Mergers & Acquisitions

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.

Acquiring or being acquired by another company can be a long, drawn-out and distracting process in which the proverbial cat can be hard to keep in the bag. With the guidance of a professional M&A adviser, you can be sure of what to say, when to say it and whom to say it to.

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.

It's likely that from now on, organic growth is going to be difficult for most printing companies. The opportunity to grow by acquisition still exists, but not necessarily in the ways that were the norm when the industry consisted of two or three times as many firms as it does now. Tuck-ins are an adaptive response to profound changes in the M&A landscape—and, when managed properly, the key to enabling serious buyers and sellers to get what they want.

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.

What determines your strategy for an acquisition? There are as many situation-specific answers as there are printing companies, but our buying clients at New Direction Partners usually have one or more of the following objectives in mind. Some are more relevant to tuck-ins (where only customer accounts are acquired) than to sales as going concerns, and vice versa. But, they’re all good examples of good reasons to proceed.

It’s possible to muddle along without a written business plan, and unfortunately, that’s what many printing companies do. But, at the M&A stage—a stage that New Direction Partners believes all printing companies will reach eventually—the absence of a business plan makes it all but impossible to move forward with a deal.