mitchell Jordan looks at one local print business that has survived the process and prospered.

Neil Armstrong is a man who loves a challenge.

Most people would agree that there are fewer challenging pursuits than taking over a company in trouble, but that is exactly what Armstrong set out to do and, two years later, he has succeeded.

It is exactly two years to the day when we meet in the scorching summer heat at 117-year-old Standard Publishing’s new home in Strathfield South where spirits are flying high amongst Armstrong and each of his 35 staff.

The mood was radically different on 17 December 2007, when chartered accountants and business advisors, PKF, called a creditor’s meeting to decide the fate of a company that had got itself into financial difficulty.

According to Armstrong, Standard Publishing’s previous owners did not have access to capital and the banks refused to loan them any money. As one of the members at the meeting in December, Armstrong feared that the company was “doomed and heading for liquidation” but with business partner, Rod Carter, the two were able to convince members otherwise and got the vote of approval for taking over the business.

“I was working at another printing company at the time,” Armstrong (pictured above) recounts with a certain degree of nostalgia. “I had to resign from there by 4pm and start this business as managing director by 8am the next morning.”

And all the rest was history, right? Well, sort of.

No one likes to forget the past and when a company earns itself a bad reputation throughout the industry, suppliers are reluctant to give it any time or support. Armstrong had a battle on his hands to steer the company back in the right direction with minimal resources.

“The first month was really hard,” he admits. “The difficulty is that you are on stop-credit with everybody and we couldn’t get some of the things we needed, like paper. A lot of our technology, such as the computers, were over 10 years old and needed upgrading and investment.”

Willpower won out and Armstrong attributes this to both his experience in managing businesses previously, and the dedicated team of staff – some of whom had been with the company for almost 40 years and had no intention of leaving what for them has become a second home.

“It was a great feeling to be running a business again,” Armstrong says, referring to his time as head of Trackmedia, which he later sold. “The staff made it enjoyable because they worked their backsides off in ensuring that the place became profitable again.”

And if that meant working a bit of over-time then they were happy to do it. Armstrong recalls how when he took over, the business was close to one month behind printing the school diaries for some schools that it had been producing work for over the past 40 years.

“There were days when I was at work for 24 hours straight,” he says. “In the end, we got all but one of the 30 school’s diaries delivered on time … we just did whatever we could.”

Armstrong, who considers himself more of a businessman than a printer, made the decision to instead focus on customer service rather than “filling the presses”.

“I had to re-engage and communicate with customers about what our vision for the business was – to be more customer service-based, we were not just about putting ink on paper,” he says.

Setting the standard
No one is immune to stress or regret and there must surely have been moments where Armstrong wished he had not taken on such a large project. However, he maintains that he remained committed at all times and was well aware of the challenges that come with companies in need when he sat in the creditors meeting back in 2007.

“[My business partner] Rod Carter told me that he would support the purchase of a business and what we wanted was a company that was struggling or in receivership that we could turnaround,” he says.

“We had been looking for distressed companies for about six weeks and this [Standard Publishing] was everything we wanted it to be: all it needed was marketing and some capital. When I looked at this business, I saw a tremendous opportunity.”

In the first year, the company’s turnover doubled and doubled again in the second year. “Now, we turnover four times what we did four years ago, which is a tremendous reflection of staff dedication,” Armstrong adds.

Part of the reason for this growth is undoubtedly due to Standard Publishing’s growth as a company, moving beyond the role of a simple printer and into a diverse business with three different arms. In September 2008, it added a mailing business, Absolute Mail, which has also served as a value-add to Standard Publishing’s print customers and enabled the company to move into printing magazines.

“By having Absolute Mail we have picked up some additional print work because it means we can get the customer’s mail to market much quicker,” Armstrong says.

Last year, it then expanded into publishing educational books in addition to simply printing them and has commissioned a number of books by established authors. Coinciding with this is the newly launched Sphere Retail (www.sphereshop.com.au), an online store that sells the books published by Standard Publishing.

In a sense, Standard Publishing experienced another takeover late last year when it purchased the former factory of Planned Print, which entered receivership early 2008, along with inheriting the former company’s technology, including a 10-colour A1 Heidelberg and 5-colour A2 Heidelberg.

Power to the people
Standard Publishing’s growth may not end there. Armstrong reveals that he is still on the look-out for more businesses that could work well with the company. “We are actively looking for graphic design companies, printing or mail houses,” he says.

Where he does draw the line is when it comes to private equity, which he does not wish to be a part of.

“I can see the benefit of a private equity model, but it dilutes the vision of the owner,” he says. “Private equity groups have a different agenda – they are purely about profit; and yes, profit is important because you can’t live with out it, but there are other elements to both business and life.”

His vision is not to take over the world or aim for a William Gates-style domination, but rather to improve and build upon Standard Publishing’s strengths. “I’d be very happy if we doubled our size in another two years. By that time we will have intelligent mailing feeding through into online and hardcopy publishing as well as a substantial commercial print arm,” he says.

Celebration is in the air as our conversation concludes; it is almost Christmas and very soon the clock will near the hour that, years ago, saw Standard Publishing fall solely into Armstrong’s capable hands.

Far from the vane or arrogant manager stereotype, he brushes off compliments on his leadership and instead praises the workers for ensuring that the transition into Standard Publishing’s new future was a smooth one. When one company takes over another, staff are often the first to go or change, but Armstrong believes they are often the most vital element and advises anyone considering buying an existing business to consider this.

“People are important,” he says. “You can’t just run a company yourself.”