Hyding Out

Listening to My Business and Hearing Continued Pain Among Owners of Print and Graphic Communications Co's

A very successful client years ago told me, "Listen to your business." Those words are timeless and I've followed them for much of my career. 

With that in mind, here is a sampling of comments from current NAPL clients answering my question, "How are you doing this month?":

1. April was okay but we are still hurting from the winter. We lost the entire month of January and most of February due to snow. Like a restaurant, these sales aren't coming back. Customers just skipped over what they would otherwise have had printed."
2. "We went from $14 million annual sales to about $10 million in just over one year. You'd think we lost a ton of money along the way, but we reacted quickly, and now we are stable with a break-even around current sales. A strategic acquisition involving $4.0 or so in annual sales would really light a fire for profits."
3. "We have not lost customers, rather, they are just buying less, in some cases, 50% less. We feel the customers will ramp back up to prior levels of purchasing when they feel more confident about the economy."
4. "The first few months of this year have been good, but I'm losing sleep thinking about how we're going to make it through the slow period of June, July and August."
5. "If it wasn't for the acquisition we did last year, I don't know how we'd have enough work to survive."

So, how are YOU doing this month? We'd love to hear from you! jhyde@napl.org

John

Printing Industry M&A Marketplace Update: More Buyers than Sellers

I've been thinking about an update on printing industry conditions and a recent M&A outreach engagement for an NAPL client-member sums it up perfectly: our client is selling general intangible assets and we received 4 hot responses from interested buyers in under 5 days. We had only contacted 5 potential suitors, so our response rate was 80%. Now THAT is targeted and personalized messaging at work in the M&A context!

Keep in mind, selling a privately-owned printing company requires discretion and confidentiality is a must; therefore, my philosophy in selling has always been "less is more". The secret is to get excellent communications to the right contacts at the right time, and that's what our team did in this case.

The relevance to owners of print and graphic communications companies is that this recent example validates NAPL's perspective that there are more buyers than sellers active in the printing industry M&A marketplace......a dynamic that has been with us for a few years, despite what you read in the trade publications.

Definitions of "Sale" and "Merger" Don't Neatly Fit Fill-in-the-Blanks Listings

There's been more than the usual chatter these days about "listings" of printing companies for sale.

My personal opinion is that listings are usually a waste of time because mergers and acquisitions of privately-owned print and graphic communications companies involve subtle nuances of chemistry and strategic fit that don't fit into neat boxes. The business of M&A is not like residential real estate where a multiple listing service ensures consistent terminology and methods.

Principals and business advisers hardly can agree on what is a "sale" or "merger", so how can this fit into "fill in the blanks" listings? It can't. As an example, the words "sell the business" can mean "sell the business as a going entity" or "sell the stock of the company" or "sell all or substantially all of the assets".....but many "sale" transactions take place with only one asset exchanging hands, the intangibles; this is the typical sale of intangibles to one buyer while the equipment/plant to sold to dealers or auction, which is technically a sale of assets arising out of an orderly liquidation. Or what if the company restructures to shed manufacturing assets and now farms out production requirements, what is that called?

The word "merger" is even more imprecise. What if the sale involves owners receiving equity in the buyer, that would be a "merger" but what if it is only one of the partners, or what if the buyer moves into the target company's infrastructure, is that an acquisition or a sale or a merger?

Residential real estate is easy, no one is confused by the words "sell" or "buy"......no one even thinks of consideration other than cash at closing, could you imagine offering a royalty arrangement, or an earn-out for a house purchase? No one questions whether the buyer is going to move into the seller's house or even thinks that maybe the reverse tuck-in is an option.

My advice to owners of print and graphic communications companies is to leave listings to the residential real estate folks and rather spend your valuable time on networking and leveraging professional contacts in search of potential synergistic opportunities.  A carefully orchestrated outreach campaign can supplement the use of contacts.