2007 Printing Industry Hall of Fame — Master of the Deal - Chris Colville

NO MATTER how many times Chris Colville sat down with a legal pad and calculator to perform due diligence in analyzing a potential acquisition for Consolidated Graphics (CGX) of Houston, he kept two things in mind.

One, it required sound judgment to determine the industry’s highest quality companies and their valuations. It is the trait that has enabled CGX to hand pick only the finest businesses the market has to offer and, in the process, compile a balance sheet that is the envy of printers everywhere.

Equally as important, no matter how many major deals Colville and CGX had consummated, it was important to appreciate one little detail: For the man sitting across the desk from Colville, it was likely his first and only sale.

“You need to give a potential deal the same attention, interest level and effort on your 50th deal that you did on the first one,” notes Colville, 49, the recently retired chief financial officer for CGX. But it wasn’t his CFO exploits that landed him onto the list of 2007 Printing Impressions/RIT Printing Industry Hall of Fame inductees; at least, that’s not how history will remember him.

Colville is a unique study as a HOF selection. He doesn’t have “ink in his veins,” never operated a press or lay claim to a family tradition steeped in printing. The man is a CPA and his father owned a ready-mix concrete company.

Yet, Chris Colville is to printing industry consolidation what Harry V. Quadracci was to privately held printers: a trailblazer.

Colville’s time in the printing industry was relatively short, a little more than 10 years. As Hall of Famers go, he is a perfect match for former Dodgers baseball pitching great Sandy Koufax—a man who set the baseball world on its ear in a very short span with a smoking fastball and big overhand curve. Colville’s “fastball” was his ability to help lift CGX from a regional $49 million sheetfed printer in Texas to a national success with 68 facilities in 27 states and Canada, and more than $1 billion in annual sales.

Colville arrived in 1994, just after CGX had gone public, and helped the company complete a pair of deals almost immediately—Jarvis Press of Dallas and Frederic Printing of Denver. He would go on to orchestrate the finalizing of roughly 50 acquisitions, an almost unheard of track record. And while the economic slump that culminated with 9/11 effectively sank the fleet of printing industry consolidation companies, CGX was better positioned to endure the major downturn and re-emerge as the pre- eminent M&A maven on the block. To say that Colville played a large role in this is not an overstatement.

Again, there was little in Colville’s history to suggest he would make a name for himself in printing circles. He grew up in West Texas, the oldest of five children. Colville’s father was a salesman for a cement manufacturer, who later started his own ready-mix concrete firm.

“It was an entrepreneurship-type company—a lot like the printing establishments CGX bought—that required about $4 million in capital investment and was a customer service-based, relationship-type business,” Colville recalls.

Learning the Ropes

Ironically, the elder Colville ended up selling the $10 million business to a regional consolidator, which in turn blended into a national consolidator. “Maybe I learned an appreciation about the business dynamics that helped me relate with the printing company owners when I worked for Consolidated Graphics,” he remarks.

Colville graduated from Texas Tech in 1980 and earned his master’s degree in 1982. A year later, he went to work for the prestigious Arthur Andersen accounting firm, where he worked in the energy division as an auditor—handling various accounts, including Texaco. Colville spent 10 years there, achieving numerous managerial positions.

He then took a position as controller for Trident NGL, an oil and gas concern. When the company went public, Colville was assigned the task of seeing its initial annual report produced, making it his first taste of print production. It was also during this time that he was introduced to a man who also boasted an Arthur Andersen background: an individual looking for someone to help him seek out acquisition opportunities for his fledgling, but fast-growing, printing company. The man was none other than Joe Davis, founder, chairman and CEO of CGX, and a fellow CPA.

“As Joe used to say, he trained the guys who trained me,” Colville says. “So he knew I received good training.”

The Jarvis and Frederic deals—Davis had letters of intent signed just as Colville came aboard—began the steady procession of acquisitions. While repetition did not make the process easier per se, Colville did develop a sense for identifying the critical points and the minute details. It was important to know when to let the lawyers have their say and when he needed to step in to make sure a deal didn’t fall apart.

“Chris is a great financial executive with extremely talented analytical skills,” Davis notes. “He is able to relate to a wide range of people and discuss very complex matters in understandable terms.”

While Colville and CGX did have a formula of determining the value and an offer price for a potential acquisition, Colville often sought to avoid that conversation. The culture of a company and the credibility of the management team paints a much clearer picture than the financials, he believes.

“We had upper parameters that we could pay for companies based upon that company’s capital resources, our bank lines, public stock and the like,” Colville says. “But the credibility of the management team was far more important than the financial information. We wanted management teams with a primary focus on their business as opposed to outside interests. We’d make our own judgment as to the management team’s interest in the business, their knowledge of it and balance that with who their customers are. If they’re a quality printer, their clientele would include the best companies in their market. That’s important. Then we did the equipment appraisals, looked at multiples, things like that.”

Harris DeWese, chairman and CEO of Compass Capital Partners, has advised companies on more than 100 transactions, and on about 20 occasions has sat across from Colville at the bargaining table. He calls Colville “one of the best deal makers I’ve ever encountered. Chris has a superb financial mind and controls a transaction extremely well. He’s a pleasure to negotiate with, even if you don’t always win your point.

“He’s of the highest integrity and never once mislead me in our dealings,” DeWese adds. “Chris is going to wind up as the CEO of some major corporation in Houston or on the Senior (PGA) Tour.”

Gone, But Not for Long

Colville left CGX for an 18-month span between September 2000 and March 2002, taking his M&A proficiency to Murphy Noell Capital. CGX had been dormant during the economic downturn of the period, and Colville wanted to try something different. But when Joe Davis called him in 2002, Colville pounced on the opportunity to return and get back into the M&A game.

“Joe challenges you to do your best, and he didn’t hold me back,” Colville says of the man he greatly admires. “He encouraged me to grow in the position, assume more responsibility and to take a leadership role in CGX. He taught me there’s no substitution for attention to detail and no substitution for managing a buck.”

Unlike what one would expect from a CPA, Colville was most enamored by the social interaction involved in his position. He remains in close contact with several former CGX presidents—he recently enjoyed a golf holiday in Scotland with one such friend.

But with his duties shifting to CFO and away from deal making, coupled with the desire to spend more time with his family, Colville opted to retire from CGX this past summer. He doesn’t rule out a return to the printing industry, but is more likely to hook on with a privately held, Houston-based company.

Colville credits his wife Nancy, whom he met at Arthur Ander-sen, with being very supportive of him and his career during their 22 years of marriage. They have two children, Tyler and Mackenzie, and recently returned from a vacation in Hawaii. He plans on spending more time with them doing outdoor activities such as hunting, golfing and fishing. PI