What’s My Motivation?
• Increase equipment utilization. If your plant has excess capacity, selling off idle presses yields no economic benefit—prices for used equipment are just too low nowadays. Filling underutilized machines with jobs from acquired accounts makes them productive and profitable again.
• Increase profitability through scale. Incremental business—non-overlapping work brought into your plant from the firm you’ve acquired—helps you cover your budgeted hourly rates, build up your EBITDA, and drop more money to the bottom line. Clients of mine have made great gains in profitability by folding in incremental work in this way.
• Reduce dependence on a few top customers. Account concentration is dangerous. Expanding your book of business with acquired accounts helps to alleviate it.
• Expand service offerings; penetrate additional verticals; add new technologies. They’re important evolutionary steps for your company to take, but starting them from square one can be costly and time-consuming. Instead, you can bring them into the picture ready-made with a well planned acquisition.
• Show customers you are in growth mode. In business, perception is reality, and the printing company that’s perceived to be on the move through business expansion will be more impressive to customers than competitors that are standing still.
• Solve internal succession challenges; replace expected attrition. When people in executive management and key technical positions retire, who will be there to fill the ranks? For many companies, a combination of home-grown and acquired talent is the best answer.
• Attain intellectual capital. The “soft” assets of skill, creativity, and work ethic are as crucial to the future of your business as any piece of equipment. One criterion in your search for an acquisition candidate should be the availability of star performers you can recruit for your team.
We’ve said it before, and we’ll repeat it here: in the printing Industry today, you either need to be a buyer or a seller since organic growth has become very difficult for most printers to achieve. That’s one big reason “Why” every printer needs to be acquisition-minded. We’ll address more “Whys” (and some equally urgent “Why Nots”) in discussions to come.
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.