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Carl Gerhardt

Business Sense & Sensibility

By Carl Gerhardt

About Carl

Carl Gerhardt is the chairman of Allegra Network, one of the world’s largest print, marketing and graphic communications franchisors, linking more than 500 locations in North America under the brands Allegra, Signs Now, Insty-Prints, and American Speedy Printing.

Carl and his wife, Judy, owned and operated their own successful Allegra Network franchise for nearly 20 years before selling the $2.3 million operation in 2003. He is a PrintImage International/NAQP Honorary Lifetime Member and was inducted into NAPL’s prestigious Soderstrom Society in 2010 in recognition of his contribution to the industry.
 

Top 10 List for Harmonious Buyer-Seller Match

 
Over the last few years, we have matched more than 50 independent printers and sign companies with buyers through what we call our Allegra Network MatchMaker™ program. I recently asked one of our mergers and acquisitions managers to name the top 10 needs to ensure a successful purchase/sale and transition. Here they are, in no particular order:

• Seller carry back. Minimum 20 percent preferably 33-50 percent.

• A fair sale price. The price needs to be fair to both buyer and seller, although in some cases, it can be nearer the high or low end of a “fair value range” depending on the seller’s motivation.

• The seller should provide 60-90 days of new owner training. You don’t have to work them like a dog, but 30-35 hours per week seems fair. At a minimum, this should include one to three trips to the top 25 to 50 customers (see item four).

• A complete list of the top 25 to 50 customers, including names or some other identifiable notation, industry and sales history and a brief synopsis (both positive and negative details) prior to opening.

• Employment contracts with any key employees. This is more important for larger shops with general managers and/or key salespeople.

• A complete list of all vendors, including contact names, addresses, phone numbers, customer numbers and a brief description of what service or product each supplies. This should include but not be limited to leases, utilities and service contracts. This step will aid in transitioning the vendors to the new company and will negate any product delays due to lack of credit application or new customer information.

• A confidential list of all employees that includes pay rate, length of service and an honest, comprehensive evaluation. Not all (maybe none) employees will be perfect. Knowing their strengths and weaknesses going in can save valuable time and money.

• In advance, obtain a copy of the seller’s pricing system for both offset and digital printing. This should include any special pricing contracts for specific companies and/or organizations/nonprofits. If no computer system is available, samples of old invoices with details will have to suffice.

• A buyer that likes and “gets along” well with the seller and vice versa.

• If he or she qualifies, the buyer can take advantage of financing from the bank, an Small Business Administration loan and/or other external seller financing with terms that provide debt service and cash flow that the business can afford.

This list could be longer, but it does a pretty good job of identifying the items that are critical to success for the new buyer and a fair deal for the seller that will allow the business he/she created to continue to be successful.
 

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