Owners of printing and graphic communications companies frequently ask questions about the extent to which it is appropriate to conduct due diligence on the potential buyer of their business.
Most often, they seem concerned about the emotional impact, fearing that the buyer would be offended by the mere question.
Our perspective here at NAPL is that the owner considering a sale should evaluate the buyer in much the same way as they are being examined. Unlike a residential real estate sale where cash and deed are exchanged and no one deals with each other ever again, the closing of an M&A transaction involving a printing company probably marks the beginning of a going-forward relationship between the parties. The seller who is transitioning from ownership becomes a stakeholder in the buyer entity by virtue of earn-out or royalty payments, or even from the vantage point of landlord-tenant.
Simply, the success of the buyer will have a direct impact on the ultimate outcome for the seller.
Therefore, we recommend that the seller should at least on some level understand the buyer's business model, strategy, and viability in order to assess FEASIBILITY of attaining the future consideration that is at the heart of most transactions.
TIP for Owners seeking to Grow by Strategic Acquisition: Buyers can preempt the question about financials by offering to bring them to an early stage meeting. This tactic breeds confidence and trust, which are essential ingredients for successful M&A.
Comments