Bought out by Geon, printers lament group’s collapse

Geon's consolidation strategy could have worked if it had been better executed, said printers whose companies were rolled into the group.

But the former owners and senior executives said Geon had taken on too much debt, priced work too low and didn't have enough printers at the top of the management.

Don Elliott's company Agency Printing was merged with Graphic World, owned by Ron Hoolihan, to create a combined business worth $40-$50 million.

Elliot, who founded ProPrint before it was acquired by Haymarket Media in 2008, said: "They wanted to get a job at any price. We saw that at the very beginning and that's why we walked out."

He said he agreed with others he had spoken with in the industry that the company's failure was inevitable.

"The main consensus was they were trying to get too much work and dropping their prices. Look at their figures, you can't do that forever.

"They had people who weren't printers trying to run the company. If you look at the successful printers, they are semi-family owned and everyone is still working."

Elliott said he was sad about what the employees were going through but added that there could be an upside. "Maybe prices will come up again and it will be better for all the small printers out there."

[Related: Geon sponsors rescue helicopter]

Another former executive, who asked not to be named, said the original consolidation strategy was "fair and reasonable", but it came undone due to over-reaching by Geon's management and its private equity owners, Gresham Private Equity.

"I think they got greedy. They borrowed more than they should have done and they got themselves into debt," he told ProPrint.

"Relative to today's terms, they paid a very high dollar for businesses on both sides of the Tasman and those businesses have been in a market that's been in a decline for the past five years."

Michael Webb, who ran the New South Wales operations for Penfold Buscombe when it was acquired in 2007 by Geon, said Geon's gradual demise took him by surprise.

"The business changed its form several times over but it was very good in its original state. I think there was a lack of industry experience towards the end; the people who made it successful were dyed-in-the-wool printers," he told ProPrint.

"They were going to grow the business and improve its performance. Like all private equity, they have a window where they expect to come in and enhance the business and sell. They got caught by the GFC, which no one saw coming."

Another senior executive at a company bought by Geon said he was such a believer in the "outstanding" consolidation concept that he accepted shares in the print group.

He said the strategy came undone when Geon allowed key personnel to depart and replaced them with the wrong people. That was because Gresham Private Equity didn't properly understand the industry, he added.

"I think it could have been successful. I still believe today it had a terrific opportunity and it didn't work for some really basic reasons," he said.

[Related: Ups and downs of Geon]