A Failed Merger Becomes A Blessing for Stuyvesant

IRVINGTON, NJ—Back in business after a merger-gone-wrong, Michael Roesch, president of Stuyvesant Press (SPI), says he's just kicking into high gear, taking advantage of what he considers the opportunity of a lifetime.

A nasty split-up almost cost him the 20-year-old, $2 million business he grew from (almost) scratch, but the outcome—SPI's recent successful reopening, after an 18-month hiatus—was worth the tribulations of the tumultuous (business) divorce.

As the proud re-owner of a completely renovated, newly equipped commercial printing operation—which includes five presses headed up by a four-color, 40˝ Heidelberg Speedmaster perfector, a full bindery, an Intergraph high-end workstation with a full complement of Macs and PCs networked with an Intergraph file server and Agfa Avantra 44S imagesetter—Roesch is thankful to be celebrating a fresh start.

Well, not completely fresh. SPI returned with nearly all of its clients intact—an amazing act of customer loyalty by any printer's standards. In fact, Roesch credits the "customers who stuck with us through thick and thin" for SPI's rebirth.

Many of Stuyvesant's clients have been with Roesch since the beginning, when he purchased the tiny storefront shop that occupied all of 450 square feet and contained a few handfed presses, including a (circa 1920s) Kelly press. The new owner started out by printing mostly business cards and labels for a small, but steady, foundation of local accounts.

Roesch added several large New York customers to his client base over the years, and Stuyvesant continued to expand until it outgrew its second facility. In 1985, Roesch purchased a 15,000-square-foot building to house his operations.

By 1995, Stuyvesant had outgrown that building, along with its existing equipment, which meant Roesch would have to make a major investment to relocate and replace the outdated machinery.

After much consideration, Roesch opted for an alternative solution: merging with a Northern New Jersey-based mailing house that had become a prominent SPI customer.

"It made sense to merge—compose, design, print and distribute all under one roof," says Roesch. "I didn't want to sell the business. But it seemed like the best thing to do."

Soon though, Roesch says he realized it was the worst thing he could have done. Without going into detail for legal reasons, Roesch says there was extreme "incompatibility of management and opinions."

Roesch claims the new partner (nearly four times larger than SPI) had size on its side, and numerous changes were immediately made—changes not previously agreed upon or even discussed before signing the contract. That's why Roesch gives this warning to companies interested in mergers: Get to know your potential partner—and get everything in writing.

"There are real dangers in verbal agreements," he warns emphatically. "Every word must be written into the contract. If you're going to merge, it's absolutely imperative to know the people and company with which you're merging. Find out all you can about that business—its ethics and policies. Ask the employees, customers and other businesses how they feel about that company. Do your homework. A merger is a marriage, and a split-up can be as nasty as any divorce."

Most importantly, Roesch cautions, "Make the proper provisions in the contract. Provide a clause that clearly states that if after six months, things aren't working out, either party can back out."

It took 18 months for the Stuyvesant merger to "dissolve by default," says Roesch, explaining he was eventually "bought out" of the contract.

Roesch had a check in hand, but he no longer owned any equipment. But he did own the company's name—and the building where Stuyvesant was located. As landlord, he immediately evicted the tenants—his ex-partners at the mailing house.

Ousted from the facility, the mailing house packed up all the equipment, computers and furniture, and vacated the premises, closing the doors behind them. Within a month, the doors were reopened by Roesch, who walked back in—in a grand fashion.

Rehiring his original staffers, who were now unemployed due to the eviction, Roesch and his crew renovated the building. He bought all new furniture and equipment and, within 90 days, the plant was 100-percent operational.

"Without the huge commitment from my employees, I could not have made it. We worked non-stop, 12 hours a day, six days a week for a month to put it all back together. Now that we're back, we're better than ever," says Roesch, who believes if he had been out of business for any longer than a month, he would have lost his customers—and ultimately the business.

"They would have gone someplace else," he says. "I jobbed out all the work and took a loss. But I kept the business alive."

Not only did he keep Stuyvesant alive, he gave it new life.

"If I had mirrored the business before it merged, I may not have made it," Roesch notes, emphasizing the old business had outgrown its facility and equipment. "The failed merger was a blessing in disguise. It gave me the chance to start over with the best technology my money could buy."

By Cheryl A. Adams