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[LONDON] When bankers talk about paper, they usually mean stocks and bonds.
But in a record year for M&A, for the people who print the documents for the bids and offers and prospectuses for corporate deals, paper means paper - and lots of it.
Deal volumes this year are up by more than 40 per cent on the previous year to a record US$4.6 trillion, according to preliminary Thomson Reuters data. This translates into hundreds of thousands of pages of documents that have to be sent out to shareholders.
For Shell's proposed purchase of BG, currently worth US$53 billion and one of this year's mega-deals, printers mailed out 10,500 copies of a 72-page "intention to make an offer" document, plus half a million copies of one regulatory letter, among other announcements, to BG's shareholders.
The firms that handle this specialised work have had a frantic year of typesetting and proofreading under strict security, before printing and posting the documents to shareholders across the world under deadlines that can be as tight as just a couple of days.
A handful of companies such as Sterling, Merrill Corporation and Black and Callow dominate the business, which not only needs big printing machines and typesetting programmes but often specialist translators too.
As privately held companies, they do not publish their earnings. But one US-based financial printer told Reuters that revenues this year from deals alone had risen twofold. "In this environment it becomes all hands on deck. You just do what you have to do," the person said, adding that their firm's biggest deal of the year ran to 40,000 copies.
And it is a round-the-clock business. Junior corporate lawyers said that during a proofing process they can spend days camped out in printers' offices - where there are often bedrooms, showers and even pool tables and Xboxes provided to pass the time. "The documents are getting bigger and more complex to draft. In this market, clients are seeing only a small window to do the deal, so the pressure on us is greater to do more in less time,"said Tim Black, joint managing director of Black and Callow financial printers, formed after a management buyout from data room company Imprima last year.
But environmental awareness and technology are changing this niche industry, pushing these companies to look for other sources of revenue beyond producing stacks of documents.
Printers can earn tens of thousands of pounds per deal, and the longer the document and the larger the number of recipients, the bigger the paycheck. The total bill for typesetting, specialist translation, printing and postage can run into the millions.
Black's company printed some of the documents for the Shell/BG initial offer this year and also did the Lloyds and HBOS merger prospectus back in 2008.
That approximately 300-page document was delivered to one in 10 UK households. According to Black's calculations, if the 3.2 million copies were laid end-to-end, it would have circled the planet's 40,000-kilometre circumference seven times.
But hard copies of big bid documents in such large numbers are on their way out. "To the extent that we're printing fewer and fewer documents, that's absolutely the prevailing trend," Alex Williams, Director of Corporate Strategy and Development at Merrill Corporation, said.
Merill does financial printing and data rooms, where bidders look into a company's confidential information in order to conduct due diligence. Technology has already transformed data rooms - which used to be actual rooms full of files - into encrypted online portals.
And as the regulatory environment tightens post the financial crisis, Merrill and others are positioning themselves with products that help businesses to manage complex and confidential data, and even generate their own proofs of documents.
These companies can capitalise on their expertise at keeping things under wraps. Black says his employees are vetted and sign non-disclosure agreements with more than 250 components. "It's an industry defined by discretion and sensitivity to the capital markets," Williams said. "There's more and more regulation and compliance, and there's more and more data. We now look at our business as managing our client's confidential complex data. And that's not going to go away."