70 | M&A in North Americaacross the organization is of the utmost “The economic resilience of the importance, according to Wynne: ‘We want employees at Fortis to feel like they’re part sector is a major factor in our of something bigger. We want to make sure that they’re not feeling on an island interest. Labels are low-cost, or operating as a fefdom but part of the broader Fortis organization.’mission-critical products. The This mentality is also how Fortis handles company culture and how it operates from industry will do well in both bad a strategic standpoint. ‘We have a cohesive internal culture and strategy and that and good economic times”informs a singular, go-to-market external strategy because we want our customers times to make sense of all the activity the group will obviously have its own way to really beneft from all our locations and industry is seeing, leaving some to ask why of going about an acquisition or merger. the breadth and depth of our people,’ says certain companies are being acquired. But what happens after the acquisition Wynne. ‘The Fortis culture just looks to be There are several factors that have drawn is complete is also dependent on the additive rather than overtaking what was the interest of those investing or making purchasing company. historically in place. We embrace the legacy acquisitions. One of which is the label cultures and look to build upon them.’industry’s durability and proven potential to Effects of an acquisition Extending to the ownership, Wynne says: push through most economic downturns. In many other industries, being acquired ‘100 percent of the owners that want to ‘The economic resilience of the sector can be scary for current staff as the stay with us, stay with us. If they’re actively is a major factor in our interest in the worrying sense that one may lose their job involved and engaged in the business, label industry,’ says Scott Sussman, chief because a position has become redundant is then we absolutely want to continue that investment offcer at Sole Source Capital, not uncommon. However, the label industry trajectory. It’s the local employees that an industrial-focused private equity frm. is different. have made these companies so successful ‘Labels are low-cost, mission-critical Currently going through a workforce and we want to continue building upon that products and we’re targeting businesses shortage, and with jobs like press operators success with them.’with end markets in food and health care. and quality assurance technicians being At I.D. Images, like Fortis Solutions Group, The label industry will do well in both bad highly skilled positions, it has been a it’s important for the company to ensure and good economic times.’ diffcult process across the industry to fnd that all the assets – the reasons why these Through economic crashes and an and maintain staff. companies were acquired in the frst place ongoing pandemic, many label converters After an acquisition, at least for Fortis – are maintained well after the acquisition continued to experience high proft margins Solutions Group, the plan is simple: keep is closed. and growth. Some, during the Covid-19 the employees. Regarding the ownership, the company pandemic, reported higher profts than ever ‘We love keeping the teams in place likes to provide options. It wants to before. And though this is important when and are just looking to accelerate the ensure that the owners can run each it comes to valuations, it is not the sole respective opportunity sets. We look to reason in the added interest of the industry. be good stewards of acquired businesses North America Sussman adds: ‘Sole Source Capital is and embrace fnding talent that then can vs interested in the label industry for several enhance management leadership at Fortis,’ the worldreasons: the economic resilience of the says Wynne.sector; the low cost, mission critical nature ‘The acquired company’s employees are ‘Dry powder’, in an investment context, of the products; and the high barriers to the ones that developed the processes, is the cash reserves kept on hand by entry. We’re seeing signifcant growth in they’re the ones with the internal companies, private equity frms, or an the secondary label industry because of knowledge, they’re the ones that have individual to cover future obligations, warehouse automation which is being created what’s special and unique about purchase assets, or make acquisitions.driven by the customer’s desire for the company we’re acquiring. We’re In the United States, the amount of effciency and due to the labor shortages.’ not acquiring turnaround companies; committed or raised dry powder that Dochstader echoes a similar sentiment: we’re acquiring good businesses and are has not been invested is vast when ‘There really isn’t a distinctive preference looking to further scale and grow them. compared to the rest of the world.– investor groups are looking for sustained Foundational to that approach is having According to Nicholas Mockett, growth. We have been working extensively good people in place.’partner at Moorgate Capital, a with private equity groups, doing all aspects The people who work on these presses, corporate fnance and M&A advisory of commercial due diligence for more than whether digital or conventional, have been frm, there is an estimated 300 billion a decade, and our experience has shown doing so for years. They know how to do USD of dry powder available in Europe. us that these frms are almost always their job and they do it well. However, But that fgure pales in comparison to seeking the same set of factors: consistent passing on that knowledge to people who the United States.EBITDA [earnings before interest, taxes, may not be on the same skill level can There is an estimated 1.9 trillion depreciation, and amortization] growth over prove diffcult. This leads to institutional USD available dry powder in the the past half decade, production foors with knowledge, which has been a historical for United States alone. Which, for the state-of-the-art equipment, an impressive manufacturing across industries.sake of comparison, is equivalent to track record in customer care, and some At Fortis, a label manufacturer that has the gross domestic product of Norway, type of specialization.’ experienced consistent growth over the Singapore, Switzerland, and the United When it comes to purchasing strategy, past decade with a large handful of facilities Arab Emirates combined.every private equity frm and converting under its belt, spreading this knowledge labelsandlabeling.com