The circa £50m operation may have been the dominant player in the business forms and listings markets, but these were markets in terminal decline.

However, perhaps unsurprisingly given his engineering background, Cornford had a detailed plan: adopt a last-man-standing model in Integrity’s then core market, while identifying new growth sectors to diversify the business.

Seven years down the line, the business has stuck to the 2008 roadmap as effectively as Cornford’s Land Rover Defender sticks to muddy tracks and with significantly less drama. 

Darryl Danielli How’s business?

Mark Cornford Interesting. We turn over around £47m here at Integrity and £7 m up at A1 Security Print, and we’re still going through our transformation.

What’s the key driver of the transformation?

I’ve probably bought six businesses; some I’ve bought and sold, some I’ve brought into here or into the A1 business up in Birmingham. But being honest, a lot of the print we did was dying; people don’t really want business forms anymore. We produce a product called [sprocketed] listing paper, and when I came here 15 years ago we were doing around £30m of listing paper alone, but we’re now doing nearer £2.5m.

That’s got to hurt.

We’re dominant in it now, but it’s challenging because it’s not enough to be the biggest and the best at something if people don’t really want it anymore.

Hence you’re active in a lot more markets now?

Of course. We’re going through a big transformation and many of our newer markets are exciting and growing.

Such as?

Security – so the A1 business that I bought – that’s doing a whole lot of exports. It has also benefited from the challenges faced by a number of our competitors; Smith & Ouzman has had a nightmare, and I think 3M has closed a site somewhere. To cut a long story short, we’ve won some significant contracts, including a regular government job. We already had ISO 27001 at both businesses and were pretty robust, but that government job has taken to us to another level in terms of physical and data security provision. 

You bought a label business too.

That’s another exciting area. [In 2009] we bought Topflite Labels, which was £2m [sales], but it’s now doing £4.5m getting on for £5m. That’s here.

Did you relocate that business into Integrity then?

I did. It’s interesting, when people talk about Integrity Print, they say ‘Oh, you used to be part of Communisis, you used to be part of Standard Cheque, that was Ken Stokes’ business wasn’t it?’ or ‘that was part of Bowater, wasn’t it?’ This business has a 100-year history, but people still think we only do business forms, which we do still do, but we also do labels now. So people know us, they know we’re big, but they’re still surprised that we do labels. When they ask how big the labels business is and I tell them it’s getting on for £5m, again they’re surprised – because that’s big for labels. 

And that’s part of the transformation you mentioned earlier?

I’m deliberately breaking the business into chunks, in what I’m saying and doing. So I have a labels division and a labels factory with its own general manager, and I’ve got a laser mail transactional data DM type print and mail factory, and a general manager to run that. I don’t want people to come to us and get lost in the amorphous mass, I want them to see a big professional business with defined areas of expertise in security, labels, and transactional DM, etc. The labels business gone from £2m to £4.5m – I want that to be £10m. Laser mail started at zero and it’s about £2.5m now, getting towards £3m – I want to grow that to around the same ultimately. We’ll also probably look at some acquisitions along the way in both areas. Another area that I’ve recently invested in is what I call sticky patches and origami, Hunkeler and Tamarack type work. Basically pieces of paper that we include a sticky patch on – the kind of thing that you get with your Amazon delivery that has a removable sticky label. That’s around £9m now. So I’ve got a labels business, transactional business, security and that. I’ve just spent £500,000 on a new Tamarack machine for that part of the business, because it’s a big growth area – people are only going to order more things online.

And that’s an entirely new market?

People talk about the internet killing print; well, it’s helping me to grow it here.

So how is the transformation going in terms of the business?

Sometimes it’s one step forward, one-step back. I do a rolling three-year forecast and I’m really proud of what we’ve achieved. Yes, we’re still at £47m, but the mix of work has changed dramatically. The dying markets are still declining, but they’re being replaced by growth markets and once the dying has stopped, it can’t hurt you anymore. So I’m looking to stay at around £47m for the next two or three years, but once business forms have stopped declining we’ll then start to grow the business as a whole.

So basically pruning back the business to enable new growth?

Security is great, and I think the label marketplace is potentially massive. I think my next acquisition will probably be a labels business. It’s all still a bit new – we do a good job but it’s not quite in our blood yet, but then I remind myself that we’re already bigger in labels than some of the best-known label companies. I sometimes think that we don’t really know just how good we are.

So plenty to get excited about then.

What we call process colour [business forms] is growing too. Wyndeham closed Print Direct up in Stockport and I picked up three machines and the order book, sold one machine to America and installed the other two here and probably picked up £1.5m of work.

So there’s still growth for you in business forms, despite it being a declining market?

There’s definitely a consolidation play still going on. The things that work against us are the decline in business forms combined with the white paper document factories. So my biggest customers are the three biggest print management companies, for whom I produce tonnes and tonnes of reels of bank statement paper. But the banks are either encouraging customers to use online statements or our customers are moving to white paper lines.

So why don’t you look at setting up a white paper factory with banks of inkjet webs?

I could, but that’s a big investment and also I have to be careful that as I transform I don’t start competing with my customers – on a different scale admittedly. Growth in labels doesn’t hurt any of my customers, but I have to be careful in transactional. Besides if I buy a few massive digital boxes, who am I going to be selling that work to? Most of my work in that space is trade, so I wouldn’t have the customer base and if I’m being brutally honest, if I was a bank, I wouldn’t give the work to me because I haven’t got the scale or the experience as things are – so I’m not a threat to my customers. There are enough drivers against us already, so I’m glad we started the diversification and transformation process when we did.

And I’m guessing it’s much nicer to look at growth areas rather than just managed decline?

Absolutely. We’ve got a good team. I’ve always said I would rather be small and pure than big and full of poison. By that I mean I don’t just want to buy businesses for the sake of buying them, they have to fit strategically and also culturally. All of our acquisitions have followed that model. So rather than looking at a business and thinking ‘that’s a good business, let’s buy it and then shape the strategy around that’ we decided on the strategy first and then we look for acquisitions that fit that. We’re looking at a few label companies now and tomorrow we might be looking at some transactional businesses – because that’s the strategy. That said, if we see the perfect business, but I don’t like the people or the culture, then I won’t do it.

What does a perfect business look like though?

The people and the culture are critical for me, which I know sounds a little naive. I try not over-think things, I make an emotional decision, if you like, and then use maths to back it up. If a business is truly perfect, though, I probably wouldn’t buy it, because there would be nowhere for me to take it and it would cost too much money. I like businesses that are on their backsides and that we can make successful, or businesses that are thoroughbreds and good, but haven’t realised their full potential yet. 

Back to the beginning though, how did the MBO at Integrity [Bath Business Forms, prior to the MBO] come about – were you involved in the business before?

Yes, I came here 15 years ago, I was ex-Unilver food and drinks and ex-automotive after that.

Were you on the sales side?

No, always manufacturing. I was a graduate engineer, chartered engineer, engineering manager, manufacturing manager, factory manager and general manager – those kinds of roles. I was managing 800 people in Plymouth and 200 people in Bodmin at two big automotive controls factories for a company called Siebe [now Invensys]. It was a brilliant business, where I learned about culture change and world-class manufacturing. Anyway, I was briefing the troops one day, and at the back of the hall was the Siebe chief executive, who had a good relationship with Rexam chief executive Rolf Börjesson, and Midsomer Norton was at that time part of the Rexam portfolio. So I got a call a month later from a chap who said Rexam wanted me to be managing director here. Which meant I had the chance to be captain of the ship and not second-in-command like I was in Plymouth. So I got into print. 

When was that?

December 1999. It’s a funny story: I was headhunted to come here and at the same time headhunted to be the ops director at a luxury boat-building business in Plymouth. My second interview was on a luxury yacht on Plymouth Sand, and I fell in love with the product. So I rang my dad and explained that I had the choice of being the boss of a print business or the second in command of a luxury boat business and he said ‘for Christ’s sake son, do the boats’. But I joined the print business and never regretted it. I own the company now and it has allowed me to be quite entrepreneurial – whereas if I was at the boat business, I would probably still be second in command.

And it sounds like you always wanted to be captain of your own ship?

I did. So I came here, and Rexam seemed very happy, but then Rexam very quickly became Communisis. I then got promoted to group ops director at Communisis and was looking after 2,500 people, with businesses all over the UK and Europe. It was a very broad role, but then I had a chance to come back here [to Midsomer Norton] as managing director to do a management buyout. So I gave up the big role.

Was it a tough decision?

Not especially. Well, it’s difficult to love 2,500 people, especially when I would fly into a place and there would be a collective sigh of relief when I left.

So were they looking to sell the business forms operation, or were you just looking to buy?

It was a meeting of minds. The chief executive at the time, David Jones, asked if I wanted to buy it, and it was something that I had been thinking about. But the deal fell through at the eleventh hour and in the end they just did a sale and lease back on the property. Then Steve Vaughan became chief executive of Communisis and I reminded him of what nearly happened, and that I was still keen to get the deal away. To his credit Steve stuck to his guns and so did I and in 2008 we did the MBO. 

Was finance difficult at the time?

I had a beauty parade with Investec, Barclays, RBS, GE and a whole host of others. Investec loved me and I loved them and they’ve been fantastically supportive ever since. 

2008 must have been a bit hairy though, if the Integrity deal had taken much longer…

We got away just on the cusp of death. It’s funny, people have said to me I was very brave, or it was a ballsy move – but I didn’t think for one minute that I was taking a risk. Did I want to buy the business? Yes, I did. I love being in control and didn’t want the bureaucracy of being part of a bigger business. So it was more a case of: if you lend me the money, Mr Investec, I’ll buy the business, make a success of it and I’ll pay you back what I owe plus interest. It wasn’t brave, we just got it done.

But at the start of a recession?

If we’d only had to worry about the recession then it would have been easy. But with our main product line declining and the growth of white paper technology –we were getting attacked on three fronts. But still everyone had a smile on their faces [laughs].

From that perspective you were probably no different from any print business in the past few years, being squeezed three ways by recession, market changes and technology. Regarding the finance of the MBO though, was that private equity?

No, they don’t have a stake – we just borrowed the money; it’s asset-based lending. I own 75% of the business and our finance director Arthur Ayres owns 25%. They don’t mither me either, and Arthur is an outstanding FD. I take risks and go by feel, he doesn’t take risks and goes by maths and that gives Investec good comfort. We know every single day how much cash we’ve got; every month we send our numbers to Investec, so there is a financial umbilical cord and they know how we’re trading. I like to believe that they think we’re one of their best customers.

Is that because of the strong communication?

Yes, they trust us. I think we’re nice people and fun to work with, but they like us because we’re good business for them, we borrow, we pay back on time and there’s good comms. 

There must have been a personal risk though, I mean it wasn’t all Investec’s money?

It didn’t feel like a risk. It’s funny, if I have issues at home with a neighbour, say over a garden fence, I get quite worried about it. If something is going on at work, multimillion this or that, I must just use a different part of my brain because that doesn’t worry me.

People work in different ways, I guess?

Don’t get me wrong, we have our challenges – we’ve got to grow the transactional, labels, security and the others to make up [for the shrinking business forms operation].

But then first year post MBO; looking through the PrintWeek archive, the business grew by 10%-11%?

The secret there was that, when we were part of Communisis, a lot of the market didn’t want to trade with us, because they were competitors. But after I broke away and was purely manufacturing – the whole marketplace opened up. Also, quite often after an MBO people sandbag a business and take out costs, we were already quite a lean, tight ship anyway – so it was just about growth and unlocking the marketplace.

So it was almost a golden handshake after the MBO?

The other print managers were pleased, because it suddenly meant they could use us. That [business forms] business has still declined though and we’re going through our transformation. We’ve got 320 people here at Midsomer Norton – it was 500-plus, so we have gone though some tough changes. I’ve taken out lots of costs, we’ve had to look at pensions, make changes to T&Cs, alter overtime and night rates. All ugly, difficult stuff. But the army still marches, so I’m chuffed that people are still ‘with us’ and that’s only because of the culture here. Running any business is tough enough as it is, but if the army marches with you there’s not a lot you can’t do.

That must have been a tough time though?

It was. I’m very paternalistic about the business, if I bump into one of my team outside of work and see them with their family and kids, then it reminds me that it’s my responsibility to secure their livelihood.

But I’m assuming that because you had experience of the business, you knew what you were getting into regarding the decline of the core market?

Yes, nothing has happened that has come as a surprise. I knew that business forms were declining, but what I didn’t foresee was the whole white paper thing. To take a hit on the decline of the market is one thing, because we knew we had to transform. But we’ve had to accelerate the transformation because not only are business forms dying, other parts of my business forms market are also changing because of technology. Think how aggressive some of the major players have been with their white paper machines.

And as you said that just doesn’t appeal?

Well, I do white paper now, but it’s sheetfed and very small volumes. I would have to be very careful to get involved with white paper web, because all the people that do that are key customers of mine. As I say to the guys, we don’t need to panic, we need to just follow the plan, follow the strategy and as long as we achieve what we set out to as a business, then we’ll do fine. If you’re in a bad place and you don’t know what you’re going to do, then it’s scary. But if you’re in a difficult place as a business and you have a plan, then it’s fine. We have a plan, we’re going to invest in labels, transactional and security. The business will go through the transformation and then the declining market won’t hurt us anymore.

And presumably the business forms sector has been sliding for a while, so you can make a pretty good stab at predicting the rate of that decline and plan accordingly?

Yes, we can, and the fact is that this year the decline hasn’t been as severe as it could have been. And the growth in the other areas has been significant. Not as significant as I planned – but the net effect is that we end up in the same place. That’s why I’m looking at bolstering the business in some areas with acquisitions to help the organic growth.

In the markets you mentioned, labels and transactional?

Well, any market. Labels is so broad. I look at businesses all the time, but it has to be the right business, in the right market with the right culture. Quite often though, and I can understand why, owners want too much for their business. I could have bought tens of businesses, but I don’t just want an amorphous mass, it has to be the right deal for my business as well as theirs financially, strategically and culturally. A1 is a great example, that has been a stunning acquisition for us. Labels and laser I’m proud of too, but we’ve got further to go. On the sticky patches and origami, we’re by far the biggest in the UK and it will grow again next year. And I can’t see internet shopping slowing down for a while yet.

So the transformation is on plan?

It’s on plan overall. Like I say to the guys, look at the trajectory of the business and work out if you’re going to fall short. Next year will be fine, the year after and the year after that I think we may fall short of our planned trajectory if we stay as we are, so I need to alter something now. We don’t travel in hope, so that’s why we’re looking at acquisitions.

So basically, plan for the worst and hope for the best?

Of sorts. I’m chuffed with the business; we have banks knocking on our door wanting our business – so when you have hard-nosed people like that saying they believe in your business that’s only good. I’ve always believed in this business though, because the team and me are passionate about it. But banks see through my passion and it’s the numbers that matter.

And having a plan?

I’ve got documents from 2008 that plot the roadmap of the business. And you could look at it now and see that, give or take the odd bend in the road, it’s pretty much what has happened.

Is that because you have this incredible insight?

No, that’s not what I mean at all. Just that the basic drivers are easy to understand. We’re the biggest and the best in business forms, but business forms are dying. There’s a consolidation play opportunity where you’re the last man standing, but that’s not enough, therefore we needed to diversify.

But then you largely predicted the rate of decline and selected good diversification opportunities.

But I smelled an opportunity in point-of-sale, it’s exciting and vibrant, but when I looked closely there are a lot of big players and the cost to entry was high, so I crossed off that one. Then there was a labels business round the corner, I went round and smelled them and thought we could do this. So I bought them. They had a great [data] geek there, and as a result, from nothing, we now have a £2.7m turnover transactional business. I would hate to claim some incredible insight, necessity is the mother of invention and we know that if we hadn’t changed then we would be toast.

You’re not saying it was luck though?

We’ve got more to do, but as long as we follow the map it’s easy – but you have to make your own luck in life. I think the transition will take another three to five years. I think we could be £60m by then, but the mix of work will completely different. Who knows, one day it might even all be labels? I don’t think so, but then in 20 years’ time you’ll go into a supermarket and there will still be labels everywhere. So never say never.