As many of our NAPL member-clients, you're considering growth by strategic acquisition, and you are ready to make your case to the owner of Treading Water Print Company to close up his/her business and bring the customers over to your happy home. You prepared to go through the litany of key points reflecting a "tuck in" scenario, in which you'll acquire the sales assets (customer relationships, data files, job tickets, CSRs, etc) and create an income stream to monetize Treading Water Print Company's valuable general intangible asset.
The owner of Treading Water Print Company who is on the listening end of the above conversation is not surprised to hear the now-familiar pitch. After all, this scene has been playing out all over the landscape of the print and graphic communications industry due to both structural and economic forces.
So why will this owner probably not respond favorably to the overture?
The answer is at the heart of why many M&A overtures by strategic acquirers fall on deaf ears: the offer addressed only part of the situation.
The owner considering transitioning from ownership has more to think about than maximizing the value of the sales assets. Considerations revolve around the interface between personal and business factors, and the owner's thought process usually takes into account a circle of relationships who would be affected including family; employees; banks; suppliers; peers; and customers.
The proponent of the offer failed to present a full solution. Does that mean the buyer has to write a big check at closing? No, it doesn't. Does it mean that an acquisition of intangibles lacks appeal? No, it doesn't.
The full solution is a consultative dialogue leading to a comprehensive plan. It may need to take into account factors such as personal financial planning, lifestyle, family, employment, health, real estate issues, self-esteem and public perception. I'm not suggesting that the buyer should be the seller's consultant.
But I am advocating that buyers should remember that their offer for acquiring intangibles does not take place in a vacuum. Excellent communication skills, empathy, and creative problem solving are traits of successful owners who embrace growth by strategic acquisition.
Right now we have several NAPL member-client strategic acquirers that come to mind as I write today's blog post. I'll talk to them one on one as to techniques/tactics for them to increase the likelihood of closing transactions by pitching the full solution, not just their offer.
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