For Charterhouse, it is a no-brainer and the directors will be chortling all the way to the bank. For the past four years, they have struggled to reduce debt while creating a European platform. This acquisition offers a wipe-out of over £20m debt and a global platform to share the inevitable and increasing cost of expansion. This is an opportunity to get out or grow and have fun doing it at someone else’s expense.
For Konica Minolta, it is less clear. It may help defend their current contracts against competitors like Xerox who offer ‘global services’, which include print management. It is possible that they have the vision of competing with Williams Lea, Xerox and RR Donnelley with a global BPO platform – or even of providing a joined-up document, fleet management and marketing services production offer to new and existing clients.
Given that Konica Minolta has already said the current Charterhouse management team will continue to run the business as a standalone offer, integration may be some way off – both practically and culturally.
What market does Konica Minolta think they have bought into? The Charterhouse story is good – an established pan-European print manager with a strong platform for growth in studio and data services to help companies deliver cross-channel communication. But Charterhouse is no Tag or Hogarth and the reality of the PM market is very different. Declared gross margins for print management contracts are down as low as 5% and to get the gross margin closer to the required 18%-22%, the return is made from supplier rebates and undeclared margins or higher margin in more labour intensive areas, such as studio or data management. Few, if any, established MPS providers operate on declared margins of less than 18% overall on fleet lease and management.
Is this a potential cultural clash that could actually benefit the print industry? Once Konica Minolta has to put its name to some of these PM contracts, will it force them to speak out and be honest about the cost of service? It would be a relief to have print managers, printers and paper merchants talking about value rather than cost to clients. It would be great to see procurement teams accept that no on-site service can be delivered for less than the cost of a salary with NI on it. Transparency of fees and costs would allow clients to decide what the service offered is really worth to them. It would open the market back up to printers who offer consistency of price and service direct to end- clients, the print managers who can offer consolidation and measured benefit would also benefit new suppliers who can offer a different take on the production house market.
High-profile acquisitions in the PM market have rarely delivered true value or change, as the acquired firm is often subsumed into the parent company. Let’s hope this time it is different.
