Are You 'Equipped' to Sell?
It’s only natural for printers to take pride in their equipment—the tried-and-true machines that helped to make their companies what they are today. But, when the time comes to sell the business, it’s also time to start looking at the machinery through different eyes.
Think about what a potential buyer sees when touring the production department. Are the presses old or relatively new? What are they being used for? How well maintained do they look? Above all, are there more of them than the plant has the workload to keep busy?
When it comes to equipment, our advice to selling clients always is: have empathy for the buyer. Redundant, underutilized equipment gives the impression that the plant is not being efficiently run—an impression that no seller wants a buyer to come away with. Unfortunately, the “hoarding mentality” that prevails at some plants can make the conclusion hard for a buyer to avoid drawing.
A visiting buyer who finds an idle press sees excess capacity and a depreciating asset—and a possible red flag against going any further with the acquisition. The buyer will also be inspecting the equipment for age, automation and condition, mentally calculating how much additional capital investment would be needed in the aftermath of a sale. We have seen more than one deal short-circuited by negative reactions to equipment on the buyer’s part during these walk-throughs.
Newer, efficient and properly maintained equipment in a clean, well-organized plant encourages buyers. Careworn presses that aren’t being utilized at least 75 percent of the time concern many buyers. If they perceive a mismatch between the capacity a plant has and the revenue it is generating, the deal may be jeopardized—or at very least, executable only on terms that penalize the seller for keeping old and/or unnecessary iron on the floor. Look at your mechanical inventory with the cool, critical eye of a potential buyer, and act accordingly.
If you have something that isn’t being fully utilized, sell it off or replace it with one piece of new or newer machinery that can do the work of two or even three copies of the outmoded hardware. Today’s equipment generally is much more productive and reliable than earlier models, and “backup” machines often are no longer necessary. More efficient equipment will give you—and your buyer—all the capacity that’s needed to handle unanticipated spikes in demand.
When discussing equipment with a selling client, we often recommend doing a certified appraisal for valuation. It’s always a good idea to have this information readily at hand. A buyer probably is going to need an appraisal in order to obtain bank financing, and if you can present one that is recent and from a qualified source, the buyer may decide to save time by accepting it.
A seller will also benefit from an appraisal in a tuck-in sale scenario (a deal in which the buyer acquires only sales accounts and few if any of the physical assets). The overall value to the seller is then based on both the sales and the total value of the physical assets.
Printers like to accumulate equipment that works well for them—it’s the nature of the occupation. In a selling situation, however, clinging to your old machines could make them work against you. Plan now to equip—or de-equip—your company for a smooth and profitable sale.