Hyding Out

Second business characteristic many private equity firms look for in an investment

Profitability:

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Most Owners of Print and Graphics Communications Businesses Who Are Selling Their Company Do So Because They "Have to" , Not Because They "Want to"

 

Most owners of print and graphics communications businesses who are selling their business are doing so BECAUSE THEY HAVE TO, not because they WANT TO-----this was one take away from NAPL Management Briefing on Growth Strategies for 2012.

My NAPL colleagues Tim Fischer, Joe Truncale, Mike Philie and I discussed significant trends affecting members-clients, particularly in the M&A arena. The "invite-only" event attracted approximately 25 attendees yesterday for the half-day workshop.

Although most M&A transactions continue to involve at least one "treading water" or "going out of business" company, NAPL expects to see rising interest in "healthy company" exit scenarios during 2012-2013. Owners of "leading companies" can be expected to put their toes in the water to explore options that include private equity, ESOP, and strategic sale. In other words, potential sellers would include those who "want to sell" and not just those who "have to sell".

 

 

Are you a candidate for private equity investment?

Warren Buffet famously states in Berkshire’s annual report that all he needs is five minutes before giving a yes or no on whether he’s interested in pursuing a transaction.  Not to discredit Mr. Buffet(whose patience and track record are another story), but his quick judgment is also shared by many private equity pros. 

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Site Visit to Printing Company Facility: 3 Things to Look for From an M&A Perspective

The all-important site visit to a prospective M&A candidate is frought with both challenges and opportunities to make a favorable first impression. What should an owner of a printing and graphics company look for when getting the proverbial "tour" of the other company's facility?

Here are 3 things to look for from an M&A perspective regardless of whether you are an acquirer or considering a transition from ownership:

Employee Connectivity: Are employees eyeing the owner/senior manager with suspicion, as would be the case in a shop where there is distrust and morale problems? Or, do employees seem engaged and open to share "what they do" with the visitor? The leading companies always seem to have a facility where it feels natural for employees to interact with guests without it being a big inconvenience or somehow viewed as a threat. Sandy Alexander (Clifton, NJ) is a good example of a positive and open culture. As part of the NAPL M&A Growth by Acquisition outreach process, my colleagues Tim Fischer, Laura Shoemaker, Kathleen Appleton and I recently visited this leading company, and we came away impressed at how forthcoming and friendly were the employees without any proding from our host CEO. L+L Printers (Carlsbad, CA) is another example of a successful company with excellent employee connectivity.

Infrastructure Cleanliness and Organization: The leading companies tend to have clean and organized infrastructure that is conducive to efficiency, profitability, and a positive culture.  Tim Fischer and I recently visited a potential M&A candidate on behalf of an NAPL client, and it took us less than a minute to see that the "merger" would never work because the shop we visited was cluttered and dated, while our client's facility is meticulous and clean. This discrepency raised an insurmountable cultural obstacle than had nothing to do with "price" and "structure" of the M&A transaction; rather, the chemistry was insufficient to suggest a high likelihood of success for the combined operation.

Passion and Viability: It never fails that an experienced observer can ascertain whether the company is "healthy" or "unhealthy" just from the walk-through. I've been in hundreds of printing facilities and rarely do I get it wrong. It's all about passion and viability, something that you feel and sense when it's there and something you know is missing when it is. This is not about machines running; rather, it's a vibe, an intuitive perception that tells you everything you want to know about the ownership. Heeter Direct (Canonsburg, PA), JS McCarthy (Augusta, ME), and EU Services (Rockville, MD) are examples of leading companies where a visitor senses passion and viability from the ownership on down.