As 2014 winds down, it's satisfying to report that the year has been a mostly good one for mergers and acquisitions in the printing and packaging industry. Looking back, we can see that a normal level of M&A activity has returned to the industry and that—assuming we get no more shocks from the general economy—opportunities for dealmaking will carry over into the year ahead.
When a buyer and a seller reach the letter of intent (LOI) stage, they'll have agreed that the potential fit looks good and that due diligence—the research phase that structures and certifies the transaction—can begin. In this post, we'll review the steps the seller should take once both parties have signed the LOI.
A favorable economy, record stock prices, low interest rates...at long last, all the right stars have aligned around M&A activity, and there’s no reason to think that the stepped-up pace of dealmaking will slow down anytime soon. We are seeing strong interest among private equity players, as well as strategic buyers. Private equity firms are attracted to growing entities that offer platform opportunities.
It’s a great time to sell a printing or a packaging business. But, as favorable as market conditions may be, is it your time? There are a number of other things to consider before you hang out the "for sale" sign.
In the first part of this discussion about what motivates owners of print and packaging companies in transacting mergers and acquisitions, we noted that every buyer and seller needs to have a clearly defined “why” in mind whether a deal is on the horizon or not. Now, let’s address what drives the thinking of buyers who are actively pursuing acquisitions.
Companies that achieve new capabilities by educating and re-equipping themselves at trade shows shouldn’t keep their progress a secret. Whether your aim is to be attractive as a seller or credible as a buyer, you’ll want your company to be known as one that’s able to deliver whatever its customers want to buy, especially when those products fall outside the definition of traditional print manufacturing.
Keeping things to yourself in an M&A transaction may seem the most natural and commonsense behavior in the world—a rule that literally goes without saying. But, no matter how seriously we take confidentiality, it’s a rule that’s prone to being broken in the stress and distraction of transferring ownership of one company to another. When this happens, the consequences can be messy.
For a long time now, the U.S. Army has been recruiting volunteers with the slogan, "Army Strong." When we speak of M&As in the printing and packaging industry, the thinking behind "Army Strong" should remind us that growth by acquisition can be a strategy for sellers, as well as for buyers.
Never give up hope of organic growth, even if it has been a long time since you last diversified your product and service offerings. To accomplish it, do your homework and find a way to set yourself apart from the competition.
You shouldn’t think about “campaigning” in the M&A marketplace unless, and until, you have a firm handle on your company’s valuation. New Direction Partners has performed more valuations in the printing industry than any other consultancy, and that experience has taught us to identify a number of factors that enhance a company’s value.
