Finance expert warns printers against "sick" companies

Consolidation in the print industry must be driven by good business synergies from the opportunities presented by administrations, according to an industry expert.

Paul Eversfield of financial broker Compass Business Finance said that industry consolidation "needs to happen" but warned against companies consolidating simply by acquiring "sick" companies that have gone into administration.

"Acquisitions and mergers must be based on good investment principles," he said. "There is a positive side to consolidation and this has to be seized, especially in today's environment when there are significant barriers to organic growth."

He said that printers should be looking for local opportunities to either merge with another printer to realise the economies of scale that comes with a larger operation or look to add on services such as finishing through an acquisition.

His comments came as Compass's Mark Nelson said that the current illiquidity in the money markets would get worse before it got better. "I think that we will see the conditions reach rock bottom in the New Year as consumers face credit card repayments, after that shock, I expect conditions to stabilise."

However, both Nelson and Eversfield said that banks were still lending to printers with the right plan for kit investment or mergers.