IPO Insight:<br>CafePress Actively Seeking Buys, CEO says

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It’s been a little over six weeks since CafePress (Nasdaq: PRSS) debuted on the stock exchange. The e-commerce business, which allows customers to create, purchase and sell custom-made products through its site, started to trade its shares on March 29, 2012. The stock priced at $19 and fluctuated between $27.50 and $24.27 on opening day. CafePress reported that its earnings, revenues and customer orders have increased, but its shares have been teetering between $15 and $17 the last several days. Despite the challenges, executives aren’t letting the drop in shares stand in the way of strategic growth plans.

In an interview, Bob Marino, CEO of CafePress, told Mergers & Acquisitions that the company is actively seeking acquisitions. “We are interested in companies that have a strong growth rate similar to our own, strong record of profitability and a management team that doesn’t have to be replaced,” says Marino. “When we look at what’s next for us, we look at the entire market of consumer products sold online.”

Shortly after its IPO, CafePress sealed the deal on its acquisition of Logo'd Softwear, Inc. an e-commerce provider of personalized apparel and merchandise for sportswear. CafePress spent $8.3 million in cash and stock on the Cheshire, Conn.,-based company and the deal closed in April.

CafePress made a couple of acquisitions prior to Logo’d. In 2010, it paid roughly $9 million for Canvas on Demand, a Raleigh, N.C.-based online service for creating personalized canvases from photographs. In 2011, it acquired the online retailer of customized stationery products, Invitation Box, for approximately $4.5 million.

The company usually finances transactions with cash and stock. Depending on the deal, it may also have a three-to-four year earn out period which will also be paid in cash and stock. Although the deals are on the small side, CafePress is willing to spend a little more on future transactions. “Bigger deals are on the horizon but they won’t be so big that it will change our DNA,” says Marino. The company has the flexibility to spend between $10 million to $60 million per transaction. “In two years, you will see a change,” he said, explaining that the spending range will increase for future acquisitions.

Until CafePress went public, the company handled acquisitions on its own. Now, it will work with investment bankers on larger deals. CafePress already established a relationship with J.P. Morgan Securities and Jefferies & Co., which acted as joint book-running managers on its IPO. Cowen & Company, Janney Montgomery Scott, and Raymond James & Assoc. Inc. also provided assistance on the IPO where they acted as co-managers.  

 

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