SOURCE - The Target Report

We are inundated with printed images. While the steady decline of newspapers and other forms of print gives a general societal impression that print is a dying industry, the truth is that we are surrounded by more print in more places on more things than ever before. The use of printed images in our environment has proliferated. Vomela

Enabled by continual development of digital print technologies, almost everything we use has images printed on it in one form or another. Just about anything we can imagine being printed, can be printed, and is. Online ordering systems drive evermore printed editions of one. (For more see: The Target Report: On-Demand Print & Merch is BIG Business for Private Equity – November 2024.) In our malls and shopping centers, entire retail environments are created, and recreated, again and again, in short time, with the use of printed graphics. Cultural venues, such as museums, are rich with graphic displays that keep up with the times and changing exhibitions. Tall buildings are wrapped and draped. Vehicles of every sort carry branding and messages.

Private Equity Investors Believe in Print

About ten years ago, one of the leading partners in a well-known PE firm that invests in the lower end of the middle market told me that they would not even consider an investment in a company that provided marketing-related commercial print services. Too risky. Old technology. Messaging is moving online. No potential for meaningful returns.

Vomela

What a difference a decade makes. Print has evolved into a multi-faceted visual communication industry that eagerly applies graphics to almost every surface in any location, with incredible images, rendered in high fidelity, and in quick order. In January, that same PE firm, The Riverside Company, announced its investment in The Vomela Companies. The smart money has rediscovered print, or as it is now more accurately described: visual communications, or specialized graphic solutions, or visual solutions, and other such non-print monikers.

Visual Communications on the Move

The Vomela Companies, as a whole, represent an incredible range of printed graphic capabilities. The company’s slogan is “Big Ideas, Any Surface, Any Scale.” The company is now comprised of multiple divisions, with over 1,300 employees and more than 20 locations across North America.

Core to the company’s success over the past several decades has been its transportation group. The division prints and installs graphics on fleets of trucks, motorcoaches, trains, buses, delivery vans, and cars. Founded in St. Paul, Minnesota, in 1947, Vomela enjoyed a close relationship for many years with the 3M company, specifically working together in the development of techniques to print on pressure sensitive vinyl stocks and die cut unique shapes for custom decal applications. According to company history, the 3M company was the major customer of Vomela and dominated its manufacturing capacity for two decades up to the early 1980’s. That relationship led Vomela into the fleet business, for which it provided decals for truck fleet marking as well as specialized decals for the automotive and motorcoach markets as an OEM supplier.

In concert with 3M, Vomela’s dedication to develop durable custom decals for the automotive manufacturers gave many cars a unique style that was only achievable by the application of printed graphics. There were, of course, the usual racing stripes and big bold lettering, but some decals went much further, became iconic emblems, and defined a brand.

READ MORE

SOURCE - The Target Report

From Printing to Print Management to Business Process Outsourcing

Printing companies increasingly seek to diversify their service offerings via acquisitions of companies that support their customers’ communication needs outside of print. However, despite the increasing use of electronic media, print remains one of the critical channels in today’s messaging mix. Print-centric companies that proactively grow via an M&A strategy go back and forth, shifting directions, alternately completing transactions that bring in additional print volume, and then subsequently acquire a company with services that are adjacent to print, but not core to the mission of putting ink on paper.

RR Donnelley is Back in the Acquisition Game

In late December, RR Donnelley (RRD), now owned by Chatham Asset Management, announced its second big deal of 2024, the acquisition of Williams Lea. The deal is a classic example of “if you can’t beat ‘em, join ‘em,” or more correctly “buy ‘em.”

The acquired company, based in London, is one of a handful of firms that have successfully placed themselves firmly between printing companies and their large enterprise-level customers. As the intermediary between printer and customer, these firms purport to drive competition between print providers more effectively than can be achieved if the corporations leave print buying to their own internal staff.

The CEO of RRD noted that the acquisition of Williams Lea aligns the company’s strategy to build on their business support offerings to achieve their “vision of the Digital, Creative and Business Support Services segment.” The combination will enable their clients to “maximize their own customer engagement strategies and streamline their business operations.” No mention of acquired print volume.

For Williams Lea, the acquired company, the transaction is a full-circle return to its printing roots. German immigrant John Wertheimer came to London in 1820 with a letter of introduction to a member of the wealthy Rothschild family. Wertheimer used the resultant connections to start his printing business under the moniker Wertheimer & Co. Products produced were traditional printed items including books, stationery, and publications. With its German and Jewish roots, the company specialized in foreign language translation and printing, including Hebrew and German, a fact with subsequent impact on the company’s fortunes.

In 1864, the same year that Richard Robert Donnelley started his printing business in Chicago, John Edward Lea joined the London printing company, and the name was changed to Wertheimer Lea & Co. to reflect the new ownership. In 1884, a partnership was formed with John Henry Williams, a year after Wertheimer’s death. With the outbreak of the First World War, amid the anti-German sentiment in Britain, the Wertheimer name was dropped, and the firm’s name was changed to Williams Lea.

READ MORE

Article by: Dan Marx

With so much going on in wide-format mergers and acquisitions, now is a good time to take a closer look at the trends driving the space and what to expect in the coming months. We sat down with Mark Hahn, senior managing director and founder, Graphic Arts Advisors, to get his perspective on what wide-format printers need to know about M&A activity.

Looking at the M&A activity you’ve seen this year, what would you say are a couple of overarching trends in the wide-format space?

Hahn: One trend we’re seeing is that the number of tuck-ins — where the book of business is moved to the buyer’s plant — has increased greatly in the past year. This is because the wide-format segment generally is maturing, so there’s more competition, increased margin pressure, less expensive equipment is widely available, and differentiation happening, particularly over the past few years. Also, we have people who entered at the start of the digital wide-format era who are now looking to exit. We’re also seeing that the number of transactions went up — and a geographic aspect is involved. Several buyers say they want to expand geographically. Finally, we saw an increase in non-bankruptcy plant closures, which is something we’ve not seen before in the wide-format segment.

As the wide-format segment has become more saturated, do you still see wide-format businesses as being strong attractive acquisitions for, say, commercial printers?

Hahn: Yes. Similar to what we see in commercial, the more differentiated a wide-format business is, the more attractive they will be. If they’ve figured out how to serve a niche market — event graphics for instance — then they may be really good at what they do. Another example would be a company doing installations, urban installations, or managing the process. That’s niche expertise. Also, scale and profit remain a strong factor.

To what degree do you see the effects of industry convergence as driving either mergers or acquisitions in the wide-format space?

Hahn: It’s been critical, and it’s one of the reasons commercial printers are looking for more profitable segments. Another example we’ve seen is the convergence between the reprographic and wide-format spaces. Convergence is blending what were previously distinct segments.

How do you see the transition to a new Presidential administration affecting print industry M&A activities in the near term?

Hahn: We have had one transaction that was not completed — the offer was withdrawn — based upon the election, based on the belief that economic conditions will be unsettled. Another shop cited the election for a dramatic decrease in mail volumes and inquiries over the last week, though others are seeing an increase. It’s similar to COVID — the change is likely to impact companies differently based on the clients they serve. Regarding tariffs, they look to be highly inflationary. That’s what I’ve read. Immigration policy may also have a significant effect. The labor outlook seems to have improved, but that could change.

For companies looking to acquire or be acquired in the next year, what is one thing they can do today to better ensure that quest?

Hahn: It’s different on the two sides [of the transaction]. If you want to acquire, you need to have clear goals, a strong balance sheet, have your team in place, and engage a transactional attorney. For companies on the sell side, it’s important to have solid profits, strong revenue, and not have problematic sales concentration. Disciplined and consistent financial reporting is very important on the sell-side.

SOURCE - The Target Report

The future of print will increasingly be individually customized with the images we want, delivered wherever we want, printed on demand when we want, and applied to whatever products we choose  – The Target Report, May 2021.

This inexorable trend has accelerated in the Covid and post-Covid periods. Initially, social distancing and the ease of online ordering was a factor, as was the desire to spruce up our personal at-home spaces with personalized décor. Going online first to order unique items is now often the go-to first response, picking up the phone and engaging in personal interaction a comparative nuisance. Ordering many types of printed items is no exception.

Building a robust and efficient online system has increasingly been accomplished with the support of well-heeled private equity funds seeking the higher margins possible with the scale and automation obtainable in an online environment. 

Two Online Print Businesses Merge, Different Models Remain 

Printful and Printify announced on November 5th that the companies will merge in what is being billed as a merger of equals. By the 20th of the month, the shareholders and regulatory authorities had indicated final approval of the transaction, and the new executive team positions were announced. The Printful CEO will be the new CEO of the merged company, taking the top position, while the Printify CEO is now the President and Head of Platform. The two brands will continue to operate separately, at least for now, with the name of the holding company still undetermined.

Both companies are providing what is known as white-label services to hundreds of thousands of independent resellers of on-demand printed products. In a white-label business, the manufacturer produces products that can be sold under the reseller’s brand. Designers offer unique products under their own name, logo, and brand identity, never revealing that the product was made by others. With the white-label strategy, the two sites support a thriving network of online designers and retailers, many of which self-identify as being part of the “Print-On-Demand Community. When the merger was announced, the influencers on YouTube that act as self-appointed print-on-demand consultants were all in a dither about the merger, but they quickly coalesced in a near unanimous and positive opinion that the merger was good for the Community.

READ MORE

Source - The Hyde Opinion

Your Money -Who Wants to Know? Balancing Disclosure and Risk in Printing Industry M&A

Imagine you are buying a house, and the seller demands to know your remodeling plans and projections for future resale profits. In residential real estate, that request would likely be met with skepticism.

However, in the world of mergers and acquisitions (M&A), especially within the graphic arts and printing industries, sellers often expect a deeper look into a buyer's plans. Why? Because M&A deals often involve complex payment structures, such as earnouts, royalties, equity rollover, or contingent notes, all of which make the seller a future stakeholder in the buyer’s success. If the seller will be leasing property to the buyer or remains employed post-closing, their interest in the buyer’s financial health becomes even more justified.

Why Sellers Want Buyer Information

When sellers are offered performance-based consideration rather than guaranteed money, their future asset monetization depends on the buyer’s success. Therefore, they reasonably want to evaluate the buyer’s financial viability and growth plans to ensure that the business strategy is sound and that the buyer can fulfill their obligations.

Common questions asked by sellers include:

• Does the buyer have sufficient ability to finance future capitalinvestmentsto grow the business?

• What’s the buyer’s transition plan?

• Does the buyer’s bank agree with projections for consolidation savings?

• How much working capital will be required post-acquisition?

Earnouts and All-Cash Deals

The choice of payment structure significantly influences the level of scrutiny from the seller. When an all-cash deal is on the table, the seller typically has no stake in the future business performance, reducing the need for in-depth buyer disclosure. The transaction is straightforward—the seller gets paid, and the buyer takes on full ownership risk.

However, all-cash deals are rarely available to sellers in the absence of stellar financial statements or a deep discount to fair market value. A word of caution for sellers: requiring an all-cash deal is an invitation for low offers. That’s because customer retention risk is inherent to printing industry M&A. Sharing of the customer retention risk is usually in the seller’s best interest to entice the highest possible offer. It is the role of the M&A advisor to balance the price and structure of the transaction to fairly allocate performance-risk.

Given that most acquisitions involve some form of risk-sharing, sellers want to know that the buyer’s plans  are feasible to achieve. Sellers want to assess the probability that performance-based consideration will actually be received.

The Value of Financial Transparency

As a buyer, it may be tempting to push back on seller requests for financial information but sharing select details early in negotiations can build trust and smooth the path to a successful deal. Buyers who provide financial statements, demonstrate creditworthiness and show strong supplier relationships can reassure sellers of their ability to deliver on future payments.

This mutual disclosure fosters a partnership mindset, where both parties are committed to the success of the deal and the post-M&A closing transition.

Planning for Financial Disclosure

Buyers can increase their chances of success by preparing financial documentation in advance. This homework includes consulting with their bank to confirm financing readiness and securing a solid credit rating. By being proactive, buyers signal seriousness and professionalism, which can lead to more favorable deal structures and stronger negotiating positions.

Financial transparency between buyers and sellers is the norm in graphic arts and printing company mergers and acquisitions, especially when earnout provisions or other risk-based payment structures are involved. Both sides are advised to share key financial details to build trust and ensure a successful acquisition. Buyers and sellers alike need to be prepared for two-way financial disclosure, helping them navigate M&A transactions with clarity and confidence.

Ultimately, the more informed both parties are, the higher the likelihood of success for both buyer and seller. Seller Financial Transparency in Printing Industry M&A

GAA found both buyers and put the complementary deals together in a managed process that was completed, from start to finish, within 60 days. Sunset Printing of Wharton, NJ, acquired Artcraft’s print, letterpress, and engraving customer business, while CFS of Norton, MA, purchased Artcraft’s promotional products business. GAA then brought in the auction firm Thomas Industries to sell the legacy entity’s manufacturing equipment.

“Artcraft was a unique project in that the company had two distinct lines of business,” commented Michael Wurst, GAA Managing Director, who served as lead advisor to Artcraft. “The key was to find buyers for each line of business who were flexible and willing to collaborate with each other to sort out the few overlapping clients and establish ground rules for cooperating into the future.” 

“We have known Mark Hahn of Graphic Arts Advisors for years,” said Rob Wainer, President of Sunset Printing. “Mark understands Sunset’s unique business, and he knew this opportunity was a great fit for our company. GAA partners Michael Wurst and John Hyde came into the picture as needed and they worked closely with our internal and hired advisory team to navigate the challenges that were discovered along the way. They quickly moved this forward towards the closing, with a positive outcome for all involved.”

About Graphic Arts Advisors:

Graphic Arts Advisors, LLC is an M&A advisory and consulting firm focused exclusively on the printing, packaging, mailing, marketing production services, and related graphic communications industries. Graphic Arts Advisors publishes The Target Report, a leading monthly trade commentary and overview of industry direction based on publicly reported transactions. Graphic Arts Advisors is headquartered in Mountain Lakes, NJ, with advisors throughout the US.

For more information, please visit https://www.graphicartsadvisors.com/.

Contact:

Mark Hahn

Senior Managing Director

Graphic Arts Advisors

mark@graphicartsadvisors.com

973-588-7399

When it comes to buying and selling your printing or sign business, both you and the buyer must decide whether to structure the deal as an asset sale or a stock sale. These two different approaches to transferring ownership have implications for both the buyer and seller. This article will give you an overview of the differences and highlight the pros and cons for buyers and sellers. These transactions are complex, so it’s best to consult with professionals who can provide you with tax or legal advice based on your specific situation.

Let’s take a closer look at each method to see some advantages and disadvantages.

What is an Asset Sale?

Asset sales are sometimes characterized as cash-free and debt-free purchases. In an asset sale, the buyer purchases specific assets of the business, such as its equipment, inventory, and contracts. This type of sale generally won’t include cash (outside of working capital needed to maintain the operations of the business) and the seller typically pays off any debt obligations at closing. There can be some significant tax and legal advantages for a buyer in an asset sale. The trick is how the total purchase price is allocated as usually the high percentage of the sale is goodwill which usually favors the seller tax wise.

Advantages of an Asset Sale

• Flexibility: A buyer can pick and choose which assets and liabilities they want to purchase or assume. It’s all negotiable.

• Liability: The seller is generally responsible for any warranties, legal issues, and liabilities prior to sale which mitigates risk for a buyer.

• Taxes: A buyer can benefit from the ability to “step up” the tax value of the assets they purchase and re-depreciate.

Disadvantages of an Asset Sale

• Complexity: A buyer will have to spend time negotiating specific assets and liabilities they purchase and retitling those assets in the name of the buying entity can be an arduous process.

• Employees: In an asset sale, employees don’t technically come with the business. The process usually involves having to terminate and rehire them and, if not handled properly, key employees may be at risk of leaving. This can be avoided if the seller lets his employees know that the company may be sold.

• Approvals: A buyer will need to obtain approval from third parties, such as landlords or creditors, to transfer the assets; and all licenses need to be either newly applied for or transferred to the new owner.

  
  

What is a Stock Sale?

Stock sales are often easier with respect to integration because the buyer is purchasing ownership (shares or membership interest in the case of an LLC) in the legal entity that owns the business. In effect, the buyer becomes the seller. This does come with some legal challenges for the buyer as the buyer will be responsible for any trailing liability the seller may have, so be extra careful in due diligence.

Advantages of a Stock Sale:

• Taxes: A stock sale generally provides tax advantages for a seller.

• Simplicity: A stock sale is also considered a simpler transaction because the buyer is purchasing the entire entity. Essentially, they become the seller, which means they don’t have to mess with rehiring employees or retitling and renegotiating licenses and contracts unless there is a change in control clause.

• Contracts: Contracts that are difficult to re-negotiate, such as those with the government, will often drive the decision to go with a stock sale.

Disadvantages of a Stock Sale:

• Lack of Flexibility: A stock sale may not provide the buyer with the same level of initial flexibility over the business as an asset sale because they simply step into the seller’s shoes.

• Liability: The buyer inherits the company's trailing liability in a stock sale and will receive any past legal or tax liabilities along with it.

• Taxes: In a stock sale, the assets are often fully depreciated, and a buyer won’t receive the “step-up” tax benefit.

In conclusion, choosing the structure of the sale can have significant tax and liability differences. Whether a stock sale or an asset sale, both buyer and seller should consider the advantages and disadvantages of each method and consult with professional advisors—transaction attorneys, accountants, and a Mergers & Acquisitions advisor —to determine the best approach for their needs.

In our industry, a high majority of printing/sign company sales are asset sales except for sales to their family members, employees or if there are contracts that may be in jeopardy if there is a change in the company structure.

Mitch Evans is a management consultant and trusted advisor who works with graphic company owners, CEOs, and entrepreneurs. Mitch is a managing director at Graphic Arts Advisors LLC which specializes in Mergers & Acquisitions (valuations, buying and selling, mergers and non-bankruptcy orderly wind-downs). Mitch is also a partner with Mike Kind in The Next Level Group which facilitates formal top executive peer groups for leadership, business growth, including revenue growth, improved internal efficiencies, and greater profitability. Please contact him at mitch@graphicartsadvisors.com or call 561-351-6950.

SOURCE - The Target Report

It didn’t take long. The ink was hardly dry. International Paper’s shareholders had just approved its acquisition of DS Smith, the UK-based manufacturer of corrugated case materials and related fiber-based products. Only days before, DS Smith had obtained its own shareholders’ approval to proceed with the deal. Within the following week, International Paper announced the closure of no fewer than six facilities, spread out from North Carolina to Texas, mostly in the corrugated box segment. The job of rationalizing the total combined production capacity of the merged operations was clearly underway in advance of the deal’s consummation. Unlike many plant closures in the paper manufacturing industry, we view these changes as a signal that the demand for corrugated packaging products will remain strong. Consequently, International Paper is positioning itself as a leading global player in the segment. (For more, see: The Target Report: Paper Manufacturers Shift Grades – April 2024.)

International Paper Gets Lean Before Merger with DS Smith

Five months into the job, new Chairman & CEO Andrew Silvernail continues to shake up things at International Paper as restructuring, cost-cutting, and workforce reductions continue. The mega US-based pulp and paper company seeks to expand its European presence, cementing its position as the world’s largest paper giant (by revenue) at a time of consolidation in the paper industry. Fiscal-year revenues are expected to exceed $18.8 billion for 2024. When combined with DS Smith, International Paper’s pro-forma annual revenues are projected to be approximately $28.2 billion, with 90% of sales coming from corrugated products. International Paper is permanently shutting down facilities in six states: two packaging plants in Rockford, Illinois, and Kansas City, Missouri, respectively; two corrugated container plants, one in Statesville, North Carolina, and the other in Cleveland, Tennessee; one corrugated sheet feeder plant in San Antonio, Texas; and a cellulose pulp mill in Georgetown, South Carolina. The combined result of the recently announced mill closures is an expected $230 million improvement in adjusted earnings.

Additionally, some 400 people at its Memphis headquarters are being let go. In all, 989 employees face being without their jobs by mid-December – that number represents about 2.5% of the company’s workers in 35 states and 10 countries worldwide. These moves follow another 900 layoffs announced 13 months ago, when a containerboard mill in Texas was closed and two pulp machines (one North Carolina and the other in Florida) were retired.

READ MORE

MOUNTAIN LAKES, NJ, November 5, 2024 - Graphic Arts Advisors (GAA), a leading M&A advisory and consulting firm serving the printing, mailing, packaging, and graphic communications industries, is pleased to announce the recent acquisition of Direct Mail of Maine by its client, DMM Direct LLC. The M&A buyer is led by print & mail industry veteran Kevin Mullaney of PDF Print Communications, Inc. and backed by highly experienced sales and financial executives.

Kevin Mullaney, CEO/President of PDF Print Communications, Inc., shared his enthusiasm about the acquisition. “I am very excited to have the former customers and employees of Direct Mail of Maine, Inc. as part of the PDF Print Communications family. I think it’s a great fit for us and our diverse client base. It would never have been possible without expert guidance and direction from John Hyde and Mark Hahn of Graphic Arts Advisors.”

Due to the challenges that Direct Mail of Maine was experiencing, the strategic acquisition by DMM Direct LLC was structured as a secured party sale under Maine law. “Speed is a key differentiating factor in M&A transactions when the seller is facing financial challenges,” noted John Hyde, Esq., GAA Managing Director - Special Situations, who developed the overall transaction blueprint and led the negotiations as M&A Advisor to DMM Direct LLC. “The company’s senior lender had pushed the legacy entity, Direct Mail of Maine, Inc., to the brink. We worked start-to-finish in just three weeks to put a deal together with the bank. The result was that the business was salvaged and now continues to serve its many long-term customers.”

About Graphic Arts Advisors:

Graphic Arts Advisors, LLC is an M&A advisory and consulting firm focused exclusively on the printing, packaging, mailing, marketing production services, and related graphic communications industries. Graphic Arts Advisors publishes The Target Report, a leading monthly trade commentary and overview of industry direction based on publicly reported transactions. Graphic Arts Advisors is headquartered in Mountain Lakes, NJ, with advisors throughout the US.

For more information, please visit https://www.graphicartsadvisors.com/.

Contact:

Mark Hahn

Senior Managing Director

Graphic Arts Advisors

mark@graphicartsadvisors.com

973-588-7399

Published in NPSOA Magazine - August 2024

At some point, you as the owner of your print/sign business will have to transition your business. Making sure your business is properly presented both on paper and in person, will get you a higher value. Even if you are transitioning within the family or to a key employee, you need to prepare properly for that sale. Also, if your horizon for selling is years ahead the tips below should be heeded.

1) Clean up your financial statements. I am always amazed at how poor financial records a majority of print/sign businesses keep. The number one item that a buyer analyzes is your financial performance which your financial statements tell the story. Make sure that your profit and loss statement is set up to easily view your business. Expenses should be categorized by cost of goods sold, payroll and general overhead or operating expenses. Buyers want to know your gross margin, your payroll as a percentage of sales and also what are your fixed costs. Make sure that your expenses are correctly categorized and are detailed enough so a buyer doesn’t have to question what goes into each category. If your balance sheet shows any assets for employee or owner accounts receivable or liability for outstanding owner loans, get these cleaned up.

2) Most importantly, make sure that your internal financials match your tax returns. I see too many issues where accountants make changes to the financials when they file taxes and the internal books are not adjusted to match. It’s usually best to file your taxes on an accrual basis vs. a cash basis. Yes, you may save money on your taxes if you file on a cash basis, this will catch up with you later as all you are doing is deferring income or prepaying expenses which will affect a subsequent tax year. Buyers want to see your financials compiled on an accrual basis as this accurately portrays what is really happening especially when in the years near when you are selling.

3) Sales should have a nice breakdown of the type of sales you record. For example, if you are a printer, a buyer wants to know the breakdown of digital printing vs. offset printing. They also want to know the sales breakdown in bindery, pre-press/graphics, mailing etc. A sign company should keep track of the different type of signs they sell. I recommend you also break out sales for graphic design, installation, permitting plus what you outsource. If you outsource a lot of your work, have a breakdown by category of what you outsource. For example, electric signs, routed/routed signs, trade show displays etc.

4) Keep good records of the order and sales history of your clients. The value of your clients is what buyers want. Good records of the clients’ sales history and order history should be kept. Normally, you don’t disclose the client names until you have signed a Letter of Intent but the buyer wants to know that you have good records so they can confirm the information they based their offer. Specific client information is provided during the due diligence process.

5) If your equipment is a high part of the value of the company, get an appraisal. Almost all selling owners believe their equipment has a higher value than buyers do. Use an industry expert to value the equipment vs. a local equipment dealer. A formal appraisal will also help the buyer if they need to get bank financing.

6) Get rid of any equipment that you don’t use at least once a week. I tour many shops where I see equipment that hasn’t been used for a long time. Sell it or if the equipment has little or no value, then dispose of it.

7) Clean up the shop. Buyers will want to tour the shop if they want to make an offer. Make sure its spic and span, looks organized and a pleasant place to work. Get rid of any obsolete inventory, old files, stuff your clients have you hold but will never use, etc. Make sure ceiling tiles are clean and don’t show old roof leaks. Make sure your outside and inside signage looks great. Part of your value is your brand and your image.

8) Let your key employees know you may be selling. I know selling owners are really scared to tell their staff that they are for sale. No one likes surprises. If an employee finds out you are selling and you haven’t told anyone, you look bad. Most employees won’t be shocked you are selling and they will support your decision.

9) If you have any special deals with employees end them. I had a deal go south right before closing because an owner had a special deal with one of his key employees where he deferred income so as to save his employee some taxes and was going to pay them off at a later date. He never told his employee that he was selling. The employee when he found out got concerned that he would not get paid plus it would change his tax situation. The buyer got concerned because the deferred compensation was not recorded which if recorded, reduced their profits on which they based their purchase price. I also see that owners sometimes pay the benefits of key employees a higher percent than the rest of the employees which is contrary to the law.

10) Make sure you track your inventory. Inventory is almost always sold along with the business and its value should be correctly recorded on your balance sheet. Too often, the balance sheet inventory is not correct or even close to the actual inventory. You can also add your work-in-progress inventory but only for the work actually done prior to the sale and valued at cost (materials and direct labor) and not the retail value.

11) Make sure you accurately track employee time off. Usually, the seller is responsible for any accrued vacation, sick or personal time off that have been accrued right up to the sale date. Keep good records and share them with your employees so everyone knows how much time they have left in time off with pay.

12) Keep good records on customer credits and deposits. Both of these are liabilities, and many owners don’t record these in their financial statements. Even if these are recorded, make sure they are accurate. If there are old credits that may never be used, delete them or else you will need to reimburse the buyer for them at closing. Also, any deposits you have on jobs or for postage will go to the buyer so make sure your books accurately reflect the amounts.

13) Make sure you know the tax implications when you sell. Speak to your tax advisor on what taxes you will or may have to pay when you sell. How the sale price is allocated and agreed upon between the buyer and seller makes a difference in taxes. Generally, sellers want as much of the sale allocated so they are liable for capital gain vs. ordinary income treatment.

14) Choose good advisors. Find a good M& A advisor who will help present your company in its best light, find the best buyer, negotiate a deal that you want and work with you right up to the closing. You will need an attorney to either review or prepare the contracts. Chose one who has experience in business transactions and also one that will work to make the deal work vs. be adversarial when the buyer’s attorney. Get a ballpark of the cost when you hire the attorney.

Mitch Evans is a management consultant and trusted advisor who works with graphic company owners, CEOs, and entrepreneurs. Mitch is a managing director at Graphic Arts Advisors LLC which specializes in Mergers & Acquisitions (valuations, buying and selling, mergers and non-bankruptcy orderly wind-downs). Mitch is also a partner with Mike Kind in The Next Level Group which facilitates formal top executive peer groups for leadership, business growth, including revenue growth, improved internal efficiencies, and greater profitability. Please contact him at mitch@graphicartsadvisors.com or call 561-351-6950.

SOURCE - The Target Report

As the commercial print industry continues to evolve, more printing companies are moving upstream into multi-channel digital marketing services to better serve their customers. Digital marketing services enable printing companies to escape the traditional printing company job‑shop business model and differentiate themselves from competitors that only print. As digital print engines of all types become ubiquitous, the integration of digital marketing methods with variable print campaigns is a natural next step for industry leaders who are thinking ahead. The right acquisition can prove to be the quickest and surest path to build out the desired diversity of services.

From Color Separators to Multi-Channel Digital Marketers

In September, Scottsdale, Arizona-based Artisan Colour acquired MarComm, a digital marketing agency that specializes in cross-channel marketing strategies and campaign integration. The company’s stated goal is to “dissolve the boundaries between print and digital to provide a unified approach where print and digital strategies are seamlessly integrated, data is leveraged across channels, and every touchpoint is optimized.” Services offered, in addition to the company’s traditional print-centric products, now include marketing strategy, CRM/HubSpot implementation, web design, SEO, content marketing, social media, and not to be ignored, integration of those digital marketing services with print.

According to the company’s website, the owners’ journey to the diversity achieved with this acquisition began at the end of the last century when their knowledge in the now extinct art of color separations gave them the confidence to start their own company. The color separation business led naturally to the addition of a full-service on-site photo studio. Combined with these services, color management expertise helped the company land the catalog production work for demanding high-end retail companies Neiman Marcus, Chicos, and Patagonia. In 2009, following the path of many color separation companies (or at least those that managed to survive the transition to digital imaging), Artisan Colour acquired Mighty Imaging, a local wide-format printing company. Digital sheetfed printing was eventually added, a necessary element needed to set the stage for the move into comprehensive integrated multi-channel marketing services.

READ MORE

Las Vegas, NV – September 20, 2024 – Amidst the evolving landscape of the print industry, industry executives and experts convened at the Printing United Expo to engage in an enlightening panel discussion on the current M&A market for companies in the print and graphics industries.

The session, held on September 10th, was moderated by Mark Hahn, Senior Managing Director at Graphic Arts Advisors. Hahn led an informative and robust conversation around various approaches when seeking acquisition opportunities, navigating the negotiation process and attributes sought when successfully approaching a strategic business acquisition.

The panel featured industry leaders Jennifer Pettinger, CEO/Partner of Sun Print Solutions in Salt Lake City, Matt Marzullo, President of Ironmark in Annapolis, and Michael Wurst, Managing Director at GAA. The panelists discussed a range of compelling topics, including the factors driving recent transactions, the timeline between a Letter of Intent and closing, the importance of a solid middle management team in place for sellers, and unique legal strategies employed during complex transactions.

The engaging and thought-provoking discussion encouraged dialogue, offering the audience an invaluable opportunity to gain a deeper understanding of the critical trends and strategies in mergers and acquisitions within the print industry. Attendee feedback reinforced the value of this event: “Great panel and very informative. My partner and I thoroughly enjoyed the back and forth.”

About Graphic Arts Advisors:

Graphic Arts Advisors, LLC is an M&A advisory and consulting firm focused exclusively on the printing, packaging, mailing, marketing production services, and related graphic communications industries. Graphic Arts Advisors publishes The Target Report, a leading monthly trade commentary and overview of industry direction based on publicly reported transactions. Graphic Arts Advisors is headquartered in Mountain Lakes, NJ, with advisors throughout the US.

For more information, please visit https://www.graphicartsadvisors.com/.

Contact:

Mark Hahn

Senior Managing Director

Graphic Arts Advisors

mark@graphicartsadvisors.com

973-588-7399

Over the past thirteen years, we have chronicled, logged, and commented on the merger and acquisition activity in several print-centric business segments, with special attention to commercial printing, packaging (labels, folding cartons, & flexible packaging), wide-format, and direct mail companies. At the end of August each year, rather than focusing on the prior month’s deal activity, we take a look back at the past twelve months. If past is prologue, and to a reasonable extent we believe it is, then we hope to provide a high-level macro perspective on what the deal activity tells us about where the industry is headed. Which segments have experienced more, or less, deal activity? What are the trends in the buyers’ rationale to complete these acquisitions? Are acquirers adding facilities to their networks, or opportunistically folding acquisitions into their existing facilities? What does all this tell us about the potential future transactional activity within each print segment?

At the end of August every year, we review, categorize, sort, count, and chart the data we have collected, comparing the trailing twelve months (“TTM”) with the same period of prior years.

During the Covid years, we extended our look-back time frame to bridge the pandemic. We thought that the longer time period was necessary, and used 2019, the pre-Covid year, to provide a benchmark across the chasm created by the shut down, so that we might know when the market has returned to normal. In our M&A practice at GAA, we have finally reached the point where we no longer have to do mathematical somersaults in order to extract the impact of Covid from our analysis (well, not entirely, there are still PPP loans and ERC credits salted into many financial statements, but less and less as each month goes by). The Covid years of 2019 to 2021 are fading into the distance in our rear-view mirror, and we have returned to our pre‑Covid practice of a three-year comparison in most of the charts presented here.

In pure numeric M&A terms, deal activity during the past twelve months was off 5.0% from the prior TTM period, which was in turn off 10.0% from the prior year. We identified 189 transactions of interest during the past twelve months; the lowest number we have tracked in any period since we began counting for our annual reviews in the autumn of 2016.

Last year at this time, the big question was whether the economy could ease its way down from the euphoric post-Covid bulge in demand. We noted that the classic signs of turbulence were in abeyance, and it appeared that the economy, and therefore by extension the printing and packaging segments, might navigate the turbulence and nail the elusive soft landing. We noted last autumn that not all was well in our industry, however, as paper manufacturers and distributors announced deals that further consolidated the industry. Some paper mills closed, and other mills converted from printing to packaging grades, portending another possible tightening of the paper market in the future. (See The Target Report: Is a Soft Landing in Sight? – September 2023).

READ MORE

Download a print friendly PDF of the full report here.

Wurst shared his passion for working through customer engagements, “My favorite aspect of working with GAA is how gratifying it is when we help a client achieve their goals.” In discussing his new role, Wurst noted that “after the whipsawing in deal flow created by the Covid pandemic, the current M&A market in the graphic communications industry

is now in a steady state. Sellers are returning to the market, ready to exit ownership, many with reasonable expectations. Buyers are eager to acquire businesses, both as operating entities and as tuck-ins, depending on the particular situation.”

In making the announcement of Wurst ’s new position, Mark Hahn, Senior Managing Director of GAA, noted “Michael has in excess of 40 years of experience in the print and graphic communications industry, both as the owner of a large commercial printing company and active participant in our industry associations. He brings his business and transactional experience to our clients, always with keen insights and a steady hand, guiding clients to successful outcomes. We are very pleased to recognize the significant value Michael provides to assist our clients to achieve their strategic and financial objectives.”

Wurst will be participating in a live panel discussion on Tuesday, September 10 at 11 am in conjunction with

the Printing United Expo 2024 trade show in Las Vegas, September 10 – 12. The event titled “Buyer’s View that

Drives Company Value in M&A” will be facilitated by Hahn with additional panelists Jennifer Pettinger, CEO/Partner of Sun Print Solutions in Salt Lake City, and Matt Marzullo, President of Ironmark in Annapolis.

Learn more online at PrintingUnited.com

The GAA partners will be attending all three days of the Printing United Expo 2024 show. They will be available for one-on-one confidential meetings during these days.

About Graphic Arts Advisors:

Graphic Arts Advisors, LLC is an M&A advisory and consulting firm focused exclusively on the printing, packaging, mailing, marketing production services, and related graphic communications industries. Graphic Arts Advisors publishes

The Target Report, a leading monthly trade commentary and overview of industry direction based on publicly reported

transactions. Graphic Arts Advisors is headquartered in Mountain Lakes, NJ, with advisors throughout the US.

For more information, please visit https://www.graphicartsadvisors.com/

Contact:

Mark Hahn

Senior Managing Director

Graphic Arts Advisors

mark@graphicartsadvisors.com

973-588-7399

MOUNTAIN LAKES, NJ, Aug 28, 2024 - Graphic Arts Advisors (GAA), a leading M&A advisory and consulting firm serving the printing, mailing, packaging, and graphic communications industries, is pleased to announce the recently completed sale of Action Printing of Fond du Lac, Wisconsin to Marketing.com, headquartered in Eureka, MO with multiple locations throughout the U.S. Michael Wurst, Managing Director of GAA, acted as the lead advisor on this engagement.

Action Printing has been in business for over 40 years and is a large commercial printing company that specializes in large multi-page perfect bound catalogs and books. The company produces short to medium runs on uncoated text paper with optional gloss covers and sections. The buyer, Marketing.com, will continue to operate the facility as part of their growing network, employee positions were maintained, and production at the facility continues, now with the added support of the Marketing.com executive team and resources. The facility was purchased as part of the transaction.

Andy Johnson, Marketing.com's Chief Operating Officer, shared why they pursued this purchase: “We are excited about the addition of the Action Printing business to the Marketing.com family as this facility further scales our capabilities in the coldset web and uncoated printing markets for catalogs, books, magazines, manuals, and marketing materials.”

“Action Printing serves a specific niche in the printing market,” stated Wurst. “GAA was delighted to find a buyer committed to operating the outstanding facility and continuing to serve that niche.”

About Graphic Arts Advisors:

Graphic Arts Advisors, LLC is an M&A advisory and consulting firm focused exclusively on the printing, packaging, mailing, marketing production services, and related graphic communications industries. Graphic Arts Advisors publishes The Target Report, a leading monthly trade commentary and overview of industry direction based on publicly reported transactions. Graphic Arts Advisors is headquartered in Mountain Lakes, NJ, with advisors throughout the US.

For more information, please visit https://www.graphicartsadvisors.com/.

Contact:

Mark Hahn

Senior Managing Director Graphic Arts Advisors mark@graphicartsadvisors.com

973-588-7399

Source - The Hyde Opinion

What is a merchant cash advance?

A merchant cash advance is a lump-sum payment from a lender based on future credit or debit card sales. It’s different from traditional bank financing and distinct from alternative financing like factoring or asset-based lending, which have been around for a long time. In the realm of financing options for companies struggling to keep up with their loans and leases, merchant cash advance loans are far riskier because of the onerous terms and conditions often obscured in the legalese fine print.

Why has there been a rise in the popularity of merchant cash advance lenders?

They are easily accessible online with a relatively simple application. The process is nowhere near the depth or scope required for bank financing or asset-based lending.

What are their lending criteria?

Most merchant cash advance lenders don’t examine the company's cash flow. They do not assess the company’s balance sheet, nor do they ask probing questions about business viability. They focus on the creditworthiness of the underlying customer of the borrowing company.

What are the costs?

Merchant cash lenders charge high interest rates and various fees, making the overall cost of money extremely high. When you break down the dollars-in versus dollars-out over the duration of the loan, you realize just how expensive it is.

READ MORE

SOURCE - The Target Report

Two Innovators in the design and manufacture of machinery used in graphic-related industries recently filed for bankruptcy, bringing to light the challenges of being out front with new ideas. One company pioneered an entirely new method of coloring thread, enabled by digital printing technology. The other abandoned more than a century of experience in the very traditional business of building bookbinding equipment in an attempt to position itself for the possible future when content goes all digital.

On-Demand Thread Dyeing in Demand

It started with a simple idea. Apply inkjet technology to thread to create colors on-demand.

The traditional method to sew a multi-color embroidered design on promotional branded garments is to change the spool of thread multiple times, or employ machines with multiple stitching heads, each drawing from different color threads.

Instead, if you could simply dye white thread in real time, in-line, and in any color, you could sew a multi-color logo without ever changing the thread. Swedish technology company, Coloreel Group AB, pioneered this idea, met all the challenges to perfect it, and introduced on-demand thread dyeing to the embroidery market. As the machine whirrs away, the thread changes color as called for by the software-driven design integrated with the market-leading automatic embroidery machines. With the Coloreel technology, colors across the spectrum are available at all times. As an added bonus, gradual fades and color transitions, never possible before, are now options.

READ MORE

Most buyers or valuation experts in our industry use EBITDA as a key metric to analyze a company’s operating profitability and determine its value.

EBITDA is simply calculated by taking the company’s Earnings (E) and adding back Interest (I), Taxes (T), Depreciation (D) and Amortization (A). This article addresses non-customary addbacks, those which go beyond the company’s interest, tax, depreciation and amortization expenses, to calculate EBITDA.

The most common method used to calculate a printing or sign business value involves applying a multiple to the company’s EBITDA. And while business owners who intend to sell their business have many options to increase the transaction multiple, one way to unlock value using this calculation is to identify other, non-customary “add-backs” to increase EBITDA.

What Are Add-Backs?

An EBITDA add-back is an expense that will not be included in the buyer’s future P&Ls for the company. Understanding and applying add-backs and other kinds of adjustments helps normalize a business’s earnings on a go-forward basis. This will give all parties a true understanding of the cash flow, and therefore, the true value of the company.

What Are the Different Kinds of Add-Backs?

EBITDA add-backs generally fall into one of the following categories: accounting expenses, interest expense, plus nonrecurring, nonoperating, and personal expenses. Add-backs and adjustments will vary from company to company, but understanding these major categories is helpful in identifying potential increases to EBITDA, and thus business value.

It is important to understand these add-back categories more fully so as to be able to accurately identify EBITDA increases and ultimately a more complete value of your business. Add-backs are also key for a buyer to understand the full scope of financial benefits the current owner experiences.

Accounting Expenses

Accounting expenses generally include depreciation and amortization. These are expenses that appear on the business’s profit and loss statement, and while they are considered legitimate deductions for accounting purposes, they haven’t truly occurred during the year when EBITDA is being calculated (i.e., there is no actual movement of cash) and subsequently don’t affect the financial benefits derived during the year in question by the business owner. Adding back depreciation and amortization to compute EBITDA is a customary add-back.

Interest Expenses

How you choose to capitalize a business is completely at the discretion of the business owner and any related interest or late payment fees paid are also an expense that is added back to the net earnings when computing EBITDA. This add back is customary.

Nonrecurring Expenses

Nonrecurring expenses are expenses that are not expected to happen again and are outside of the ordinary course of business. Such expenses often result from one-time, extraordinary events. Some typical examples include:

• Litigation costs

• Professional fees above the normal fees like consulting

• Capital expenses

• One-time technology upgrades

• Transaction-related costs

• Facility relocation or renovation expenses

• Bad debt expenses

There is an important consideration here, and that is these expenses are indeed nonrecurring. Clearly, this leaves room for interpretation. For example, if your business is engaged in lawsuits year after year, and such lawsuits are expected to continue, it would be clearly inappropriate to add those costs back, as they are part of the ordinary course of business.

Non-operating Expenses

Non-operating expenses are add-backs expenses that are not required in, or related to the true operating performance of the company. Oftentimes, these are related to non-operating assets or liabilities, such as real estate or vehicles. Some typical examples include:

• Discretionary Travel expenses

• Auto allowances for executives and business owners

• Insurance payments for executives and business owners

• Expenses related to leisure activity or entertainment

Non-operating expenses appear towards the bottom of the company’s income statement. As they do not directly correlate to the business. As such, they are considered an add-back to help the business appraiser or business valuation analyst focus more on the true value of the company.

Personal Expenses

Personal expenses are often expensed through a business to reduce tax liability. These expenses should be added back because they will end once the business is sold. Some typical examples include:

• Payments to family members who are not actively involved in the day-to-day operations of the business

• Above-market salaries paid to the owners or their relatives

• Bonuses serving as shareholder distributions

• Any expense that is truly personal in nature or discretionary

This category will also include discretionary expenses, such as charitable contributions and food and entertainment expenses. When adjusting for excess compensation, it is important to consider payroll taxes, insurance, and the benefits related to any excess wages.

Negative Add-Backs

Despite the name, EBITDA add-backs will not always increase the earnings of your business. Remember, the purpose of EBITDA add-backs is to reflect the true economic earning potential of a business if a third party owned it. Sometimes, negative add-backs are necessary for items that are expected to decrease earnings of the business going forward.

If the print/sign owner personally owns the real property where the business is located and charges below-market rent, the rent expense should be increased to reflect the cost to new owners who will not have the same favorable rent. Or maybe the owner takes a below normal salary, then the difference between that salary and the industry average salary is a negative add-back.

Factors to Consider

When accounting for add-backs, you will want to analyze the company’s P&Ls for the types of expenses and adjustments discussed above. Be careful not to miss one-time expenses that are easily overlooked. When putting together the add-backs, make sure each one is legitimate and is defendable.

In Conclusion

While adding back (or adjusting) EBITDA is valid in most settings, it’s not ideal to go to market for sale with a significant number of other, non-customary add backs. Generally speaking, when it comes to the number of EBITDA add backs, less is more. Buyers, Investors, PE firms and the like prefer fewer add-backs to EBITDA when considering their investment in your business.

That said, the inclusion of valid EBITDA add-backs will create a clear picture of your business’s cash flow which makes it easier to understand how much your printing/sign business is worth. Work with an experienced professional who thoroughly understands this process to ensure you properly compute EBITDA and ultimately receive the greatest value for your business.

Final note, EBITDA value is based on selling the business “as is” “where is” and not as the “tuck-in” value. I will highlight how the “tuck-in” value is cal in a future article.

Mitch Evans is a management consultant and trusted advisor who works with graphic company owners, CEOs, and entrepreneurs. Mitch is a managing director at Graphic Arts Advisors LLC which specializes in Mergers & Acquisitions (valuations, buying and selling, mergers and non-bankruptcy orderly wind-downs). Mitch is also a partner with Mike Kind in The Next Level Group which facilitates formal top executive peer groups for leadership, business growth, including revenue growth, improved internal efficiencies, and greater profitability. Please contact him at mitch@graphicartsadvisors.com or call 561-351-6950.

SOURCE - The Target Report

There has been a steady uptick in the number of acquisitions over the past twelve months of companies focused on the production of corrugated cartons. Recent deal activity involving the corrugating, printing, and converting of corrugated box products now exceeds that of any of the prior five years, including the number of deals we logged in the corrugated segment during 2019, the benchmark year before Covid disrupted everything.

From the largest players, such as International Paper, to the midsize integrated companies including Hood Container and Green Bay Packaging, to Welch Packaging, which is rolling up smaller companies, interest in fiber-based corrugated box businesses is keen and shows no sign of letting up. However, unlike the private equity-induced fever-pitch pace of deals in the label and flexible packaging segments that occurred prior to the Covid shutdown and continued apace up to the first quarter of 2023, transactions in the corrugated business have been, to date, driven primarily by buyers that are themselves steady-as-you-go family businesses.

We began to see an increased interest in the box, of all types, as 2023 began, concurrent with the decline in the number of deals in labels and flexible packaging. It appeared, at least to us, that the purchase price multiples in the label and flexible packaging businesses had reached unsustainable levels, coinciding with a dearth of suitable acquisition candidates; many of the best already having been cherry-picked by the surfeit of private equity funds vying to snag the next label or flexible packaging deal. (For more, see: The Target Report: The Box is Back – January 2023.)

READ MORE

Several years ago, Beta Research conducted a survey of 2,000 Americans in middle management and above, aged 25 and older, for Business Week. The margin of sampling error for this study is plus or minus 2.2%.

One of the most eye-opening statistics revealed from this study was that 90% of managers think they’re among the top 10% of performers in their workplace.

There was not much variation in the answers when the managers were segmented large versus small companies; male managers versus female managers; or by age. In every instance, managers ranked themselves as truly being great.

The real gem that surfaced in this survey came from the executives that responded. When asked “Are you one of the top 10% of the performers in your company?” a whopping 97% of the executives answered “Yes.”

Let’s do a reality check here for just a moment. Are all top executives and business owners really that good? Or is that what they believe, and is the truth another number? What is true is that this is how the top Executives ranked themselves.

One of the deadly sins of a print/sign shop owner or partner is invincibility. These owners or partners believe that they are bullet proof, able to leap tall buildings with a single bound and can travel faster than a speeding bullet. The dictionary defines invincibility as incapable of being overcome; unconquerable.

Back in the late 1980’s a major manufacturing firm in the Midwest hired a research firm to conduct a survey of the cultural climate of the organization. When the study was finished, the executives were flabbergasted by the results. The survey suggested that more than 80% of the management staff felt they were doing a fantastic job yet less than 20% of their direct reports agreed.

The company fired the research firm and hired another one, who performed the same study. The results came back to a similar conclusion. After considerable soul-searching, the company reached the conclusion that while they might not agree with the results, two studies of the same subject could not be wrong. After a delay of years, the organization began the process of changing a culture of management invincibility that had existed for decades.

At the core of the issue is that position is substituted for performance. Position is granted or earned, depending on specific circumstances. Position is not the same as performance. Performance is measured and evaluated. The assumption is made that because someone has a position of authority, they must be doing an outstanding job. That is not always the case.

Jack Welch was criticized for his forced ranking of all employees when he was the CEO at GE, but it kept the deadly sin of invincibility to a minimum. Welch understood that everyone needed to have their performance appraised to a set of expectations. He also knew that “Managers would rather have a tooth pulled than have a performance conversation with a subordinate…” and this included managers who supervised managers.

At GE, every employee was rated according to one of three groups. The first group, the top ten percent, exceeded expectations and were given the highest amount of compensation and put in line for advancement. The next eighty percent were given moderate increases and told that any advancement would come only after they moved into the top performer category. The third group, the bottom ten percent, was given little or no compensation increase, coached for improvement and was subject to termination if there was not a change made for the better.

A very easy method to apply a rating system in your print/sign shop is to create a list of each of your employees or direct reports. Then based on what you know today about those employees or direct reports, place a “YES” next to each name for those who you would rehire; place a “?” for those who you are not sure if you would rehire; and place a “NO” for those who you would not rehire. The “YES”’s are your keepers and top performers. The “NO’s” should be let go immediately. For all of the “?” mark employees, put a timeline next to their name for which you need after that time to decide whether they are a “YES” or a “NO. The timeline set should not exceed one year.

Invincibility, however, goes much farther than just job performance. Ask any print/sign shop owner how much they think about the subject of death and many would respond that they have no exit strategy from their business, have not put a succession plan in place, do not have a buy sell agreement, do not have enough life insurance, are not in the best physical shape possible for their age, work more than they should, need to spend less time thinking about their business and take more time off.

It comes as no surprise that only those print/sign shop owners who have had some sort of physical or health issue understand the true meaning of the statement “If you don’t have your health, you don’t have anything.” These individuals understand that they are not invincible.

Everyone nods their head in agreement when hearing that “only two things in life are certain -- death and taxes.” Unfortunately, an inordinate amount of time is spent trying to minimize the latter and ignoring the ultimate consequences of the former.

Unfortunately, few print/sign owners have a clear vision of how they will exit their business. It’s amazing how many print owners hope or worse yet expect that someone will knock on their door at some point in the future and offer them lots of money to buy them out. Hope is not a plan. You need to start your transition plan at least 5 years before you want to exit. Even in the best-case scenarios, it takes months to find a qualified buyer that will pay what your business is worth.

Mitch Evans is a management consultant and trusted advisor who works with graphic company owners, CEOs, and entrepreneurs. Mitch is a managing director at Graphic Arts Advisors LLC which specializes in Mergers & Acquisitions (valuations, buying and selling, mergers and non-bankruptcy orderly wind-downs). Mitch is also a partner with Mike Kind in The Next Level Group which facilitates formal top executive peer groups for leadership, business growth, including revenue growth, improved internal efficiencies, and greater profitability. Please contact him at mitch@graphicartsadvisors.com or call 561-351-6950.