Hyding Out

You'll Never Guess The One Area That is Hurting Print Profits

Freight.

Am I right you wouldn't have guessed it?

NAPL COO Tim Fischer and I were on the phone during a client "check up" call yesterday and he said, "Many of our member-clients don't realize how much is being lost on freight charges. They've gone up a lot, and people think they have a handle on it, but few have taken the time to really dig into it. Once they do, they're often surprised at how much freight cost is absorbed and not passed on to customers."

So what can be done about controlling freight costs?

C'mon now, I've got to leave something off this blog for our paying clients, okay? Call me if you want help with freight cost reduction recommendations or other assistance on overall cost alignment to improve profitability and increase your business value.

Why Two Offers for the Same Company are Totally Different

Real scenario being played out in Massachusetts these days: Company A does $2 million annual sales and is in financial trouble with two suitors putting totally different offers on the table. How could two savvy owners look at the exact same company and come up with one offer being much higher than the other?

Answer: synergistic value in printing industry  distressed M&A is based on the acqiurer's benefit, not on the seller's financial statements. With the respective acquirers each having different cost structures, utilization rates, infrastructure costs, cross selling opportunities, and other profit factors, it is no surprise that their analysis of the benefit of the transaction will radically differ, thus resulting in disparate offers.

And the Multiple Is........

Today is the first time in over ten years that I've come across a printing company who truly deserves a Valuation multiple higher than 5X EBITDA. That's because it really isn't a printing company although they do print and mail as part of their business. Hear me: "PART OF" their business. This NAPL member has such a unique service offering and set of capabilities that I don't even want to remotely describe it in a blog. But trust me when I say that the key to the kingdom is the customer "hook" which is way beyond the usual trio of price-quality-service. Those are a given these days.

More on valuation and multiples in future blogs. Have a great day.