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Jun 1, 1997 12:00 AM

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Consolidated Graphics CEO Joe Davis has an interesting-and successful-philosophy about the acquisitions strategy that moved his company from tenth last year to sixth place in 1997. He and his team at Consolidated like to acquire printing companies whose presidents won't act as if they've been acquired. "People ask me how I can run 20 different companies. I just say I don't manage 20 companies-those companies' presidents do that job."

With a total headquarters staff of 15 people, Consolidated has nonetheless caught the attention of mainstream business media such as Forbes magazine, which put the consolidator on its list of "best-managed" high-growth companies last year.

Growth through acquisition is a tricky business, however. Davis lists the criteria Consolidated uses to identify prospects for acquisition: first, a good reputation in its own local market; second, good financial operating results; and third, a good fit with Consolidated's own corporate culture.

The results of this selection process are impressive: Consolidated's 20 operating companies averaged 12 percent operating income last year. In fact, several of them were already at seven percent to eight percent annual profitability before being acquired. While Consolidated doesn't handle turnaround situations, a well-managed company running at a slight loss might still be a candidate for consideration.

In exchange, acquired companies have the benefits of Consolidated's group legal, human resources and banking assistance, plus the kind of purchasing power that leads to the recent multi-year sheet-fed purchase agreement with Komori USA. "We partnered with Komori because it could work with our vision and offers top-of-the-line pressroom technology," says Davis

Consolidated's three-year Management Development Program is well-known in the industry. Recruiting efforts for new hires now extend to 13 colleges nationwide, according to Ron Hale, vice president and treasurer with Consolidated. Interestingly, a new hire is not typically a graphic arts major, but more likely a liberal arts, business or engineering graduate. "Especially one we think might have the potential to become a company president one day," Davis adds.

While creating a common business culture across 20 companies may be challenging at times, it also can offer opportunities for cross-fertilization, Davis explains. Consolidated's 20 company presidents convene four times annually for three-day presidents' meetings that include presentations on "best practices" from printers with special strengths in a particular technology or market. "Our Emerald City Graphics in Seattle, for example, does excellent specialized bindery and screen printing work, areas in which another company might want to develop its skills. Sometimes we have a customer for whom we can do some cross-selling of services from two or more of our groups in this way," reports Davis.

With a total of 93 presses at Consolidated's disposal-including sheet-fed, full web, one-color to eight-color, plus a digital color press-cross-selling shouldn't be difficult to do.

So what's the upper limit for Consolidated? "We take a conservative approach with all our acquisitions," Davis states. "That said, we can see ourselves becoming a $500 million company in the next three to four years."