M&A Activity -- Expect a Surge in Mergers
The Important Questions to Ask
"How will the mega-deals and hence mega-companies affect my company and the market(s) I serve?"
"Will I be a buyer, seller or a liquidator?"
"If I'm a buyer, what, how and when do I buy?"
"If I'm a seller, will any buyers be interested? How do I prepare my company for sale and how do I obtain the maximum value?"
"If I'm headed for an inevitable liquidation, when is the right time and how do I help to preserve my personal wealth?"
The remainder of this article is a primer for small- and medium-size printing company owners and managers. It is intended to acquaint you with the language, practices and mathematics of consolidation in the printing industry.
The M&A Transaction Process
The majority of companies acquired in the coming new wave of M&A deals will be taken to market. The owners of these companies will consciously decide to sell the company. In these cases, the owners will either decide to "do it themselves" or retain a lawyer, accountant, business broker, M&A firm or investment banker to market their company.
There will be a handful of occasions where a strategic buyer targets a competitor or a strategically desirable company and comes courting. "Strategic Buyers" are essentially other printing companies. They are contrasted to "Financial Buyers," which are companies or individuals who buy for the purpose of building and operating a company for the short term, but principally for the purpose of obtaining an extraordinary return on investment when the company is resold.
These buyer-initiated overtures will mostly be limited to the mega-deal and strategic buyer categories. There will be some occasions where a local or regional company CEO—recognizing weakness or desirability in a competitor—will pick up the phone and ask to "have lunch." Targets that respond positively to these overtures will need immediate valuation advice and prepare an information package for the buyer.