Pick What You Want—and Go for It
"Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?"
That's the challenge that Steve Jobs laid down before John Sculley when he offered the PepsiCo executive the CEO spot at Apple in 1983. Jobs was urging Sculley to get specific about the vision of the future he wanted for himself, and motivating him in that way turned out to be a huge win for everyone. In his 10 years in the role, Sculley took Apple's sales from $800 million to $8 billion.
There's a lesson here for owners who have decided to grow their printing or packaging companies through strategic acquisitions. Knowing from the get-go exactly what you want to accomplish by purchasing another firm puts you in a winning frame of mind and increases the acquisition's likelihood of success. At New Direction Partners, we know that when a prospective buyer comes to us with a clear picture of the kind of company he or she wants to buy, we can zero in that much more quickly on candidates that will be complementary or accretive to the buyer's present business.
As a buyer, you may see an acquisition as a shortcut to gaining a production capability you don't have or to creating a footprint in a territory where you don't currently operate. Your decision may be driven by a wish to better support certain key customers. Or, you may simply want to add sales volume that you can't achieve organically. Whatever the motivation, the more detail you can give your M&A advisor about how you expect an acquisition to serve your purpose, the straighter the path to the desired outcome will be.
Example: a client of ours in the Southeast had some major accounts in an adjoining state that could be difficult to service because of the distance involved. The buyer's idea was to acquire a satellite plant in that area with exactly the type of equipment that would be needed to run the customers' jobs locally. He gave us a complete set of machinery specs—make, model, format size, number of colors, coater type, and so on—to use as a search criterion. We found a company with just such equipment, but the benefits of the acquisition didn't end there. The buyer also picked up an additional $6.5 million worth of business in accounts from the seller that now belonged to him.
Further up the East Coast, we worked with an owner who generated most of his sales through Internet storefronts. Overnight shipping to the West Coast was the issue, and this client had a specific city in mind as the location for the regional plant he wanted to establish through an acquisition. Like our client in the Southeast, he insisted that the candidate have a machine with very specific characteristics—a requirement that, along with the geographic preference, helped us to narrow the search considerably.
It took a bit longer than anticipated to close a deal with the candidate we found, mostly because the company's owner hadn't been thinking about selling at the time we first approached him. But, once we were able to show the owner why being exactly what our client wanted made the moment ideal for him to sell, negotiations proceeded to a profitable conclusion for both parties.
Printing and packaging firms don't operate in the same style or on the same scale as a company like Apple. But, they can act with the same clarity of intention that Jobs inspired in Sculley when it comes to making decisions about the future direction of their businesses. It's fundamental to the success of M&A planning. And, it beats selling sugar water.
About New Direction Partners
New Direction Partners (NDP) is the print and graphic communications industry’s leading provider of advisory services for firms seeking growth and opportunity through mergers and acquisitions. NDP assists its clients by giving them expert guidance and peace of mind at every stage of the process of buying or selling a printing company. Services include representing selling shareholders; acquisition searches; valuation; capital formation and financing; and strategic planning. NDP’s partners have participated in more than 300 mergers and acquisitions since 1979. Collectively they possess over 200 years of industry experience with transactions in aggregate exceeding $2 billion.
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