What Buyers Want

-- graphic arts online, 12/1/2000

Even though purchase prices have declined overall, owners of printing companies with the right mix of attributes may still command a high price for their businesses. What are buyers willing to pay extra for? How can printers ready their firms for sale?

According to Harris M. DeWese, a principal of Compass Capital Partners, companies that exhibit all of the following characteristics may command an above-average purchase price:

1. Quality management that is willing to stay on.
2. Absence of unionization.
3. Good earnings history over the last three to five years, but are particularly focused on the trailing 12 months' earnings.
4. Reasonably new equipment. "Buyers don't want to immediately make a lot of capital expenditures following the purchase. Consequently, they prefer to purchase companies with well-maintained facilities, advanced digital prepress, and computer-to-plate production," notes DeWese.
5. A stable, well-managed sales force.
6. Balanced account concentration. "Buyers don't want to see a huge percentage [above 20%] of business generated from one major account or salesperson," says DeWese.
7. An absence of environmental problems, pending safety actions, OSHA dangers, safety problems, or unresolved litigation.
8. Financial statements audited by an independent accounting firm.
9. A motivated seller.

Adds consultant Ted Burbank, preparation is the single most important ingredient in maximizing the sale price. Burbank, the president of the Burbank Group, Inc., Shrewsbury, Mass., a provider of valuation, marketing, and sales assistance, says, "As with most projects, the quality of the preparation in large measure determines the quality of the results."