M&A Activity -- Expect a Surge in Mergers

Profitable Company Valuations

Sellers are best served by seeking a professionally prepared market valuation for their company. These valuations, among other things, will be based on current market conditions and prices paid in comparable transactions.

A professionally prepared valuation will also examine the valuations placed on selected publicly traded printing companies. It will use capitalized earnings analysis to estimate the value of the seller's company by capitalizing current earnings (usually the trailing 12 months). The valuation will also seek to "normalize" earnings by adding back to or adjusting earnings for cost that disappear if the company is sold. These addbacks can include excessive owner's compensation, non-performing family member compensation, excess rent paid for plant real estate held "off the books" by the shareholders, the effect of equipment operating leases and other non-recurring expenses that presently depress earnings.