Darryl Danielli Have you always been in print?

Simon Moore Yes. Well, sort of. I left school at 15 going on 16 and joined the production department of a publishing company called Thorsons, which later became part of Harper Collins. In fact, my first boss actually works here now in the estimating department. He used to joke when I joined that they weren’t going to start paying me until I was 16 – so now that he’s here, I can get my own back on him. But I got into print proper at 21, at Hunterprint’s special products division.

How long were you there?

Only around 18 months in the end, but in that time I developed an understanding of what a really well run business looked like and met some really good people. I then joined a company called Hartlebury – this would have been in the late 1980s – that was going through a massive expansion that sounded very exciting. They’d bought the first two Heidelberg 32pp webs and myriad sheetfed presses, and they were paying good money.

The money was the most important factor, I’m guessing, as you were still in your early 20s?

Well, put it this way: it was a 50% increase in salary and a company car and a full relocation package. I was warned at the time that it probably wasn’t going to last that long, but Neil Lakin, who headed it up, was quite an infectious character. While I was there, I also had my first taste of management. As predicted, it did go belly up in the end, before being resurrected by TPL from Singapore. At the time, I had an opportunity to go and work for Centurion Press in London, but TPL was an embryonic business and half the people coming from Singapore were Harvard Business School-trained, so I thought ‘these guys are very successful in Asia, maybe it’s an opportunity to learn something’. So I stayed.

Did you learn anything?

No. Well, I learned how not to do it, I suppose. My line manager was the managing director and we didn’t exactly see eye-to-eye, so there was only ever going to be one winner. So when a number of people were made redundant, I was one of them. I actually went out and celebrated that evening; it was the kick up the backside I needed to get out of the business, because I wasn’t enjoying it. That was a good life lesson for me: you spend too much time at work to be unhappy there.

So what happened next?

I had an interview at sheetfed and web house Flair Press with Charles Grant Salmon, who had gone in there two months before to turn it around, because it was weeks away from falling apart.

Did you know Grant Salmon before that?

I didn’t, we had some common customers, though, and I think he talked to them first. He gave me an opportunity, but it had no management responsibility and I also lost the company car and was on a significantly lower salary. It also meant I had to move back in with my parents. But I just saw it as a great opportunity – I liked what Charles was saying and I felt it would be a case of taking one step backward to then take two steps forward. Fortunately it was, and six months later I was associate director on the commercial side, and then I took on responsibility for two subsidiaries, which were a pre-press company and Flair Finishing and Mailing. It was really to give me an idea of numbers and reporting P&Ls.

So it was a way for you to learn the business of print without being able to do too much damage if it went wrong?

I suppose it was; I couldn’t make a bad decision because Charles had more sense than to let me actually decide anything, but I was sitting in a forum where I had to digest the numbers and understand them and talk about them in a management environment. So that gave me the understanding I needed, and I ultimately became deputy managing director for Flair.

It sounds like Charles sort of groomed you for management?

I suppose he did. We’re still friends, partly because of that. At some point in your career you have to have some one that recognises an opportunity for you and equally you then have to do something with that opportunity. I think we were good for each other and certainly he was a good mentor; a lot of my business practices were picked up under Charles at Flair, because, in its day, it was a pretty successful business.

So why did you leave Flair?

It was owned by Adscene Group and it became clear that Adscene felt its future was in regional newspapers – they didn’t want to invest in a commercial print business. In 1997, Charles looked at buying the business, but that didn’t happen, and it was around this time I was approached by MPG to run Staples’ Kettering factory.

Tell me about that business.

Put it this way, when I first walked in, they were a £4.5m-a-year business that was losing £1m a year, which, with accumulated interest, equalled annual losses of £2m. It also had a debtor list with £400,000 of unrecoverable debt. I’ve still got that list.

Why do you keep it?

To remind me to never get in a situation like that. 

That must have been a terrifying situation to be in. I guess you were in your early 30s?

I was 31. But it was an opportunity to turn something around and perhaps take it on. I also agreed with MPG that they couldn’t sell the business without my permission and I’d agreed with David Birkbeck and Ben Ward, who would ultimately become my partners when we did the MBO, what the eventual share split would be if we managed to buy it.

I see, so you brought them with you to turn it around?

Including me, David and Ben there were five of us in total who joined Staples from Flair, all from different disciplines. 

What was so bad about the business though, other than the losses?

The union was incredibly strong; it was almost like being in the 1970s. Although some of the staff were young guys, there were practices that had been going for years that were just accepted, and the company didn’t have the stomach for a fight with the union. 

Presumably the business hadn’t always been in trouble though?

Well no. Mike Milton, who had not long taken over when I joined, told me that everything was on the up and the group was starting to make progress, and it was, in relative terms I guess. But the chairman, Sir Clive Martin, was effectively bank-rolling the operation and he entrusted the business to a management team. The problem was, I suppose, that he put people in there who didn’t really feel the pain because they were still going to collect their salaries whatever. It’s easy to say with hindsight, but I do wonder how hard some people really tried to turn it around.

Did you manage to turn around your operation though?

We increased sales from £4.5m to £6.1m by 1999 with a completely new customer base and reduced the losses significantly.

So how did you eventually buy it and turn it into Eclipse?

It was still losing money. The problem MPG had was that it couldn’t afford to close the business because the crystallised debt was more than £2m. Around that time though they were closing a number of other businesses and also sold the profitable part of the group, a publishing company, for around £15m, I think. So I saw this as an opportunity and said ‘look, I think the best thing for you to do is to close the business and I’ll go and look for another job, because clearly you want out’. But they said that they didn’t really want to close any other businesses from a reputation point of view, so they asked if I would take it off their hands.

Playing right into your hands.

You could say that. So in 1999 we negotiated that they would pay us the closure costs and we would run it as a going concern, and it became Eclipse.

What do you mean?

Well I gave them a pound and they gave me the business, £2m and the premises rent free for two years.

That wouldn’t happen nowadays?

No, probably not, times were different then. However, they would have had to pay those closure costs anyway, so all they were doing was giving the staff the chance of continued employment.

There must have been conditions attached though, otherwise you could just walk away?

Well, no there weren’t really, and that was kind of the point: having the ability to walk away. It meant I could go to the union and say ‘here’s my shopping list of 13 things I need to change to make this a viable business’. I wasn’t robbing anyone, all I was trying to do was bring it in line with the rest of the industry so that we could compete on a level playing field. So I spelled it out that if they agreed to everything, then we had a viable business. If they didn’t agree, then I would walk way and close the business down. I could have paid off all the debts and the staff and left with my head held high and I, David and Ben would each have had £40,000 left for the hassle of closing the company down.

Sounds like the union didn’t have much of a choice?

They did, and it could have gone either way, but fortunately for everyone they made the right decision.

Did it work?

Well, within three months Eclipse started to make a profit. So yes, although I had a hard time convincing our suppliers to support us. Remember, this was a company that had been losing millions and on paper had a negative net worth of £10m and a very young management team – why should they want to supply us with paper or equipment? So I went to all the suppliers and talked them through our plan and explained that if they bought into it, there was longevity to it.

And was there?

I think all the companies that backed us in the beginning are all still suppliers today.

After the two-year rent-free grace period was up in 2001, you moved into a new purpose-built factory. Was it also around that time that you started investing in kit?

Yes, we got the third Cutstar in the UK and then we were the first company in the world to have two and the first to have three. We’ve always pushed the boundaries.

You were still quite a young business, though, so that must have been a hairy time, taking on all that kit and debt?

Not really, it was just exciting.

I suppose you also had David and Ben too.

Well, yes, but in 1999 we had also taken on Mike Kobuta, who was the old Flair financial director and who is still a partner, and he was my sounding board. I have a lot of faith in Mike; he’s very shrewd, not purely from a numbers perspective, but operationally too. And he’s a brilliant negotiator.

When did you move into web?

In 2004, because we had exhausted Cutstar – so many other people had got into it by that stage and the margins were being eroded. We’d also all come from a web background and we believed that we had a customer base that allowed us to move into it – so that wasn’t scary, even though we were taking on significant debt.

When did David and Ben leave the business though? 

A private equity company approached us in 2005 to put Eclipse, 4DM and a marketing business together, and what that did was reveal the fact that David, Ben and I all had different objectives. David wanted to leave the business, because he’d fallen out of love with print and had other interests, and Ben wanted to realise his share of the business.

Basically they wanted to sell?

They did and I didn’t. But they had 30% each and I only had 40%, so they had the winning hand – lesson learned there. Fortunately we had a friendly bank and within 24 hours it agreed to back me. So I made David and Ben an offer, and 48 hours later I bought their stakes. 

It all happened pretty quickly then?

You could say that. Mike had a share option of 5%, which converted to a stake in the new business and I gifted him some shares too, so he had 18% in the new business.

Was this the scary time then?

Even though I had lost my two original partners (although Ben stayed as an employee for a while) it was the best thing that ever could have happened. Because despite the fact that I ended up with £9m of debt after buying them out, on sales of £13m in 2005, before that we were beginning to lose a little bit of momentum. 

How did you get it back?

Well, I wasn’t being distracted and we also made some really good additions to the team. We got the harmonious working environment back. Stability has always been one of our strengths, so getting that back really helped.

I can understand how, with a £13m company, you can get as involved as you want with every facet of the business, but that must have changed by now?

The biggest change was with the acquisition of 4DM. We got to £23m as Eclipse in 2012, and then we took complete control of 4DM. So when Eclipse was a £23m company with 120-ish people you could keep a very flat structure. It’s not so flat now that we have 4DM, total sales of around £37m and 280 people.

Does that mean that you’re no longer signing off every estimate before it goes out then?

I haven’t done that for a couple of years; we generate around 500 or 600 estimates a week in print, so I couldn’t even if I wanted to. I still set boundaries though, and I’m still heavily involved in commercial decisions. But I’ve also had to learn a lot: 4DM has disciplines that are new to me, and more than that, we were going into a business to revive its trading and operational performance, and its sales functions.

But it wasn’t in trouble, was it?

Well, no it wasn’t, far from it, but it was underperforming.

Did 4DM have a flat structure?

No, it was very different. It was the polar opposite, in fact.

But was that because Charles was building the board to the point that he could sell to the directors?

Well, he did sell to them, effectively, when he stepped back from business in 2007, but he had ‘step-in rights’ because it wasn’t performing as it should have been. So he came back in 2010 even though his heart probably wasn’t in it. So, to be fair, yes you’re right, the structure was the way it was for a very good reason. But all we had to do was go in and flatten it.

How come the deal happened so quickly, though? When you bought the original 10% stake in 2011 wasn’t it part of a five-year plan to merge 4DM into Eclipse?

I sat on the 4DM board for a year, and that was a sort of scouting year, but also one in which I could share the things we were doing in Eclipse that might help them – because we were buoyant and they perhaps weren’t finding it quite as easy. It got to the point, though, when I thought five years was far too long. I thought that if I was going to point the business in the direction I wanted it to go, then I needed to either get involved then or not at all.

Was 4DM profitable when you bought it?

It was, but in real trading performance terms it was probably only breaking even.

Looking at some of the investments you’ve made since buying it, I guess it hadn’t really been invested in over the previous few years?

It hadn’t. Before we came in it had been about cash preservation to fund the initial deal, and then after that it was about reining in costs. But we’re happy with its performance in the first year and I expect it to be 50% better in year two. 

So what’s next on the plan then?

To continue to develop Eclipse Red.

That’s the cross-media/data part of the business?

It is. We’ve also got the Direct Link part of the business, that’s a good contributor to the business, but in reality, I don’t see any massive expansion there.

Do you think Red is the part of the business that will drive you over £50m then?

To be honest, probably not; we’ve got some unique things and we are getting traction with it, but we still need to figure out how we can get more. But it’s got to the point now where we’re developing things that we never even produce. But we need to add more strings to its bow and that’s what we’re looking to do.

So is 2014 going to be steady year?

Perhaps; we’re targeting around £40m, but there will be some investments. For example, we’re looking at installing Kodak Prosper inkjet heads in the first quarter of this year and dipping our toe in hybrid inkjet white paper – that could be an area of significant growth for us. 

What about M&A activity, are you looking at anything?

I’ve got no desire to do a DST, so I’m not looking to buy a printing or DM business, but I’m open to deals that might enhance our offering with new skills or services. But it’s also about finding the right people with the right skill sets.

What size do you want to grow the business to though?

I could see us getting to £50m, but I’m a big believer in having a sustainable business that delivers the earnings you want it to. We would never risk what we have. But the type of conversations we’re having with customers today, compared with pre-4DM days, are really interesting – there are a lot of opportunities.

So what are going to be the big challenges for you this year?

I don’t really see any this year. I’m more confident than I was last year.

Why?

I think pricing might have bottomed out in 2013. I’m not going to kid myself that 2014 is going to be completely rosy, but I think the market has stabilised, so we have solid foundations to build on. 

What’s been the secret of your success though?

Never being entirely happy with what I’ve got.

Really?

What I mean is there’s a difference between being happy and content. I am happy, but I’m never complacent – I always want to do more. I’m a big believer in measurements: knowing where you started and where you want to be. It’s also about understanding your customers’ needs.

What’s your exit strategy for the business though?

I have a recurring dream, which I probably have every few months.Basically it involves me losing control of the business. I’m not sure what that means...

Nice dodge of the question, but it probably means that you’re never going to sell it?

Not only that, but there’s still a lot more we can do with the business. We’re in a good place and I enjoy what I do and I’m not the sort of person that could retire early and spend the rest of my life on the beach. I’m only 48, so ask me again in five or 10 years’ time.