M&A Strategies -- Ultimate Survivor's GuideJanuary 2009 By Bob Cronin and Janice O'Driscoll
So, what do we need to have to become one of these resilient enterprises? We can learn much from the lessons of those “extreme” contests (aside from the gourmet insect cuisine) by examining what it takes to be the “Ultimate Survivor.”
But, before diving in, realize the tides do turn. For as long as you run your printing establishment, you will face low tides, high tides, no tides and everything in between. Building your life raft to withstand fluctuations is key to staying afloat. The economy will change. And while it does, you must continuously adapt and build your company for the future.
Surviving—and ultimately, thriving—requires you to deliver value to the marketplace, in terms of size, positioning, capabilities and service. These issues make mergers and acquisitions (M&A) more critical than ever. Cash-strapped printers are seeking safe havens. Small players are struggling against larger competitors. Tightening print budgets are requiring innovative solutions. Customers that were once rock-solid are now declaring bankruptcy.
Add to this...buyers continue to consolidate their print spends. Increasing raw material and postage costs are forcing clients to find suppliers with greater purchasing and distribution power. Conglomerate buying groups are expanding, adding competitive pressure. And, that’s not even considering the effects of the global economy.
Clearly, scale and scope are vital to your future success—regardless of your history, segments, verticals, customers, equipment...whatever you bring to the table. M&A is no longer a luxury for print royalty; it’s a tactic every company should explore to grow its business. In our extreme economy, the approach must be highly judicious, but is key to becoming the Ultimate Survivor.
To maximize your success, you must first optimize your cash flow. Survivors are mean and lean. Before making a bid on the next “fire sale” or planting your FSBO sign, get your shop into fighting shape. The economic meltdown has increased lender scrutiny, and most investment capital is on hold through year’s end. Yet, good financing options—and opportunities—will be available to those with solid cash flow.