I have some experience in the printing industry and this is a...

I have some experience in the printing industry and this is a pretty good acquisition.

I know a bit about both companies (Active and AFI) and both are pretty good businesses in their own right.

Active being a retail POS signage company and that's what they specialise in. In the retail POS signage segment, it's more of a design/service market than manufacturing because clients come to you for the design of a new POS signage.

AFI is your standard large format printing company but the biggest differentiator of AFI is they are the exclusive distributor of Octanorm. Octanorm is the market leader in trade show stands. They control the market and have quite a substantial moat around this industry. Octanorm is a reusable modular exhibition system and both exhibitors and exhibition organisers use Octanorm to build their stand and if you want to change the design or layout of your stand, you buy more Octanorm parts and plug it in. The moat here is since Octanorm has already such a large market share of the industry, the majority of them are stuck with Octanorm. Since these exhibitors and exhibition organisers already have a substantial investment into the Octanorm system, it isn't worth it to switch to another system.

The risk here IMO are:

1. Prices have been declining over the years. Everyone is undercutting one another to pay for their printing equipment and to keep them running/printing so looking at EBITDA isn't the right metric because the DA in this industry is real. Equipment break down, needs servicing, and in the next few years needs to be replaced to keep up with your competitors. It isn't a service-type business where EBITDA can equate to cash flow.
2. The industry in general is in a decline too or flat at best. We all know retail is being disrupted by eCommerce and the question is how much are clients willing to allocate into their budget for retail POS signage. Same with AFI. Trade shows are being disrupted with Zoom.

With all that said, the risk here is pretty small because the price paid is just too good.