PROPRIETARY First Equity Copyright 2018 © First Equity Group, Inc. – 14 – Imtek / Holladay-Tyler Printing Inc. Background Holladay-Tyler was purchased from Southam Corp. after the Canadian publisher divested a number of non-core graphic businesses acquired as part of a failed diversification strategy. Holladay-Tyler was saddled with unproductive and antiquated labor contracts from four locals. The printing industry was going through rapid consolidation and migrating to operations primarily in non-union facilities in right-to- work states causing a continuous erosion in pricing. The company lacked the flexibility to negotiate work rules with its unions. Southam was motivated to exit the business since it was losing nearly $1.0 million per month. Investment Thesis First Equity acquired Holladay-Tyler knowing that it would be very challenging to turn around in its current form since the industry had moved to a national vs. regional model, there was inflexibility in the unions’ scope clauses and the company had a very high cost structure. First Equity had two alternative strategies when the company was acquired: − Work cooperatively with the unions to become more efficient and cost competitive, or − Rebuild the company around a single product and customer in a new facility outside the scope of the existing union contracts