Planning and Executing a Successful M&AApril 2014 By Paul Reilly and Peter Schaefer, New Direction Partners
In this new editorial series for Printing Impressions, New Direction Partners will offer guidance in a business strategy that we believe every printer needs to be thoroughly acquainted with: the planning and execution of successful mergers and acquisitions. It's a complex subject and, in columns and blogs to come, we'll detail many of the actions that take place when two printing companies decide to come together as a whole that's greater than the sum of the parts.
However, the message behind it all is simple. Today every printing and packaging company, regardless of size or specialty, should be thinking of itself either as a buyer or as a seller in the industry's M&A marketplace. Properly conceived and managed, an M&A transaction can be a natural step toward growth or, in the case of firms nearing the end of their life cycles, toward an orderly and rewarding exit from the business. What's more, present conditions for dealmaking are more favorable than they have been in several years—another incentive for taking first steps in the direction of building an M&A plan.
Let's consider M&As from the buyer's perspective first. If your printing company does most of its business in a maturing market—one growing at a slower pace than the economy as a whole—then you already know how difficult to come by organic growth can be. Printers of books, inserts, envelopes and general commercial products are examples of companies that get a better shot at growth when they acquire the customer bases of other mature-market providers like themselves.
While the Iron Is Hot
Organic growth isn't as challenging for printers or packagers in dynamic markets such as flexible, stick-pack and pouch packaging; labels; retail POP; large- and wide-format printing; digital printing; and signage/out-of-home. Here, the opportunity lies as much in acquiring technology and skilled personnel to drive your performance in these hot sectors to the next level.
The good news for sellers is that buyers are out there and that they're showing considerable interest in acquisition targets that can give them the kinds of growth they are looking for. The interest, by the way, isn't tied to company size. Although larger companies tend to attract more attention from buyers than smaller ones, we are seeing no clear trends in M&A activity relative to size—deals are being done across the board in terms of revenue.