April 8, 2025 • 69 mins
In this episode of Printing's Alive, Mark Hahn delves into Graphic Arts Advisors' services and succession planning in the print industry. He outlines key steps for selling a print business, emphasizing timelines, advisor roles, future value, and human factors in acquisitions. Mark also tackles challenges in the due diligence process, ESOPs, family succession, and M&A trends, underscoring the need for specialized legal advice. He shares insights on M&A success rates, post-sale satisfaction, and the role of industry-specific advisors. Tips for business owners and common selling mistakes are discussed, with closing thoughts and a future episode preview.
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Transcript
Episode Transcript
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(00:09):
Welcome back to another podcast of Printing'sAlive with me, Warren Werbet, your host.
I hope you enjoyed the podcast and the series.
I'm here to just bring the world of print toyou with everyone involved from all aspects,
all kinds of print, more importantly, just allabout the people.
Today, I have a special guest.
I have Mark Hahn of Graphic Arts Advisors,whose specialty is Actually, Mark, why don't
(00:35):
you just welcome, first of all.
Thanks, Warren.
And why don't you give us a little lowdown onwho you are and what you do?
Well, Mark Hahn, senior managing director ofgraphic arts advisers.
We're a boutique financial advisory firmspecializing in mergers and acquisitions in the
printing, packaging, and related industries.
(00:57):
Related typically means mailing because mailingand printing have come together.
Also, a little bit of dose of digitaladvertising sometimes gets in there.
But as I like to say, if somebody's putting inkon something somewhere, we're probably
interested in, we're probably qualified.
(01:17):
If there's no ink involved, we're probably notinterested in, we're probably not qualified.
So that's the blinders that we have on in termsof our practice.
Personally, got into the printing industry as ayoungster.
I rent presses, went into sales, sold printing,started a printing company, rented for ten
years, sold it twenty two years ago.
(01:37):
I'm making this quick, Warren.
I don't want to get into too much of the weeds.
It's all good.
Then was a CFO, Chief Financial Officer ofanother printing company, and then started
Graphic Arts Advisors full time about ten ortwelve years ago.
So that's who I am.
I have partners, three of whom are ex printingcompany owners, as am I.
(02:01):
And one partner, John Hyde, is an attorney, nonpracticing but licensed.
And I can tell you what we do.
So that's who we are.
We also have a couple of associates that wework with, one in my office and also a
bookkeeper in another office.
We work across the country, so we're national,primarily US centric, Ed Warren, some Canadian
(02:21):
once in a while, but we're not global.
So we're focused really on North America andmostly US.
So that's who we are.
So what do we do with that?
Half of our business is sell siderepresentation, A quarter of our business is
buy side representation.
That's what we call it.
We're either representing a seller or a buyer.
(02:42):
And a quarter of our business is a mixed bag ofvalue assessments and special situations, which
we can talk a little bit about that.
That's essentially helping companies that arefinancially challenged.
So so that's who I am and what we do in anutshell.
Awesome.
(03:02):
Yeah.
I've known I've known you guys for a long time.
I've dealt with John in the past, spoken withhim in the past.
He's been quite helpful.
Today, we're gonna talk only the good stuff.
We're gonna leave some of the rough stuff foranother episode.
But what I wanted to talk about with you isbuying and selling.
Owners wanting to sell and maybe buy.
(03:25):
Our industry is getting a little bit older.
Not everybody has family in the business.
Some do, some don't.
Some wanna be in, some don't wanna know fromit.
But when I talk to other printers and I say tothem, Hey, what's your plan?
Are you thinking of selling?
What are you doing?
You know, they could be late 50s and their 60s.
And a lot of them are like, I don't know.
(03:47):
I said, Have you spoken to anybody?
They're like, No.
And I just know from my own experience thatwhen you wanna go through the process, there's
a lot to it.
It's not just deciding that you wanna sell,right?
Then call somebody.
And I would also say it's not something wheretwo owners really get together to try to do the
(04:10):
deal.
My experience was it's always easier to havesomebody fresh, you know, from outside the
circle assisting.
Well, I'm definitely a believer in having anintermediary involved because that's the
business I'm in, and and it works.
And and we're busy.
So I know there's a need for it.
It's a proven model.
However, there are occasions where one ownerknows another owner for many years and they
(04:35):
maybe have friendly competition, and and theycan do a transaction.
So that does occur.
It's harder, though.
It's less common.
And what happens sometimes is the transactiondoesn't happen, and then the seller finds
themselves a year or two behind the schedulethat they intended because they burnt up time
(04:57):
really trying to do it on their own.
So we do get some do it yourselfers that thencome to us and say, Hey, this didn't work.
Curiously enough, sometimes the buyer that theywere working with will actually end up being
the buyer.
But after you run a process, the buyer knowsthere's a competitive environment, they know
(05:18):
there's professional advisory services, and sothey kind of get going and make an offer that
makes sense.
So an advisor can simply actually help theprocess through motivation.
Yeah, and the other thing with the advisor is,I think it just, most importantly, it keeps the
(05:40):
emotions down because when people are owners,they could be quite emotional about how their
business is and how they see it, right?
But what I wanna get into is I wanna sell mybusiness.
What's the first thing I'm gonna do?
It really depends on your business.
I know that's a non answer answer, but ifyou're a highly successful business and you're
(06:04):
clicking out EBITDA at 15% of revenue andyou're growing at 10% a year, that's a
different pathway than somebody who's sayfinancially distressed or just treading water
moving along.
So it really depends on where you are.
Again, I know that's a non answer.
Well, about if we just put the context of theperson has a decent business, the growth is
(06:30):
there a little bit, there's no fives and tens ayear annual growth.
They're making some money, they've always beensomewhat profitable, Their equipment is semi up
to date because we're always needing somethinganyways.
Yeah.
Yeah.
First thing is decide that you really wanna dothis.
And and you talked about emotions, and there'sthere's a concept that I use, which is what I
(06:54):
call the emotional bridge.
And people sell their company because they'vecrossed some kind of emotional bridge.
They're either rich, they're either poor,they're sick, they're healthy, their spouse is
saying enough already with these sixty hourweeks, or they're not going into work and they
don't want that responsibility.
You mentioned equipment.
Equipment has come to the end of its life andit's time to sign on for another million dollar
(07:18):
press or upgrade from Offset to Inkjet,whatever it is, there's some kind of bridge
that you cross in your career where you'vedecided it's time to sell.
That's an internal step.
And I can tell you that there's no way that Ican sell somebody on hiring us to sell their
business.
It just doesn't work that way.
(07:40):
They have to decide in the whatever theirsituation is, again, rich, poor, healthy, sick,
whatever it is, something has changed where nowthey're ready to exit.
And that's the first step is crossing thatemotional bridge.
Once that happens, it really does depend on thebusiness.
If your bookkeeping is sloppy, then get yourbookkeeping in order.
(08:00):
If your bookkeeping is in order but you've gotcustomer concentration, figure out maybe you
need to go through a couple years of addingsome customers and show that you can do that.
You might not be able to dilute theconcentration, but at least you can show
there's a pathway to it.
Or if you have concentration, can you get acontract with that customer so you can show
(08:21):
that it's going to transition with a sale?
So it's really going depend on your particularsituation.
If you're in an industry that's in if yourcustomers are in an industry that's in decline,
maybe you need to, again, show that you can addcustomers in a new direction.
So it's situationally dependent.
(08:43):
And what would you say though?
I mean, I've spoken with a few people and I'vein the past, but to how should the company be
really set up?
Like, your sales your salespeople in order?
Do you if you should you be having the latestaccounting software, MIS software, production
processes?
(09:05):
Does value, take things away?
Like how do you get the best value goingforward?
The best value is gonna be because yourcompany's profitable and growing.
I mean, can cut through all that other stuff,it's great.
You can have worked for thirty five years, yougot a great brand name, you're gonna you're
(09:26):
gonna you're gonna benefit the most by having aprofitable company that's growing and and and
you're showing that.
And what what you don't wanna do is do a wholebunch of mechanics to boost your profit
artificially in the year before you sell.
Now you might do some things.
You might put off some equipment purchases.
(09:47):
You may let go a salesperson who'snonproductive.
That's all good kinda house cleaning stuff todo.
But making major changes that all of a suddenyour EBITDA goes from 7% to 20% because you did
all these cuts and everything, buyers are goingto see right through that.
You're not going to get the benefit of it.
In fact, it may be detrimental because you'venow taken the future life out of your company.
(10:09):
You've cut things that shouldn't be cut.
I don't know, did I answer your question,Warren?
Yeah, really, I guess what I'm hearing isdepends on who the buyer is, depends on the
company.
Everybody should be as clean as they canbecause there are no secrets once people start
diving in, right?
So you shouldn't have the outside looking greatunless the inside's you know, together as well.
(10:34):
Yeah.
And if there are issues, be prepared todisclose those.
Be prepared to talk about what the solution is.
Everybody knows we have issues in business, butwhat what what are you doing about those
issues?
And we're kind of fast forwarding to theprocess, but if you have an issue and you're
involved in a sale process, the earlier in theprocess you get it out, the better it is
(10:56):
because you don't want to go down a road andthen have to backtrack.
That's a difficult position for everybodyinvolved.
Well, think in life, we all learn that when youare speaking the truth and you're honest
upfront, it's always easier, right?
Because it just And again, you can't hideanything.
How how long does it take or how long is thetransaction when you wanna sell?
(11:21):
The standard answer is six to nine months.
That's the default answer.
The truth is it could be anywhere.
We've done deals in, I'm not exaggerating here,six weeks during the time when COVID broke out,
March to April 2020, probably the quickest dealwe ever did.
We just had one where we went to market, we gotoffers right away, we're gonna close tomorrow.
(11:46):
And we just went to market, I think it was lateAugust, maybe it was even September.
Other deals can take four years.
Now you might go, woah, four years.
What's that about?
Well, what's that about is COVID broke out, soyou sit around.
A great offer came in for the real estate, sothe company's taken off the market for a year
(12:07):
while that's digested.
Other a major customer is lost, so the buyerbacks away.
There's a few bad months.
We've had ones where a buyer backs away.
We gotta go back out to market.
And in both cases, can think of where thathappened.
We actually got a better offer when we wentback out to market because things weren't as
(12:27):
bad as maybe they looked at for those twomonths.
So six weeks to four years, that's a big range,but the standard answer would be six to nine
months is what you should expect.
And you might wanna say, realistically, setyour set your sights on a year to to to get to
closing and kinda be through the process.
(12:49):
There's prep time.
There's so that's how I would answer thatquestion.
Cool.
And I guess we've said that the buyer shouldstart really thinking or bring it up as soon as
he's thinking about it, I guess, instead ofsitting on it and waiting.
Right?
Or reach out to someone like yourself for aconversation.
(13:09):
I guess, do you help people define what theywanna do or maybe they don't wanna do it?
Are you like a little bit like a play theshrink a little with the owner sometimes?
Well, yeah, I guess half of my job ispsychology, but I don't wanna overdo that.
The answer is that's not the heavy part of ourbusiness, guiding people through their business
(13:35):
structure.
We're primarily M and A and transactionaladvisors.
It's the bulk of our business.
However, companies will hire us to do what wecall a value assessment.
We'll go through the process and we'll say, youknow, we think your company's worth x.
You've got y amount of debt.
(13:55):
Here's gonna be the and we run that downthrough what are the net shareholder proceeds
because you could have a company that's worth$10,000,000, but if you're loaded with debt and
you need new equipment, maybe your proceedsaren't gonna be significant.
And that's really the number that you wannalook at is what are you gonna get at the end of
the process.
So what's involved when you're doing anevaluation?
(14:19):
What are you looking at?
Because not everybody who sells knows all thedifferent steps to take into their mind.
They might leave out one or two lines, whichthen affect the number in a big way.
Well, we have a checklist that we've developedover the years of documents that we ask for.
It's not too long, it's not too short.
It's been honed over time to get us areasonable picture of what we think is needed
(14:46):
to establish what a value would be on the an mand a value based on the market, what we're
seeing.
Now so to kinda go back to your question, if wego through a value assessment process, people
will say, Well, I'm not ready then because I'vegot too much debt, or I really need to work on
(15:10):
this EBITDA number, or my revenue went downlast year and that doesn't look good.
So we'll discuss those factors.
And I've had plenty of owners say, You knowwhat?
I'll come back to you in six months or a year.
Let me take care of these things.
Another conversation we have over and overagain with owners is, what's the impact of net
working capital requirements on ownershareholder net shareholder proceeds on a
(15:36):
transaction?
And the most common response I get to thatquestion is what?
What is that and why am I thinking about thatand why do I need to think about that?
Those are questions and when we go through thenumbers, owners will say, wow, if I manage my
working capital just a little bit differentlyover the next year, I don't want to say
(16:02):
radically, but I can change the proceeds thatI'm going to get out of this business because I
manage the working capital more tightly and Ican prove to a buyer that I was able to make
the same EBITDA by managing that net workingcapital.
Those are kind of arcane concepts when you'rerunning a business on a daily basis.
(16:22):
You're not thinking about that.
I can give you examples where that gets people.
Their light bulb goes off, and they go, okay.
I'm gonna work on this for a year or two, andthen I'll sell.
Well, I I've I've done a had done coupleacquisitions, and you learn a lot when you're
doing acquisitions.
You gotta take into account, first of all, theother team.
(16:43):
I've did one small acquisition where they hadto sell.
I mean, they didn't have to, but yes, they hadto.
And when they did and the owners were included,I mean, were almost sabotaging the deal after.
It became toxic.
So I had to, you know, act quickly to get ridof one of them really quickly and, you know,
make the others understand that you guys weregoing down.
(17:03):
We're not here to be bad.
We're here to elevate everybody.
And that in itself is a whole other processthat you go through.
And then the biggest thing that I went through,even when, you know, the advisor with the
evaluations and everything, one of the otherowners had in his head, he was adding up
(17:24):
literally all the hours he worked in his lifeand putting them on to the value.
And it was hard to
have know this a lot of times, Warren, I'veworked thirty five years to build this company.
It's gotta be worth this.
And I get that, but that's not what buyers arebuying.
They're buying the future.
(17:45):
They're not buying the past.
So the value has to be transferred at theclosing, and the buyer's going to say, What is
this going to do for me as the buyer?
Hopefully a buyer is respectful about thatthirty five years.
But they're not paying for that thirty fiveyears.
They're paying for the future performance ofthe company.
And that's what we need to show.
(18:05):
Right.
And if you set your company up right or you'rein a niche or you're doing something
particular, you're added more you're addingmore value because they have it going forward,
Yes.
It has to be about the future value.
And to your point about the people sabotagingthings, there are three primary things you want
to think about in an acquisition context.
(18:27):
These are very broad categories.
You want to think about the money, you want tothink about the strategic position of the
company, and you want to think about the peopleor the culture or the environment of that
company.
And I can tell you that most buyers and sellersthink about those things in that order.
They think about the money, then they thinkabout the strategy.
(18:48):
Does this fit?
And the last thing they think about is thepeople.
We hear a lot of lip service about people, butwhen it gets down to it, that's what they're
thinking about.
However, I can tell you when you do a look backon most of these transactions, it's the
opposite.
It it it it may be it may be a tie between thepeople and the strategy because both of those
have to be right.
(19:09):
But, typically, it's the people.
If the people are wrong, you should walk awayfrom a deal as a buyer or seller.
Don't kid yourself that any amount of strategyor money is gonna make it work.
You gotta have the right people.
Strategic fit is critical.
And then at the end of the day, I don't wannayou know, people make different amounts of
(19:30):
money in this business, but I'll just throw outa round number.
$10,000 or a hundred thousand dollars spreadover five years in a purchase agreement is not
gonna change pretty much anybody's life in thisbusiness.
So you really wanna focus on those otherfactors and then then work out the best
financial deal.
(19:50):
Oh, for sure.
So yeah, I would tell you, one of myexperiences and one of the acquisitions that I
had done was, first of all, you get excited.
And many of you get excited, you need to havesomebody, I think you need to have somebody
with you who's not attached to anything, who,non emotional, could think things through and
(20:11):
guide you.
So in one instance, I got really excited aboutthe whole prospect of what the deal was, who
they were, their reputation, and I made somebig fundamental mistakes.
One of the mistakes I made was the people, notreally doing enough not really getting to know
them or understand them well enough, even themanagers say, because you can't deal with
(20:34):
everybody.
And then the, I'm gonna say the biggest mistakeI made is when I looked at the customer list, I
go out and check enough verify that they arewho they are.
There was a lot of customers on that list thatwere great names that got me excited that
hadn't given them an order in two years.
Yeah, well, a diligence, there's a duediligence part.
(20:55):
And I'm not meaning to underplay the value ofgetting the best deal for your company.
But there's a term that you want the best andhighest value for your company.
And that highest part is the soft part thatdefines the other factors that are maybe not
(21:16):
the top dollar, but it's a better deal for youfor reasons of structure, deal structure, maybe
the money sooner or later, depending on what isimportant to the seller.
So you really wanna look at all those factorsin a deal.
And and I guess to your point, yes, having anadviser who's objective and not involved is I
(21:38):
can say things that maybe the seller or thebuyer don't wanna hear.
And it's needed.
So let me ask you, a person's decided that theywanna do something, they've brought in the
right advisor, what's involved with duediligence?
Because that's really where it all starts andends or should.
(22:00):
Well, it's all over the place.
Due diligence is the process for people whodon't know, is the process of the buyer
examining the seller.
And in our process, we tell sellers once you'vesigned an asset purchase agreement or a letter
of intent and you intend to go to a closing,it's the buyer's right to ask any question they
(22:25):
want and you should answer that question.
In due diligence, it's, what's they saying,kimono's open.
You really have to show everything.
But in terms of the actual process, you can geteverything from an 80 page document that has
questions that are, one, ridiculous, but alsomay have the same question four or five times
(22:45):
in the document because they've cobbledtogether this list of questions from various
documents they've received.
And that can be very frustrating and you feellike somebody on the other side hasn't done
their job.
That's one extreme.
The other extreme is, and this is more likelyfrom a strategic buyer, another printer buying
(23:06):
a printing company, where the due diligence isreally quite light.
And as you say, they're excited about the deal,they know each other, the finances seem right,
and they just say, Let's make this happen andget a deal done, and they're not asking a lot
of questions or a lot of deep dive.
Somewhere in the middle of that between thedisorganized, non professional, 100 page list
(23:30):
of questions and the local strategic who reallykind of does a comfort deal, is it the private
equity buyers will do a pretty deep dive andthere'll be a lot of questions and they may
want to do a quality of earnings report wherethey basically recreate your P and L and really
kind of acid test a lot of the assumptions thatthey've made, but they want to see the
(23:54):
documents and trace those documents frombeginning to end.
For example, I did a deal with a Canadianpublic company was the buyer.
And as a public company, they don't want egg ontheir face.
They don't want be going to their shareholderslater and say, oops, we made a mistake.
(24:14):
Right.
A private company, you can go home and say,oops, I made a mistake, but they couldn't do
that.
So the due diligence was pretty rigorous.
Private equity buyers, the due diligence isgonna be pretty rigorous.
So, you know, scrap on your seat belt, getready.
It's gonna be a ride.
So if you're if you're doing something likethat, would you say that the payout could be a
(24:35):
little bigger in general if it's equity buyersversus, say, a competitor?
Like, do you get more money from one group overanother?
It's a great question.
It's gonna be so based on the situation.
I mean, private equity firms are spending otherpeople's money.
(24:55):
Actually, they're probably spending your money.
They're paying you.
Your company takes out the loan and has to payit back.
Well, if they re leverage the
company.
Yes,
it's a leverage buyout at some point.
They're using debt in the capital structure.
(25:15):
So they might be able to pay a little more, butthey're going to be very disciplined about that
process.
Classically, understanding was strategic buyerspaid more because there were synergies, but I
don't think that's any longer true.
It's situational.
(25:36):
If you get the right strategic buyer who says,I need this company in this city that does this
work, well, an extra turn on EBITDA solves alot of problems for them.
Right.
And they might be willing to go to that level.
So it's really gonna depend.
That's not a great answer, but it's the rightanswer.
(25:58):
Right.
I mean, I I've seen some, bigger companiesgobble up some smaller ones and almost pay
dollar for dollar on the revenue.
Bigger companies meaning big cash or public, orI mean, is it because it's the easiest way that
they're gonna get the bulk volume that theyneed for a story?
I've seen dollar for dollar on the revenue, butbut let's look let's do the numbers.
(26:21):
If you're a high performing company and yourEBITDA is 20% and and you're high performing
and maybe your revenue was $2,030,000,000, sonow you're up in that that middle range of
printing companies.
You're not down at the under 10,000,000.
So maybe you get a five times EBITDA.
Well, five times 20% is a %.
So there you are at one times revenue.
(26:42):
So you hear those stories about companies thatget that, but there's some mathematics behind
that.
It wasn't based on revenue.
It was based on that EBITDA.
On how they worked.
And where they are in the market.
You mentioned, you know, five times value whatis the is there a standard number out there
today?
Because in in the last little few years, itseems like it was all over the place or label
(27:06):
businesses were high demand going through theroof, offset companies less so, and then find a
niche guy with offset packaging and then it'sback up through the roof?
Well, you've kind of answered your ownquestion.
It really depends on the segment, the size, thegrowth rate, even the location, what's the
(27:27):
future prospects for it.
And, you know, there's that the the theattribute of this whole process that kinda
hurts the people at the low it hurts theirfeelings at the lower end of the market is if
their EBITDA is down at 7% or 8%, nine %, andthey're not growing, they're not gonna get a
(27:50):
high multiple.
And then they see somebody who's growing thathas a higher EBITDA who gets a higher multiple
and a higher number so that there's thatexponential ex escalation of business value.
But you have to be performing in order to getthose numbers.
So, to answer your question, the ranges are allover the place depending on the segment.
(28:14):
And I didn't mention in the intro that I'veresearched and written the monthly target
report for the last fourteen years, which Ishould have mentioned.
Well, I was gonna eventually bring it upanyway.
Actually, it's an important report that you do.
It gives a really good view of what's going onin M and A or how it's going and who's buying
(28:35):
who and size of the company you could get agood feeling for.
Yeah, and what we talk about in that are moreindustry trends that we're looking at based on
M and A transactions as well as closures andbankruptcies and so forth.
And that's by segment because the labelbusiness is not the commercial printing
(28:55):
business, is not the direct mail business, isnot the folding cart business.
We're all putting ink on something somewhere,but those are not the same businesses.
No, the label business is good.
Although the market
Right now.
The market has cooled off a little bit forlabel businesses since
And why would you say that?
Many, too much capacity?
(29:18):
Was such, a hot market fueled by the PE firms,and they cherry picked a lot of the firms that
were $45,000,000 in revenue, really doingreally well.
You've had the whole evolution of flexographyfrom a backwater process back when I was in the
business to doing beautiful work on flexiblepackaging.
(29:42):
So you've got a technology change, you've gotgrowth, and as we all know, packaging is a
reoccurring revenue so that people who wannainvest in businesses like that.
And so those values are just disconnected fromthe commercial print market.
Have you been have you been involved in anyESOPs or employee purchases of the business?
(30:07):
We have.
So tell me about that because that almostsounds could sounds interesting.
The employees that work obviously, you know,have some input, get something at the end if
there's a benefit.
How does it work for the owner when he'sselling first?
And then tell me about the employees.
Owners could do very well because it's a taxadvantaged process.
(30:28):
An ESOP's basically a trust that's a retirementplan.
So if if it's done correctly and there's a lotof rules, the the owners can benefit by selling
the company and having tax advantage proceedsfrom that sale.
(30:49):
It's gonna be situationally dependent.
But if somebody calls me up and it's a$2,000,000 or $3,000,000 a year revenue company
and they've heard about ESOPs, it's tooexpensive.
The reporting requirements, the trusteerequirements.
(31:10):
I tell people, right or wrong, it's what Iheard and what I believe, is that to really
consider transitioning to an ESOP company, youshould be revenue roughly 15,000,000 and above
and EBITDA 15% or thereabouts.
And if you're not clicking down those numbers,you're probably gonna be floored by the cost of
(31:35):
putting one of these plans together and thenrunning it every year.
So tell me quickly, what's the cost, just sopeople know and they have a good understanding,
what's the cost of putting it together?
And then what's the cost of, you know, managingit throughout the year at the end of the year?
Well, it's gonna depend on the company, but 6figures would be.
Really?
(31:56):
Oh, yeah.
Wow.
ESOPs are complicated, and they are trustarrangements that are retirement plans.
So there's a lot of rules around retirementplans, as should be.
And does the owner walk away with cash at thattime?
(32:18):
Sure.
Like does the company borrowing money from thebank to pay out the owner or partial or
does the cash there's typically a loan.
So ESOPs tend to have a lot of debt whenthey're formed.
So one of the questions I ask when an ESOPcontacts us about buying a company is how long
(32:39):
have they been in ESOP?
Because if they've been in ESOP for six months,they probably still have a lot of debt that
they need
to
pay down.
But if they've been an ESOP for ten years,they're probably well into paying down that
loan.
And there's a lot of nuances about these.
It's not for the faint of heart, and it's notsomething you wanna do without really good
(33:03):
professional advisers.
So when you say 6 figures, is that because youhave a lot of outside professionals coming in
to do things and to manage, or is it internal?
Is it your CFO, or is it your auditing firm?
Outside professionals.
Outside.
Yeah.
Yeah.
Wow.
Yeah.
And the employees benefit in that they receive,when the company's making money, dividends
(33:27):
every year?
Is it the loan paid off by the operation andthe employee never pays anything out of their
pocket?
Well, definition, an ESOP is a retirement plan.
So employee, there's a vesting schedule, justlike other plans that companies have, and that
vesting schedule is defined.
(33:48):
So employees who are there for that certainamount of time enjoy the value of that portion
of the equity that they're entitled to based onthat vesting plan.
And then when they retire, they sell theirstock back to the ESOP or redeemed, think would
(34:10):
be the proper word.
And so it's a form of retirement plan.
Wow.
Sounds complicated.
And then it kind of feels like you're gonnaretire waiting for counting on other people.
Well, you you are.
You're you're you're you're counting onyourself if you're an employee.
The idea is that it motivates employees to workharder to increase When
(34:34):
when when an owner decides to take that route,is he staying on for a long time?
Is he vacating the building?
Because when you sell your company, from whatI've seen is most people don't last that long.
The ones that I'm aware of the owners havestayed on, And typically part of the ESOP
(34:56):
funding comes from the owners in the form ofseller debt.
Okay.
Those sellers are motivated to stay on andperform and help pay down themselves, so to
speak.
Wow.
Do a lot of companies do that or is it apopular avenue?
(35:16):
I think it's kind of spotty.
I mean, there's a few in the printing industry.
There's a couple in the printing industry thatwere bought.
It's effectively a transaction you're sellingto a trust that's created a retirement plan to
buy the company stock have gone ESOP, to usethat term, and then have then sold out of the
(35:41):
ESOP structure.
And to do that, that's just a regulartransaction.
Well, you need ESOP trustee approval.
There's an approval process.
Right.
And some of them have been quite good for theemployees.
Oh, I would think what a great way to motivatepeople.
(36:01):
You know.
But if it goes down, it's not so good.
No, it's no good for anybody.
Yeah, so.
Right, it's gotta be, so also with sellingbusinesses, you have families.
And in some businesses, sometimes the family orchildren will take it over, in other cases not,
(36:24):
in other cases, maybe the father doesn't wannasell it to the kids.
Like, do you come across that and what happensin those cases?
Yeah, the biggest issue we see is that when acompany becomes very valuable, it can be hard
for the children to fund that transaction.
If the, the husband and wife who built thecompany are looking for a certain amount at an
(36:49):
exit, it's difficult.
We have seen situations where the ownerstransition ownership to the next generation
over time, and that maybe works better.
And I guess the kids' parents are still thereto teach them a little and make sure that it's
(37:12):
still running and they're not
cranking up
the yeah.
They're not giving up the reins.
Is the M and A activity busy now?
Yes.
Because it was busy a little while.
Did it slow down in the last couple years alittle or?
It did.
There was a time period, and we're out of thatnow, which is why I think it's busy, where a
(37:34):
lot of companies had a fair amount of liquidityon their balance sheet from all the government
money.
You had a couple and also there was the postCOVID demand curve that just shot up.
Right.
And there was the paper shortage, which gaveprinters a window of pricing opportunity.
(37:55):
So it's kind of ironic but you had companieswith strong balance sheets, strong earnings and
owners expected this huge bump up in value andof course buyers are going, had a couple of
really lousy years in COVID and I'm not gonnapay you for this one year because it's been so
(38:16):
good.
And so we had some sellers that were kind ofdiscouraged by the market response to their
inflated expectations.
That's kind
of think you sorry, I was gonna say, I thinkyou kind of gotta know if you're the seller
that if, you know, if you put yourself in the,you always have to put yourself in the place of
the buyer to think about what they're thinkingon how you're gonna maybe present things or how
(38:41):
you want to, But I, you know, even, you know,I'm just thinking like how many times people
have great runs and then that's why, you know,you go an average four years and not two.
Yeah.
We, our kind of default position is a weightedthree year average.
So that's just but if they're doing political,we use a four year average.
(39:01):
So but, you know, that's kind of run its coursenow.
The the PPP money and the I don't know what itwas called in Canada, but in The US, was the
PPP money and the ERC credits.
Think in Canada, it was just called free moneyfrom our stupid government.
Yeah.
So, you know, of course, we had all theimpacts.
(39:24):
We won't get into that from all that freemoney, but that's kind of been rung out of the
system now.
They're still there, but it's gone, most of it.
So now we have sellers coming to market withmore reasonable expectations.
And we also have buyers with strong balancesheets.
(39:44):
The buyers who kept that cash are now in a goodposition.
So there's kind of a nice market right now.
Oh, good.
The other thing that we've come across, andthis goes back to, I can really date it to May
2023.
As you know, a quarter of our business orthereabouts is helping companies that are
(40:07):
financially challenged.
I know that's another video, maybe we'll getJohn Hyde on a video with you, he's our expert
in that.
But that part of our business has ramped uptremendously since, again, May 2023, it's just
like somebody opened the gates and we startedto get distressed transactions.
Well, think that also, I think that has startedto do with the end of COVID, money running out,
(40:31):
the fairytale ending, market conditions.
Yeah.
And that hasn't stopped.
So that's a pretty steady drumbeat.
And that's a whole different transactionalstructure.
It's a whole different service offering.
So again, it's a different conversation.
But it's worth noting that that we've seen anuptick in that activity.
(40:55):
Yeah.
I don't I don't think there's any printingcompany that hasn't experienced in their
journey in the peaks and valleys.
Right?
And if you for me too, if you if you rememberwhat happened in the valley and you end up on
the peak, and as you go into the valley, it'sgonna be a different valley because you don't
wanna make the same mistakes twice.
Yeah.
Right?
And you wanna learn.
(41:16):
So in all the M and A and all the thinking andevaluations and whatnot, I think there's one
area that people are generally a little shockedwith and that's the cost at the end.
It's the cost of paying their advisor, whateverthe percentage is.
I was blown away on the professional fees,right?
(41:39):
Between the accountants and the due diligenceand all the numbers and their time, and then
the lawyer with whatever it is that the liarskind of do, and they're setting you up.
No, you have to make jokes about liars, but youneed the lawyer.
Yeah, well, you're bringing up a really goodpoint, and this happens over and over again,
and I would urge people to not do this.
(42:01):
And what I say when I give a talk in a printshow or whatever is don't hire uncle Charlie.
And uncle Charlie is my euphemism.
For the attorney that you've trusted throughyour whole career, Uncle Charlie, and maybe
he's a relative, maybe he's not or she, hasdone your real estate transaction.
They helped with your corporate documents, yourformation documents.
(42:23):
They helped you with your loan documents, andyou've really got this trusted relationship
that goes back thirty years.
Well, you've got a couple problems here.
One, Uncle Charlie doesn't understand M and Atransactions and he or she is going to make
stupid corrections to the asset purchaseagreement or the stock purchase And it's going
to eat up time and money because they don'tknow what they're doing.
(42:44):
They don't understand what's normal in thesetransactions.
They're also going to burn time.
And we've had deals actually that have fallenapart because Uncle Charlie, again to use that
term, has literally burnt through two or threemonths.
We had one once where the guy literally I knewI was in trouble when the I was working for the
(43:05):
the seller in this case, and he told me thatthey view the documents because he was in
traffic court that week or something like that.
I said, Oh boy, oh boy, we're in trouble.
And the deal fell apart.
We got it back together a year later, we gotthe deal done.
(43:27):
But literally, he blew the deal because hecouldn't respond.
And so the the problem is that they're notthinking about that it's a different adviser
for the this type of transaction.
Depends on the size of the company, and and thetrusted adviser, to use the the proper term for
uncle Charlie, might be somebody who really isqualified, but you really wanna know that in
(43:51):
advance.
And the problem is that I can say that untilI'm blue in the face, but our clients typically
will then say, yeah, but not Uncle Charlie.
He's got this.
He told me he's done transactions.
And and then four months later, they're saying,Mark, I should have listened to you.
(44:11):
So that's an issue.
So spend Oh,
I'm
sure.
Spend the $30.40, 50 on a real top notchtransactional attorney if depending on the size
of your company.
Maybe 10 You
want to be with the people that are smart andknow what they're doing and it's not hard to
find out who they are
and experienced in that in transactional intransactions
(44:34):
Well, you know, it could be said for everybodyand everything that they do, right?
In our own world of print, when you, you know,keep things at the high level, high quality,
You like the finer things.
You don't change the way you think on that sidewhen you go over there or how I could save some
money.
(44:54):
Those are not the transactions where it'sthinking about saving the money.
It's about making the right decisions becausewith the right guy, you will have more money at
the end.
Typically, yes.
Right?
I mean, yes, I know was know, I
just threw out a number, but that number mightnot be applicable to a company with $4,000,000
of revenue.
So I don't wanna scare people off with a numberthat I just threw out, which is really for
(45:16):
bigger transactions.
So but
Well, I've I've I've done some transactionswhere, you know, the lawyer bill is 25, 30
grand, 30 5 grand for whatever he's doing backand forth, and you know, the accountant is
doing whatever they're doing.
Although I will touch on something reallyfunny, it's not really about M and A, but we're
(45:38):
talking lawyers and reading.
So I recently just had a contract from someoneto look at, and I joked to them and said, Do I
need a lawyer?
And they said, No.
And I looked at it, and I thought, Okay, maybeI do need someone to look at it.
And I put it into chat GPT that I pay for, andI asked it to be my advisor and just to point
out the good, the bad and the ugly and what Ishould think about.
(46:01):
And I kid you not, I saved at least $2,000 onthe lawyer just to read it because they charge
you for the time to read it.
And what it put out, I've done enough stuff to,you know, to be able to read it and know that
it's a good starting point.
Blown away.
Went back to the other people, I said, Hey, I'dbe straight up.
(46:21):
This is what I did.
They looked at it, they're like, Woah.
Wow.
So it's not to cut out the lawyer, it's to savea little bit of money in the beginning, right?
For what you're doing.
And then the other thing is when I did that,it's what I learnt when I did that.
Because I wouldn't normally learn, the lawyergives me back something, just kind of read it.
(46:42):
At the end of the day, it's all about beingefficient.
So whether it's chat GPT or getting the rightattorney, you wanna get the deal done.
You wanna have the right toolkit.
No, for sure.
I'm just saying people could use chat in thebeginning a little bit to get ahead before they
sit down.
Or even if they're gonna sell, they can go inand ask it, give me the full list of what I'm
(47:05):
supposed to do so that when they do sit withthe advisor, they're a little bit pre versed in
some of the terminology.
That's different thing.
I'll have to play that one out and see how whatcomes out.
Yeah.
I just found in certain situations, it justhelps me even on a legal side understanding.
(47:25):
Even just, and then I'll move on from that one,but like even NDAs.
Lawyer would charge you $1,000 for an NDA, thenyou just change your name in.
You don't need that anymore.
So different ways, but I'm always been abeliever.
Even when I was selling print, the people wouldcome to me because we were the best at what we
did, which we did it really well, and you getwhat you pay for in the end most of the time,
(47:48):
right?
Because people hold themselves like that.
It's just important to just always do the rightthing.
How many transactions fail?
Or what percentage do you think fail of whatstarted?
Define fail for me.
Don't go through.
(48:14):
Probably 10 or 15%.
I'm just doing some quick math in my head.
And and for all kinds of reasons.
It could be anything.
Yeah.
Yeah.
And then okay.
Last question.
When they do transactions, do the selling partystay on?
(48:37):
If they do, for how long?
Generally, do they last the duration of thetime that they said they would be there?
As always Really big big
big because after they have no say, so to speakThe
(48:58):
successful owner who exits typically doesn'tlast long.
Take the the statistics are less than a year.
But the salesperson owner who wants anotherfive years in a career tends to last because
they've got they've got their their their laneto stay in.
(49:18):
They're successful at it.
I've talked to buyers who will point out to methat they've done five acquisitions, and four
of those five owners are still with them doingsomething.
I guess depends what their position is.
And you know what?
I would think that, for the person selling whogets some cash, whatever amount it is, and then
(49:39):
really doesn't wanna do nothing, what a greatopportunity to be doing what you love to do
without any of the pressure and liability.
I mean, unless you have a payout or an earn outat the end.
But it's pretty, it's little, it's a nice wayto end lighter than buying a $4,000,000 machine
to keep the business going.
(49:59):
Right?
Well, I'm there because
you I might say, Warren, is that it's difficultfor the type a personality
Mhmm.
If we can use that term, to stay on for long.
I would agree with that.
That's being me.
Yeah.
That's the person that kind of chafes at thewhole thing and has to leave.
Yeah.
(50:20):
I could see that being well, from my ownperspective, I could see it being pretty tough,
pretty tough.
Yeah.
But And would you say most people are happy atthe end, buyers, sellers, when they do the
transactions?
Yes, but sometimes it takes a few months.
(50:42):
It's almost like postpartum depression, if youknow that term.
Find that sellers, they're very focused.
They want to retire, and They've got a goal.
Maybe there's cash plus an earn out and acouple weeks after the closing they're
(51:02):
typically This is a broad brush, but they'reunhappy because they just let go of their their
baby,
oh, that's it?
But then a few months later, like, this is whatI needed to do.
This was the right decision.
I made you know, I got the transaction Iexpected.
(51:23):
I said yes to it.
I'm okay.
Saying buyers maybe less so, but we have hadbuyers who come back to us and say, you know, a
month later, this is a disaster.
Why did I do this?
Right. To
To me a
year or two later and they say, You know what?
That worked out.
We got some good customers.
We had to change some things around.
(51:44):
It wasn't 100% what we thought we were gettinginto, but we're glad we did it.
And and there's a real good residual value thatwe still have in our new company or or the
bigger company.
So there's kind of this natural human emotionalcurve that goes on.
Probably not what people wanna hear, but that'ssort of Well,
you know what?
It's I want people to hear the truth.
(52:06):
I want people to hear the way it really is.
I've done, in a couple acquisitions that I'vedone, I mentioned one before we were, like,
sabotaged by the former owner and maybe some ofthe people, but it's the heart you learn the
most in an acquisition when you bring twocompanies, two groups together because it never
(52:27):
really is what you had before, right?
And it's not what they had before.
And you're kind of recreating a new culture anda new mantra for people to work on.
It's, you know, it's like a I'll even say, justas a divorced guy when I was with somebody
else, it's like a blended family.
You hope it's great, but it takes work, and youcan't go in with the wrong expectations.
(52:51):
Common mistakes are people let a us versus themculture develop within, and you have to work
hard to avoid that.
And that can be really difficult if you'rebringing people together in the same plant.
You're maintaining a different brand in adifferent facility, well, that's one thing.
But if you're taking a company and everybodyfeels very emotionally strong about that
(53:14):
company and you're tucking it in, you'regetting rid of the name and you keep telling
people, I've seen this happen.
Well, your company failed.
So everything we're gonna do everything ourway.
That's probably a mistake.
There was probably some good value there thatyou could learn from and incorporate.
So you want to avoid that us versus them.
(53:35):
And
You you you could have a three hour podcast on,you know, merged entities after and people and
cultures.
There's a different conversation here.
I'm probably not the right person to have it.
Is the post closing transition process.
And our firm doesn't get involved in that somuch.
(53:58):
So we get to a closing and everybody's happy.
We walk away.
We get our fee.
If it's a distressed situation, then we'reinvolved to help figure out
where
to put the in a successful company M and Aprocess, typically we're out of the picture.
But there's a need for a consulting companythat helps with post closing transitions.
(54:27):
And I suspect they're out there.
Well, I
I would have used one had I known betterbecause it would have made it would have made
the pain a lot easier.
Okay.
But now you've gone through a closing.
You've spent all these fees that you've spokenabout.
And now the M and A advisor says, hey, Warren,I'm out of the picture, but you should hire
(54:51):
this firm that's gonna help you with thetransition, and it's gonna be another x amount
of dollars.
You're probably exhausted spending money atthis point and you just want this to happen.
There are a lot of things in transition.
Again, I'm not the right person to do it, butthere's a need for that service.
(55:12):
My
biggest experience in business has been if youneed to hire somebody to move things along, to
recreate, you know, cultures, people, etc.
It is so important and it is so worth it withthe right person, right?
Because the quicker you can get from A to Bwith minimal aggravation interruption,
(55:36):
everybody then just comes together and theneverybody's rowing the boat in the same way or
most people in the same way.
Otherwise, There are people in the industry whodo that.
Don't know that they really do transitionconsulting, but they certainly would be
helpful.
I don't want to name any names, but
Yeah, no, no, no.
That's yeah.
I can think of a couple of people that ifsomebody called me, I could say, well, call
(55:59):
this person or that person, and they probablycould help you with this process.
Oh, I think, anybody can call anybody who'sdone any acquisitions and brought companies
together for a little top 10 on what to do orwhat not to do right away to keep the ship
moving and keeping it upright.
Otherwise, it's like you're in some roughwaters.
(56:20):
But yeah, it's a never ending learning, right?
When you're doing this type of stuff.
At minimum, at minimum, put together aninternal transition team.
Yeah, and that's, you know, regardless of yoursize, to do something.
Yeah.
Right?
Yep.
You have to have even liaison, a liaison personjust within.
(56:42):
Yeah.
That works and goes with.
Yeah.
Wow.
Anyways, wow.
Time flies.
Great.
If that's for me, take a message.
Yeah, no, great conversation, super insightful.
I think these conversations need to be hadbecause more and more people wanna do
transactions and don't know what it is.
(57:02):
I think when you wanna do a transaction, Ithink you have to educate yourself a little bit
before to know what you're going into, or theup and the down and the journey is a lot
bumpier or could
be Yes, what we didn't talk about on this call,and I'm happy to talk about it with anybody at
any time really, is what are the particulars ofthe process?
(57:25):
What does the process look like?
And because it's a defined process.
It's not rocket science.
But you know what?
Let's take some time.
I'm in no rush.
And let let people hear.
What the process?
Alright.
I have to watch my time as well.
In a nutshell, okay, because it's really alonger conversation But
(57:51):
when you hire an adviser, an adviser is gonnaput together marketing materials.
And they're typically gonna put togethersomething called a teaser.
That's a document that describes the companythat's for sale, but it's not identified.
So this goes out to a broad base.
It could be an approved base, but it's a baseof prospective buyers that are going to look at
(58:13):
this and say, Is this interesting to me?
Then the next thing that's put together issomething called a confidential information
memorandum, or the book it's called sometimes,or CIM, C I M for short.
That's a lot of details.
Typically it would be 50 to 100 pages.
That's got a lot of detail about the company,financial information, customer information.
(58:36):
We typically don't name the customer names inthat, but we do call them customer A, customer
B, customer C.
But buyers are going to want to know, is therecustomer concentration or is there customer
diversity?
What's the trend from those top customers?
What's it look like over the last three years?
What industry are those customers in?
All that's identified in the SIN.
(58:59):
Where is the company?
Where is the building?
Is the building for sale?
Is the building for lease?
How big is the building?
All that information.
Why are they selling?
What's the motivation for selling?
Who are the principals?
What is their background?
What's the second level management?
What do they do?
Who are they?
(59:20):
Again, there's different levels of informationfor different sized companies and different
preferences.
So that's all put together.
The next thing you put together is a list ofprospective buyers.
In our process, we get that pre approved by thesellers.
Other people just broadcast it.
(59:41):
I don't know somebody else's process, but Iknow what our process is.
So we work with a pre approved list.
We also put forth a Why would somebody hire usversus a general broker or investment banker in
their community?
Because we know the industry.
I daresay we probably have the best database inthe industry of investors and owners in the
(01:00:08):
printing packaging industry.
If not the best, we're certainly there.
And relationships, widespread relationshipsthroughout.
We talk to owners and investors every daythroughout the industry, these different
segments, printing, packaging, mailing, soforth.
(01:00:28):
So we can put together that list of prospectivebuyers, not just as a shotgun approach, but in
a specific
From knowing.
Using the knowledge of the business.
You don't wanna send
a wide
format opportunity to a high volume web offsetprinter unless you happen to know that they're
(01:00:51):
interested in getting into the wide formatbusiness, which is that's that relationship.
But you don't want to waste being in wrong timein the wrong place for the wrong reason.
Yeah, you want to So we do that.
We also have an NDA, is well vetted by dozensof attorneys, so we provide that.
And then you go to market.
You get responses.
(01:01:11):
You solicit offers.
You provide one of the things that I have foundis that owners will hire our firm because they
think we know somebody, and we do.
But six months later, after we've gone throughthe process, and it is a process, I've had
(01:01:36):
several owners say to me, it's gonna sound alittle immodest, and it's not just about me,
it's about my partners as well.
The team, it's the team.
And
we always work two principles on everyengagement, so it's not just ever me.
It's always me and Michael, me and John, me andMitch, me and Rod.
It's always two of us together on everyengagement.
(01:01:58):
And we do that for a couple of reasons.
One, we do a peer review internally.
But two, this decision when an owner hascrossed the emotional bridge to sell is one of
their most important decisions.
They don't wanna hear that I'm on vacation orJohn or Michael's on vacation and not be and
not that's fine, but they want to be able toreach somebody and say, What's up?
(01:02:23):
Or get good advice.
So I've had owners call me six months later andsay, I hired you effectively what they're
saying because I thought you knew somebody.
But what I really came to value at the end ofthe process was you and your team's advice
along the way to get me to a close.
And that's when they don't mind the fee, whenthey say, okay, you got me here.
(01:02:49):
This is not like the real estate brokeragebusiness where you is there a dog there?
I see a tail wagging.
It's, Wally on the wall is, sitting right herebeside me.
Just got to fuck the bed.
Not like the brokerage business where you takea listing and throw mud up against the wall and
hope that something stick sticks.
(01:03:09):
It's a disciplined process to accomplish agoal.
Well, I I was gonna say before, when you weretalking, it I think in our industry or maybe
every industry, you need to go with the peoplethat know the industry, because if they don't
know the industry, they don't know the ins, theouts, they don't know, you know, the lingo on
the other side.
And then it just takes longer to do.
(01:03:31):
And I find there's even more complications.
I mean, that's the philosophy that we've usedat Graft Cards Advisors because we have
blinders on and it makes a huge difference forus and our clients.
There are other people who would rather hirethe investment bank that's in their city who
needs to learn the business, and, you know,that's okay too if that's what they decide to
(01:03:51):
do.
But, you know, we've obviously taken thisapproach where we're not industry agnostic.
We're industry specific.
Yeah.
No.
That would be my my preference.
Okay, so we went off a little, which was great,because I think that was really important for
people to hear and to know.
First of all, what a session.
Love M and A, love hearing about it becauseyou're always learning something new, there's
(01:04:14):
always something different, and times arealways changing.
So when the times change, the way people dothings change, the operation, you know, the
process.
What few words would you have for anybody outthere who's thinking about possibly, you know,
wanting to unload their business?
Well, unloads, that's a loaded term.
(01:04:36):
Oh, I'm just using different words.
Sell their business for high profit.
Everybody loves this term, Lainie.
They want to exit ownership.
Mean, that's become a popular term in the lastten years.
I Mean this is gonna sound self serving and itis is talk
your loud
or whether it's what's that
(01:04:57):
I said you're allowed
Yeah, whether it's me or somebody else one ofmy partners or somebody else who does what we
do, talk to somebody about the process.
They should be willing to have a conversationwith you upfront about what the process is
like, what the costs are, and what's going tohappen through the process.
(01:05:18):
Because it will be a little bit of a rollercoaster.
To say the least.
Be prepared for some lows and some highsthroughout the process for sure.
What's something that they should stay awayfrom or not do it or just a quick, you know?
(01:05:40):
Because everybody's quick on, yeah, I wannasell or I want.
But
The one, and I would call it a mistake that wesee, is owners will get engaged in what I call
a serial process.
The serial with an s, not with a c, and they'llentertain one they really wanna exit.
(01:06:03):
They've got a one year or two year plan, andthey think they know the perfect buyer.
So they engage with that buyer and they spend 4or 5 months, doesn't work out, and then they
say, Oh, well, that didn't work.
I'm gonna call that, and then they go throughthat.
So it's a serial process where they're goingthrough one after the other.
(01:06:26):
Before you know it, it's two years later andthey don't have a transaction completed.
You really wanna run a parallel process whereyou're going out to the market and touching
various prospective buyers at the same time.
Not only will you probably get a better offer,but you're more likely to get an offer done
because we're all human, and part of the humandynamic is when it's a competitive situation,
(01:06:51):
we up our game.
So buyers are no different.
When they know they're in a competitive I'm nottalking about a drag out knockout fight, But if
there's an adviser involved, they knowimmediately that it's a competitive situation,
and therefore, they're gonna up their game, andyou're more likely to get a deal done.
(01:07:15):
It's just the truth of it.
Yeah.
No.
It's, you know, well, again, that's why peopleshould refer to advisors for the right I think
just for the you know, help with the right wayto do it and to avoid all the minutiae stuff
and wasting time because the time fliesquickly.
The more time you spend, the more expensive itgets.
(01:07:37):
I tell people, if we're not gonna hire ourfirm, we'll hire some firm, at least get an
advisor to help you with the process.
So that's a generic statement, even though itsounds like a pitch.
It's definitely
No, I think it's great.
I think everybody should.
There's a reason that there's professionals inevery different area, even when it comes to
print.
When I'm selling print and I go to a customer,I want the customer who wants me because I know
(01:07:59):
what I know and I'm gonna save them the time,the energy, we're gonna get their brand on
mark.
Yeah.
There's no secrets.
Wow, okay, we're gonna do this again becauseit's a never ending and there's just like, as
I'm doing this, I'm thinking of like 20 morethings I'm thinking about in the process.
And I'm thinking back to some of my experiencesthat I would like to share with some because
(01:08:19):
when you don't do good, it really does suck andyou don't wanna make those mistakes again in
any way.
Thank you so much for your time, Mark.
I appreciate Yeah.
So Mark, I just, again, I wanna thank you foryour time for You're welcome.
You know, all the information, everything youput out for us.
To everybody else, I hope you walked away withsomething that you didn't know.
(01:08:39):
And if you did know, maybe you just had somereconfirmation of the right things to do.
It is a big process if you wanna sell.
It is a big process if you wanna buy.
My experience is you wanna do it right becausetime is money.
If anybody knows anyone who wants to be on theshow, let me know.
If anybody has anything they wanna share that'sgood good for people to learn and know, then
(01:09:03):
let me know and we'll work that out.
Otherwise, we'll see you again soon.
Warren Werbitt, printing's alive and I loveprint.
Thanks, Mark.
Thanks, Warren.
Welcome back to another podcast of Printing'sAlive with me, Warren Werbet, your host.
I hope you enjoyed the podcast and the series.
I'm here to just bring the world of print toyou with everyone involved from all aspects,
all kinds of print, more importantly, just allabout the people.
Today, I have a special guest.
I have Mark Hahn of Graphic Arts Advisors,whose specialty is Actually, Mark, why don't
(00:35):
you just welcome, first of all.
Thanks, Warren.
And why don't you give us a little lowdown onwho you are and what you do?
Well, Mark Hahn, senior managing director ofgraphic arts advisers.
We're a boutique financial advisory firmspecializing in mergers and acquisitions in the
printing, packaging, and related industries.
(00:57):
Related typically means mailing because mailingand printing have come together.
Also, a little bit of dose of digitaladvertising sometimes gets in there.
But as I like to say, if somebody's putting inkon something somewhere, we're probably
interested in, we're probably qualified.
(01:17):
If there's no ink involved, we're probably notinterested in, we're probably not qualified.
So that's the blinders that we have on in termsof our practice.
Personally, got into the printing industry as ayoungster.
I rent presses, went into sales, sold printing,started a printing company, rented for ten
years, sold it twenty two years ago.
(01:37):
I'm making this quick, Warren.
I don't want to get into too much of the weeds.
It's all good.
Then was a CFO, Chief Financial Officer ofanother printing company, and then started
Graphic Arts Advisors full time about ten ortwelve years ago.
So that's who I am.
I have partners, three of whom are ex printingcompany owners, as am I.
(02:01):
And one partner, John Hyde, is an attorney, nonpracticing but licensed.
And I can tell you what we do.
So that's who we are.
We also have a couple of associates that wework with, one in my office and also a
bookkeeper in another office.
We work across the country, so we're national,primarily US centric, Ed Warren, some Canadian
(02:21):
once in a while, but we're not global.
So we're focused really on North America andmostly US.
So that's who we are.
So what do we do with that?
Half of our business is sell siderepresentation, A quarter of our business is
buy side representation.
That's what we call it.
We're either representing a seller or a buyer.
(02:42):
And a quarter of our business is a mixed bag ofvalue assessments and special situations, which
we can talk a little bit about that.
That's essentially helping companies that arefinancially challenged.
So so that's who I am and what we do in anutshell.
Awesome.
(03:02):
Yeah.
I've known I've known you guys for a long time.
I've dealt with John in the past, spoken withhim in the past.
He's been quite helpful.
Today, we're gonna talk only the good stuff.
We're gonna leave some of the rough stuff foranother episode.
But what I wanted to talk about with you isbuying and selling.
Owners wanting to sell and maybe buy.
(03:25):
Our industry is getting a little bit older.
Not everybody has family in the business.
Some do, some don't.
Some wanna be in, some don't wanna know fromit.
But when I talk to other printers and I say tothem, Hey, what's your plan?
Are you thinking of selling?
What are you doing?
You know, they could be late 50s and their 60s.
And a lot of them are like, I don't know.
(03:47):
I said, Have you spoken to anybody?
They're like, No.
And I just know from my own experience thatwhen you wanna go through the process, there's
a lot to it.
It's not just deciding that you wanna sell,right?
Then call somebody.
And I would also say it's not something wheretwo owners really get together to try to do the
(04:10):
deal.
My experience was it's always easier to havesomebody fresh, you know, from outside the
circle assisting.
Well, I'm definitely a believer in having anintermediary involved because that's the
business I'm in, and and it works.
And and we're busy.
So I know there's a need for it.
It's a proven model.
However, there are occasions where one ownerknows another owner for many years and they
(04:35):
maybe have friendly competition, and and theycan do a transaction.
So that does occur.
It's harder, though.
It's less common.
And what happens sometimes is the transactiondoesn't happen, and then the seller finds
themselves a year or two behind the schedulethat they intended because they burnt up time
(04:57):
really trying to do it on their own.
So we do get some do it yourselfers that thencome to us and say, Hey, this didn't work.
Curiously enough, sometimes the buyer that theywere working with will actually end up being
the buyer.
But after you run a process, the buyer knowsthere's a competitive environment, they know
(05:18):
there's professional advisory services, and sothey kind of get going and make an offer that
makes sense.
So an advisor can simply actually help theprocess through motivation.
Yeah, and the other thing with the advisor is,I think it just, most importantly, it keeps the
(05:40):
emotions down because when people are owners,they could be quite emotional about how their
business is and how they see it, right?
But what I wanna get into is I wanna sell mybusiness.
What's the first thing I'm gonna do?
It really depends on your business.
I know that's a non answer answer, but ifyou're a highly successful business and you're
(06:04):
clicking out EBITDA at 15% of revenue andyou're growing at 10% a year, that's a
different pathway than somebody who's sayfinancially distressed or just treading water
moving along.
So it really depends on where you are.
Again, I know that's a non answer.
Well, about if we just put the context of theperson has a decent business, the growth is
(06:30):
there a little bit, there's no fives and tens ayear annual growth.
They're making some money, they've always beensomewhat profitable, Their equipment is semi up
to date because we're always needing somethinganyways.
Yeah.
Yeah.
First thing is decide that you really wanna dothis.
And and you talked about emotions, and there'sthere's a concept that I use, which is what I
(06:54):
call the emotional bridge.
And people sell their company because they'vecrossed some kind of emotional bridge.
They're either rich, they're either poor,they're sick, they're healthy, their spouse is
saying enough already with these sixty hourweeks, or they're not going into work and they
don't want that responsibility.
You mentioned equipment.
Equipment has come to the end of its life andit's time to sign on for another million dollar
(07:18):
press or upgrade from Offset to Inkjet,whatever it is, there's some kind of bridge
that you cross in your career where you'vedecided it's time to sell.
That's an internal step.
And I can tell you that there's no way that Ican sell somebody on hiring us to sell their
business.
It just doesn't work that way.
(07:40):
They have to decide in the whatever theirsituation is, again, rich, poor, healthy, sick,
whatever it is, something has changed where nowthey're ready to exit.
And that's the first step is crossing thatemotional bridge.
Once that happens, it really does depend on thebusiness.
If your bookkeeping is sloppy, then get yourbookkeeping in order.
(08:00):
If your bookkeeping is in order but you've gotcustomer concentration, figure out maybe you
need to go through a couple years of addingsome customers and show that you can do that.
You might not be able to dilute theconcentration, but at least you can show
there's a pathway to it.
Or if you have concentration, can you get acontract with that customer so you can show
(08:21):
that it's going to transition with a sale?
So it's really going depend on your particularsituation.
If you're in an industry that's in if yourcustomers are in an industry that's in decline,
maybe you need to, again, show that you can addcustomers in a new direction.
So it's situationally dependent.
(08:43):
And what would you say though?
I mean, I've spoken with a few people and I'vein the past, but to how should the company be
really set up?
Like, your sales your salespeople in order?
Do you if you should you be having the latestaccounting software, MIS software, production
processes?
(09:05):
Does value, take things away?
Like how do you get the best value goingforward?
The best value is gonna be because yourcompany's profitable and growing.
I mean, can cut through all that other stuff,it's great.
You can have worked for thirty five years, yougot a great brand name, you're gonna you're
(09:26):
gonna you're gonna benefit the most by having aprofitable company that's growing and and and
you're showing that.
And what what you don't wanna do is do a wholebunch of mechanics to boost your profit
artificially in the year before you sell.
Now you might do some things.
You might put off some equipment purchases.
(09:47):
You may let go a salesperson who'snonproductive.
That's all good kinda house cleaning stuff todo.
But making major changes that all of a suddenyour EBITDA goes from 7% to 20% because you did
all these cuts and everything, buyers are goingto see right through that.
You're not going to get the benefit of it.
In fact, it may be detrimental because you'venow taken the future life out of your company.
(10:09):
You've cut things that shouldn't be cut.
I don't know, did I answer your question,Warren?
Yeah, really, I guess what I'm hearing isdepends on who the buyer is, depends on the
company.
Everybody should be as clean as they canbecause there are no secrets once people start
diving in, right?
So you shouldn't have the outside looking greatunless the inside's you know, together as well.
(10:34):
Yeah.
And if there are issues, be prepared todisclose those.
Be prepared to talk about what the solution is.
Everybody knows we have issues in business, butwhat what what are you doing about those
issues?
And we're kind of fast forwarding to theprocess, but if you have an issue and you're
involved in a sale process, the earlier in theprocess you get it out, the better it is
(10:56):
because you don't want to go down a road andthen have to backtrack.
That's a difficult position for everybodyinvolved.
Well, think in life, we all learn that when youare speaking the truth and you're honest
upfront, it's always easier, right?
Because it just And again, you can't hideanything.
How how long does it take or how long is thetransaction when you wanna sell?
(11:21):
The standard answer is six to nine months.
That's the default answer.
The truth is it could be anywhere.
We've done deals in, I'm not exaggerating here,six weeks during the time when COVID broke out,
March to April 2020, probably the quickest dealwe ever did.
We just had one where we went to market, we gotoffers right away, we're gonna close tomorrow.
(11:46):
And we just went to market, I think it was lateAugust, maybe it was even September.
Other deals can take four years.
Now you might go, woah, four years.
What's that about?
Well, what's that about is COVID broke out, soyou sit around.
A great offer came in for the real estate, sothe company's taken off the market for a year
(12:07):
while that's digested.
Other a major customer is lost, so the buyerbacks away.
There's a few bad months.
We've had ones where a buyer backs away.
We gotta go back out to market.
And in both cases, can think of where thathappened.
We actually got a better offer when we wentback out to market because things weren't as
(12:27):
bad as maybe they looked at for those twomonths.
So six weeks to four years, that's a big range,but the standard answer would be six to nine
months is what you should expect.
And you might wanna say, realistically, setyour set your sights on a year to to to get to
closing and kinda be through the process.
(12:49):
There's prep time.
There's so that's how I would answer thatquestion.
Cool.
And I guess we've said that the buyer shouldstart really thinking or bring it up as soon as
he's thinking about it, I guess, instead ofsitting on it and waiting.
Right?
Or reach out to someone like yourself for aconversation.
(13:09):
I guess, do you help people define what theywanna do or maybe they don't wanna do it?
Are you like a little bit like a play theshrink a little with the owner sometimes?
Well, yeah, I guess half of my job ispsychology, but I don't wanna overdo that.
The answer is that's not the heavy part of ourbusiness, guiding people through their business
(13:35):
structure.
We're primarily M and A and transactionaladvisors.
It's the bulk of our business.
However, companies will hire us to do what wecall a value assessment.
We'll go through the process and we'll say, youknow, we think your company's worth x.
You've got y amount of debt.
(13:55):
Here's gonna be the and we run that downthrough what are the net shareholder proceeds
because you could have a company that's worth$10,000,000, but if you're loaded with debt and
you need new equipment, maybe your proceedsaren't gonna be significant.
And that's really the number that you wannalook at is what are you gonna get at the end of
the process.
So what's involved when you're doing anevaluation?
(14:19):
What are you looking at?
Because not everybody who sells knows all thedifferent steps to take into their mind.
They might leave out one or two lines, whichthen affect the number in a big way.
Well, we have a checklist that we've developedover the years of documents that we ask for.
It's not too long, it's not too short.
It's been honed over time to get us areasonable picture of what we think is needed
(14:46):
to establish what a value would be on the an mand a value based on the market, what we're
seeing.
Now so to kinda go back to your question, if wego through a value assessment process, people
will say, Well, I'm not ready then because I'vegot too much debt, or I really need to work on
(15:10):
this EBITDA number, or my revenue went downlast year and that doesn't look good.
So we'll discuss those factors.
And I've had plenty of owners say, You knowwhat?
I'll come back to you in six months or a year.
Let me take care of these things.
Another conversation we have over and overagain with owners is, what's the impact of net
working capital requirements on ownershareholder net shareholder proceeds on a
(15:36):
transaction?
And the most common response I get to thatquestion is what?
What is that and why am I thinking about thatand why do I need to think about that?
Those are questions and when we go through thenumbers, owners will say, wow, if I manage my
working capital just a little bit differentlyover the next year, I don't want to say
(16:02):
radically, but I can change the proceeds thatI'm going to get out of this business because I
manage the working capital more tightly and Ican prove to a buyer that I was able to make
the same EBITDA by managing that net workingcapital.
Those are kind of arcane concepts when you'rerunning a business on a daily basis.
(16:22):
You're not thinking about that.
I can give you examples where that gets people.
Their light bulb goes off, and they go, okay.
I'm gonna work on this for a year or two, andthen I'll sell.
Well, I I've I've done a had done coupleacquisitions, and you learn a lot when you're
doing acquisitions.
You gotta take into account, first of all, theother team.
(16:43):
I've did one small acquisition where they hadto sell.
I mean, they didn't have to, but yes, they hadto.
And when they did and the owners were included,I mean, were almost sabotaging the deal after.
It became toxic.
So I had to, you know, act quickly to get ridof one of them really quickly and, you know,
make the others understand that you guys weregoing down.
(17:03):
We're not here to be bad.
We're here to elevate everybody.
And that in itself is a whole other processthat you go through.
And then the biggest thing that I went through,even when, you know, the advisor with the
evaluations and everything, one of the otherowners had in his head, he was adding up
(17:24):
literally all the hours he worked in his lifeand putting them on to the value.
And it was hard to
have know this a lot of times, Warren, I'veworked thirty five years to build this company.
It's gotta be worth this.
And I get that, but that's not what buyers arebuying.
They're buying the future.
(17:45):
They're not buying the past.
So the value has to be transferred at theclosing, and the buyer's going to say, What is
this going to do for me as the buyer?
Hopefully a buyer is respectful about thatthirty five years.
But they're not paying for that thirty fiveyears.
They're paying for the future performance ofthe company.
And that's what we need to show.
(18:05):
Right.
And if you set your company up right or you'rein a niche or you're doing something
particular, you're added more you're addingmore value because they have it going forward,
Yes.
It has to be about the future value.
And to your point about the people sabotagingthings, there are three primary things you want
to think about in an acquisition context.
(18:27):
These are very broad categories.
You want to think about the money, you want tothink about the strategic position of the
company, and you want to think about the peopleor the culture or the environment of that
company.
And I can tell you that most buyers and sellersthink about those things in that order.
They think about the money, then they thinkabout the strategy.
(18:48):
Does this fit?
And the last thing they think about is thepeople.
We hear a lot of lip service about people, butwhen it gets down to it, that's what they're
thinking about.
However, I can tell you when you do a look backon most of these transactions, it's the
opposite.
It it it it may be it may be a tie between thepeople and the strategy because both of those
have to be right.
(19:09):
But, typically, it's the people.
If the people are wrong, you should walk awayfrom a deal as a buyer or seller.
Don't kid yourself that any amount of strategyor money is gonna make it work.
You gotta have the right people.
Strategic fit is critical.
And then at the end of the day, I don't wannayou know, people make different amounts of
(19:30):
money in this business, but I'll just throw outa round number.
$10,000 or a hundred thousand dollars spreadover five years in a purchase agreement is not
gonna change pretty much anybody's life in thisbusiness.
So you really wanna focus on those otherfactors and then then work out the best
financial deal.
(19:50):
Oh, for sure.
So yeah, I would tell you, one of myexperiences and one of the acquisitions that I
had done was, first of all, you get excited.
And many of you get excited, you need to havesomebody, I think you need to have somebody
with you who's not attached to anything, who,non emotional, could think things through and
(20:11):
guide you.
So in one instance, I got really excited aboutthe whole prospect of what the deal was, who
they were, their reputation, and I made somebig fundamental mistakes.
One of the mistakes I made was the people, notreally doing enough not really getting to know
them or understand them well enough, even themanagers say, because you can't deal with
(20:34):
everybody.
And then the, I'm gonna say the biggest mistakeI made is when I looked at the customer list, I
go out and check enough verify that they arewho they are.
There was a lot of customers on that list thatwere great names that got me excited that
hadn't given them an order in two years.
Yeah, well, a diligence, there's a duediligence part.
(20:55):
And I'm not meaning to underplay the value ofgetting the best deal for your company.
But there's a term that you want the best andhighest value for your company.
And that highest part is the soft part thatdefines the other factors that are maybe not
(21:16):
the top dollar, but it's a better deal for youfor reasons of structure, deal structure, maybe
the money sooner or later, depending on what isimportant to the seller.
So you really wanna look at all those factorsin a deal.
And and I guess to your point, yes, having anadviser who's objective and not involved is I
(21:38):
can say things that maybe the seller or thebuyer don't wanna hear.
And it's needed.
So let me ask you, a person's decided that theywanna do something, they've brought in the
right advisor, what's involved with duediligence?
Because that's really where it all starts andends or should.
(22:00):
Well, it's all over the place.
Due diligence is the process for people whodon't know, is the process of the buyer
examining the seller.
And in our process, we tell sellers once you'vesigned an asset purchase agreement or a letter
of intent and you intend to go to a closing,it's the buyer's right to ask any question they
(22:25):
want and you should answer that question.
In due diligence, it's, what's they saying,kimono's open.
You really have to show everything.
But in terms of the actual process, you can geteverything from an 80 page document that has
questions that are, one, ridiculous, but alsomay have the same question four or five times
(22:45):
in the document because they've cobbledtogether this list of questions from various
documents they've received.
And that can be very frustrating and you feellike somebody on the other side hasn't done
their job.
That's one extreme.
The other extreme is, and this is more likelyfrom a strategic buyer, another printer buying
(23:06):
a printing company, where the due diligence isreally quite light.
And as you say, they're excited about the deal,they know each other, the finances seem right,
and they just say, Let's make this happen andget a deal done, and they're not asking a lot
of questions or a lot of deep dive.
Somewhere in the middle of that between thedisorganized, non professional, 100 page list
(23:30):
of questions and the local strategic who reallykind of does a comfort deal, is it the private
equity buyers will do a pretty deep dive andthere'll be a lot of questions and they may
want to do a quality of earnings report wherethey basically recreate your P and L and really
kind of acid test a lot of the assumptions thatthey've made, but they want to see the
(23:54):
documents and trace those documents frombeginning to end.
For example, I did a deal with a Canadianpublic company was the buyer.
And as a public company, they don't want egg ontheir face.
They don't want be going to their shareholderslater and say, oops, we made a mistake.
(24:14):
Right.
A private company, you can go home and say,oops, I made a mistake, but they couldn't do
that.
So the due diligence was pretty rigorous.
Private equity buyers, the due diligence isgonna be pretty rigorous.
So, you know, scrap on your seat belt, getready.
It's gonna be a ride.
So if you're if you're doing something likethat, would you say that the payout could be a
(24:35):
little bigger in general if it's equity buyersversus, say, a competitor?
Like, do you get more money from one group overanother?
It's a great question.
It's gonna be so based on the situation.
I mean, private equity firms are spending otherpeople's money.
(24:55):
Actually, they're probably spending your money.
They're paying you.
Your company takes out the loan and has to payit back.
Well, if they re leverage the
company.
Yes,
it's a leverage buyout at some point.
They're using debt in the capital structure.
(25:15):
So they might be able to pay a little more, butthey're going to be very disciplined about that
process.
Classically, understanding was strategic buyerspaid more because there were synergies, but I
don't think that's any longer true.
It's situational.
(25:36):
If you get the right strategic buyer who says,I need this company in this city that does this
work, well, an extra turn on EBITDA solves alot of problems for them.
Right.
And they might be willing to go to that level.
So it's really gonna depend.
That's not a great answer, but it's the rightanswer.
(25:58):
Right.
I mean, I I've seen some, bigger companiesgobble up some smaller ones and almost pay
dollar for dollar on the revenue.
Bigger companies meaning big cash or public, orI mean, is it because it's the easiest way that
they're gonna get the bulk volume that theyneed for a story?
I've seen dollar for dollar on the revenue, butbut let's look let's do the numbers.
(26:21):
If you're a high performing company and yourEBITDA is 20% and and you're high performing
and maybe your revenue was $2,030,000,000, sonow you're up in that that middle range of
printing companies.
You're not down at the under 10,000,000.
So maybe you get a five times EBITDA.
Well, five times 20% is a %.
So there you are at one times revenue.
(26:42):
So you hear those stories about companies thatget that, but there's some mathematics behind
that.
It wasn't based on revenue.
It was based on that EBITDA.
On how they worked.
And where they are in the market.
You mentioned, you know, five times value whatis the is there a standard number out there
today?
Because in in the last little few years, itseems like it was all over the place or label
(27:06):
businesses were high demand going through theroof, offset companies less so, and then find a
niche guy with offset packaging and then it'sback up through the roof?
Well, you've kind of answered your ownquestion.
It really depends on the segment, the size, thegrowth rate, even the location, what's the
(27:27):
future prospects for it.
And, you know, there's that the the theattribute of this whole process that kinda
hurts the people at the low it hurts theirfeelings at the lower end of the market is if
their EBITDA is down at 7% or 8%, nine %, andthey're not growing, they're not gonna get a
(27:50):
high multiple.
And then they see somebody who's growing thathas a higher EBITDA who gets a higher multiple
and a higher number so that there's thatexponential ex escalation of business value.
But you have to be performing in order to getthose numbers.
So, to answer your question, the ranges are allover the place depending on the segment.
(28:14):
And I didn't mention in the intro that I'veresearched and written the monthly target
report for the last fourteen years, which Ishould have mentioned.
Well, I was gonna eventually bring it upanyway.
Actually, it's an important report that you do.
It gives a really good view of what's going onin M and A or how it's going and who's buying
(28:35):
who and size of the company you could get agood feeling for.
Yeah, and what we talk about in that are moreindustry trends that we're looking at based on
M and A transactions as well as closures andbankruptcies and so forth.
And that's by segment because the labelbusiness is not the commercial printing
(28:55):
business, is not the direct mail business, isnot the folding cart business.
We're all putting ink on something somewhere,but those are not the same businesses.
No, the label business is good.
Although the market
Right now.
The market has cooled off a little bit forlabel businesses since
And why would you say that?
Many, too much capacity?
(29:18):
Was such, a hot market fueled by the PE firms,and they cherry picked a lot of the firms that
were $45,000,000 in revenue, really doingreally well.
You've had the whole evolution of flexographyfrom a backwater process back when I was in the
business to doing beautiful work on flexiblepackaging.
(29:42):
So you've got a technology change, you've gotgrowth, and as we all know, packaging is a
reoccurring revenue so that people who wannainvest in businesses like that.
And so those values are just disconnected fromthe commercial print market.
Have you been have you been involved in anyESOPs or employee purchases of the business?
(30:07):
We have.
So tell me about that because that almostsounds could sounds interesting.
The employees that work obviously, you know,have some input, get something at the end if
there's a benefit.
How does it work for the owner when he'sselling first?
And then tell me about the employees.
Owners could do very well because it's a taxadvantaged process.
(30:28):
An ESOP's basically a trust that's a retirementplan.
So if if it's done correctly and there's a lotof rules, the the owners can benefit by selling
the company and having tax advantage proceedsfrom that sale.
(30:49):
It's gonna be situationally dependent.
But if somebody calls me up and it's a$2,000,000 or $3,000,000 a year revenue company
and they've heard about ESOPs, it's tooexpensive.
The reporting requirements, the trusteerequirements.
(31:10):
I tell people, right or wrong, it's what Iheard and what I believe, is that to really
consider transitioning to an ESOP company, youshould be revenue roughly 15,000,000 and above
and EBITDA 15% or thereabouts.
And if you're not clicking down those numbers,you're probably gonna be floored by the cost of
(31:35):
putting one of these plans together and thenrunning it every year.
So tell me quickly, what's the cost, just sopeople know and they have a good understanding,
what's the cost of putting it together?
And then what's the cost of, you know, managingit throughout the year at the end of the year?
Well, it's gonna depend on the company, but 6figures would be.
Really?
(31:56):
Oh, yeah.
Wow.
ESOPs are complicated, and they are trustarrangements that are retirement plans.
So there's a lot of rules around retirementplans, as should be.
And does the owner walk away with cash at thattime?
(32:18):
Sure.
Like does the company borrowing money from thebank to pay out the owner or partial or
does the cash there's typically a loan.
So ESOPs tend to have a lot of debt whenthey're formed.
So one of the questions I ask when an ESOPcontacts us about buying a company is how long
(32:39):
have they been in ESOP?
Because if they've been in ESOP for six months,they probably still have a lot of debt that
they need
to
pay down.
But if they've been an ESOP for ten years,they're probably well into paying down that
loan.
And there's a lot of nuances about these.
It's not for the faint of heart, and it's notsomething you wanna do without really good
(33:03):
professional advisers.
So when you say 6 figures, is that because youhave a lot of outside professionals coming in
to do things and to manage, or is it internal?
Is it your CFO, or is it your auditing firm?
Outside professionals.
Outside.
Yeah.
Yeah.
Wow.
Yeah.
And the employees benefit in that they receive,when the company's making money, dividends
(33:27):
every year?
Is it the loan paid off by the operation andthe employee never pays anything out of their
pocket?
Well, definition, an ESOP is a retirement plan.
So employee, there's a vesting schedule, justlike other plans that companies have, and that
vesting schedule is defined.
(33:48):
So employees who are there for that certainamount of time enjoy the value of that portion
of the equity that they're entitled to based onthat vesting plan.
And then when they retire, they sell theirstock back to the ESOP or redeemed, think would
(34:10):
be the proper word.
And so it's a form of retirement plan.
Wow.
Sounds complicated.
And then it kind of feels like you're gonnaretire waiting for counting on other people.
Well, you you are.
You're you're you're you're counting onyourself if you're an employee.
The idea is that it motivates employees to workharder to increase When
(34:34):
when when an owner decides to take that route,is he staying on for a long time?
Is he vacating the building?
Because when you sell your company, from whatI've seen is most people don't last that long.
The ones that I'm aware of the owners havestayed on, And typically part of the ESOP
(34:56):
funding comes from the owners in the form ofseller debt.
Okay.
Those sellers are motivated to stay on andperform and help pay down themselves, so to
speak.
Wow.
Do a lot of companies do that or is it apopular avenue?
(35:16):
I think it's kind of spotty.
I mean, there's a few in the printing industry.
There's a couple in the printing industry thatwere bought.
It's effectively a transaction you're sellingto a trust that's created a retirement plan to
buy the company stock have gone ESOP, to usethat term, and then have then sold out of the
(35:41):
ESOP structure.
And to do that, that's just a regulartransaction.
Well, you need ESOP trustee approval.
There's an approval process.
Right.
And some of them have been quite good for theemployees.
Oh, I would think what a great way to motivatepeople.
(36:01):
You know.
But if it goes down, it's not so good.
No, it's no good for anybody.
Yeah, so.
Right, it's gotta be, so also with sellingbusinesses, you have families.
And in some businesses, sometimes the family orchildren will take it over, in other cases not,
(36:24):
in other cases, maybe the father doesn't wannasell it to the kids.
Like, do you come across that and what happensin those cases?
Yeah, the biggest issue we see is that when acompany becomes very valuable, it can be hard
for the children to fund that transaction.
If the, the husband and wife who built thecompany are looking for a certain amount at an
(36:49):
exit, it's difficult.
We have seen situations where the ownerstransition ownership to the next generation
over time, and that maybe works better.
And I guess the kids' parents are still thereto teach them a little and make sure that it's
(37:12):
still running and they're not
cranking up
the yeah.
They're not giving up the reins.
Is the M and A activity busy now?
Yes.
Because it was busy a little while.
Did it slow down in the last couple years alittle or?
It did.
There was a time period, and we're out of thatnow, which is why I think it's busy, where a
(37:34):
lot of companies had a fair amount of liquidityon their balance sheet from all the government
money.
You had a couple and also there was the postCOVID demand curve that just shot up.
Right.
And there was the paper shortage, which gaveprinters a window of pricing opportunity.
(37:55):
So it's kind of ironic but you had companieswith strong balance sheets, strong earnings and
owners expected this huge bump up in value andof course buyers are going, had a couple of
really lousy years in COVID and I'm not gonnapay you for this one year because it's been so
(38:16):
good.
And so we had some sellers that were kind ofdiscouraged by the market response to their
inflated expectations.
That's kind
of think you sorry, I was gonna say, I thinkyou kind of gotta know if you're the seller
that if, you know, if you put yourself in the,you always have to put yourself in the place of
the buyer to think about what they're thinkingon how you're gonna maybe present things or how
(38:41):
you want to, But I, you know, even, you know,I'm just thinking like how many times people
have great runs and then that's why, you know,you go an average four years and not two.
Yeah.
We, our kind of default position is a weightedthree year average.
So that's just but if they're doing political,we use a four year average.
(39:01):
So but, you know, that's kind of run its coursenow.
The the PPP money and the I don't know what itwas called in Canada, but in The US, was the
PPP money and the ERC credits.
Think in Canada, it was just called free moneyfrom our stupid government.
Yeah.
So, you know, of course, we had all theimpacts.
(39:24):
We won't get into that from all that freemoney, but that's kind of been rung out of the
system now.
They're still there, but it's gone, most of it.
So now we have sellers coming to market withmore reasonable expectations.
And we also have buyers with strong balancesheets.
(39:44):
The buyers who kept that cash are now in a goodposition.
So there's kind of a nice market right now.
Oh, good.
The other thing that we've come across, andthis goes back to, I can really date it to May
2023.
As you know, a quarter of our business orthereabouts is helping companies that are
(40:07):
financially challenged.
I know that's another video, maybe we'll getJohn Hyde on a video with you, he's our expert
in that.
But that part of our business has ramped uptremendously since, again, May 2023, it's just
like somebody opened the gates and we startedto get distressed transactions.
Well, think that also, I think that has startedto do with the end of COVID, money running out,
(40:31):
the fairytale ending, market conditions.
Yeah.
And that hasn't stopped.
So that's a pretty steady drumbeat.
And that's a whole different transactionalstructure.
It's a whole different service offering.
So again, it's a different conversation.
But it's worth noting that that we've seen anuptick in that activity.
(40:55):
Yeah.
I don't I don't think there's any printingcompany that hasn't experienced in their
journey in the peaks and valleys.
Right?
And if you for me too, if you if you rememberwhat happened in the valley and you end up on
the peak, and as you go into the valley, it'sgonna be a different valley because you don't
wanna make the same mistakes twice.
Yeah.
Right?
And you wanna learn.
(41:16):
So in all the M and A and all the thinking andevaluations and whatnot, I think there's one
area that people are generally a little shockedwith and that's the cost at the end.
It's the cost of paying their advisor, whateverthe percentage is.
I was blown away on the professional fees,right?
(41:39):
Between the accountants and the due diligenceand all the numbers and their time, and then
the lawyer with whatever it is that the liarskind of do, and they're setting you up.
No, you have to make jokes about liars, but youneed the lawyer.
Yeah, well, you're bringing up a really goodpoint, and this happens over and over again,
and I would urge people to not do this.
(42:01):
And what I say when I give a talk in a printshow or whatever is don't hire uncle Charlie.
And uncle Charlie is my euphemism.
For the attorney that you've trusted throughyour whole career, Uncle Charlie, and maybe
he's a relative, maybe he's not or she, hasdone your real estate transaction.
They helped with your corporate documents, yourformation documents.
(42:23):
They helped you with your loan documents, andyou've really got this trusted relationship
that goes back thirty years.
Well, you've got a couple problems here.
One, Uncle Charlie doesn't understand M and Atransactions and he or she is going to make
stupid corrections to the asset purchaseagreement or the stock purchase And it's going
to eat up time and money because they don'tknow what they're doing.
(42:44):
They don't understand what's normal in thesetransactions.
They're also going to burn time.
And we've had deals actually that have fallenapart because Uncle Charlie, again to use that
term, has literally burnt through two or threemonths.
We had one once where the guy literally I knewI was in trouble when the I was working for the
(43:05):
the seller in this case, and he told me thatthey view the documents because he was in
traffic court that week or something like that.
I said, Oh boy, oh boy, we're in trouble.
And the deal fell apart.
We got it back together a year later, we gotthe deal done.
(43:27):
But literally, he blew the deal because hecouldn't respond.
And so the the problem is that they're notthinking about that it's a different adviser
for the this type of transaction.
Depends on the size of the company, and and thetrusted adviser, to use the the proper term for
uncle Charlie, might be somebody who really isqualified, but you really wanna know that in
(43:51):
advance.
And the problem is that I can say that untilI'm blue in the face, but our clients typically
will then say, yeah, but not Uncle Charlie.
He's got this.
He told me he's done transactions.
And and then four months later, they're saying,Mark, I should have listened to you.
(44:11):
So that's an issue.
So spend Oh,
I'm
sure.
Spend the $30.40, 50 on a real top notchtransactional attorney if depending on the size
of your company.
Maybe 10 You
want to be with the people that are smart andknow what they're doing and it's not hard to
find out who they are
and experienced in that in transactional intransactions
(44:34):
Well, you know, it could be said for everybodyand everything that they do, right?
In our own world of print, when you, you know,keep things at the high level, high quality,
You like the finer things.
You don't change the way you think on that sidewhen you go over there or how I could save some
money.
(44:54):
Those are not the transactions where it'sthinking about saving the money.
It's about making the right decisions becausewith the right guy, you will have more money at
the end.
Typically, yes.
Right?
I mean, yes, I know was know, I
just threw out a number, but that number mightnot be applicable to a company with $4,000,000
of revenue.
So I don't wanna scare people off with a numberthat I just threw out, which is really for
(45:16):
bigger transactions.
So but
Well, I've I've I've done some transactionswhere, you know, the lawyer bill is 25, 30
grand, 30 5 grand for whatever he's doing backand forth, and you know, the accountant is
doing whatever they're doing.
Although I will touch on something reallyfunny, it's not really about M and A, but we're
(45:38):
talking lawyers and reading.
So I recently just had a contract from someoneto look at, and I joked to them and said, Do I
need a lawyer?
And they said, No.
And I looked at it, and I thought, Okay, maybeI do need someone to look at it.
And I put it into chat GPT that I pay for, andI asked it to be my advisor and just to point
out the good, the bad and the ugly and what Ishould think about.
(46:01):
And I kid you not, I saved at least $2,000 onthe lawyer just to read it because they charge
you for the time to read it.
And what it put out, I've done enough stuff to,you know, to be able to read it and know that
it's a good starting point.
Blown away.
Went back to the other people, I said, Hey, I'dbe straight up.
(46:21):
This is what I did.
They looked at it, they're like, Woah.
Wow.
So it's not to cut out the lawyer, it's to savea little bit of money in the beginning, right?
For what you're doing.
And then the other thing is when I did that,it's what I learnt when I did that.
Because I wouldn't normally learn, the lawyergives me back something, just kind of read it.
(46:42):
At the end of the day, it's all about beingefficient.
So whether it's chat GPT or getting the rightattorney, you wanna get the deal done.
You wanna have the right toolkit.
No, for sure.
I'm just saying people could use chat in thebeginning a little bit to get ahead before they
sit down.
Or even if they're gonna sell, they can go inand ask it, give me the full list of what I'm
(47:05):
supposed to do so that when they do sit withthe advisor, they're a little bit pre versed in
some of the terminology.
That's different thing.
I'll have to play that one out and see how whatcomes out.
Yeah.
I just found in certain situations, it justhelps me even on a legal side understanding.
(47:25):
Even just, and then I'll move on from that one,but like even NDAs.
Lawyer would charge you $1,000 for an NDA, thenyou just change your name in.
You don't need that anymore.
So different ways, but I'm always been abeliever.
Even when I was selling print, the people wouldcome to me because we were the best at what we
did, which we did it really well, and you getwhat you pay for in the end most of the time,
(47:48):
right?
Because people hold themselves like that.
It's just important to just always do the rightthing.
How many transactions fail?
Or what percentage do you think fail of whatstarted?
Define fail for me.
Don't go through.
(48:14):
Probably 10 or 15%.
I'm just doing some quick math in my head.
And and for all kinds of reasons.
It could be anything.
Yeah.
Yeah.
And then okay.
Last question.
When they do transactions, do the selling partystay on?
(48:37):
If they do, for how long?
Generally, do they last the duration of thetime that they said they would be there?
As always Really big big
big because after they have no say, so to speakThe
(48:58):
successful owner who exits typically doesn'tlast long.
Take the the statistics are less than a year.
But the salesperson owner who wants anotherfive years in a career tends to last because
they've got they've got their their their laneto stay in.
(49:18):
They're successful at it.
I've talked to buyers who will point out to methat they've done five acquisitions, and four
of those five owners are still with them doingsomething.
I guess depends what their position is.
And you know what?
I would think that, for the person selling whogets some cash, whatever amount it is, and then
(49:39):
really doesn't wanna do nothing, what a greatopportunity to be doing what you love to do
without any of the pressure and liability.
I mean, unless you have a payout or an earn outat the end.
But it's pretty, it's little, it's a nice wayto end lighter than buying a $4,000,000 machine
to keep the business going.
(49:59):
Right?
Well, I'm there because
you I might say, Warren, is that it's difficultfor the type a personality
Mhmm.
If we can use that term, to stay on for long.
I would agree with that.
That's being me.
Yeah.
That's the person that kind of chafes at thewhole thing and has to leave.
Yeah.
(50:20):
I could see that being well, from my ownperspective, I could see it being pretty tough,
pretty tough.
Yeah.
But And would you say most people are happy atthe end, buyers, sellers, when they do the
transactions?
Yes, but sometimes it takes a few months.
(50:42):
It's almost like postpartum depression, if youknow that term.
Find that sellers, they're very focused.
They want to retire, and They've got a goal.
Maybe there's cash plus an earn out and acouple weeks after the closing they're
(51:02):
typically This is a broad brush, but they'reunhappy because they just let go of their their
baby,
oh, that's it?
But then a few months later, like, this is whatI needed to do.
This was the right decision.
I made you know, I got the transaction Iexpected.
(51:23):
I said yes to it.
I'm okay.
Saying buyers maybe less so, but we have hadbuyers who come back to us and say, you know, a
month later, this is a disaster.
Why did I do this?
Right. To
To me a
year or two later and they say, You know what?
That worked out.
We got some good customers.
We had to change some things around.
(51:44):
It wasn't 100% what we thought we were gettinginto, but we're glad we did it.
And and there's a real good residual value thatwe still have in our new company or or the
bigger company.
So there's kind of this natural human emotionalcurve that goes on.
Probably not what people wanna hear, but that'ssort of Well,
you know what?
It's I want people to hear the truth.
(52:06):
I want people to hear the way it really is.
I've done, in a couple acquisitions that I'vedone, I mentioned one before we were, like,
sabotaged by the former owner and maybe some ofthe people, but it's the heart you learn the
most in an acquisition when you bring twocompanies, two groups together because it never
(52:27):
really is what you had before, right?
And it's not what they had before.
And you're kind of recreating a new culture anda new mantra for people to work on.
It's, you know, it's like a I'll even say, justas a divorced guy when I was with somebody
else, it's like a blended family.
You hope it's great, but it takes work, and youcan't go in with the wrong expectations.
(52:51):
Common mistakes are people let a us versus themculture develop within, and you have to work
hard to avoid that.
And that can be really difficult if you'rebringing people together in the same plant.
You're maintaining a different brand in adifferent facility, well, that's one thing.
But if you're taking a company and everybodyfeels very emotionally strong about that
(53:14):
company and you're tucking it in, you'regetting rid of the name and you keep telling
people, I've seen this happen.
Well, your company failed.
So everything we're gonna do everything ourway.
That's probably a mistake.
There was probably some good value there thatyou could learn from and incorporate.
So you want to avoid that us versus them.
(53:35):
And
You you you could have a three hour podcast on,you know, merged entities after and people and
cultures.
There's a different conversation here.
I'm probably not the right person to have it.
Is the post closing transition process.
And our firm doesn't get involved in that somuch.
(53:58):
So we get to a closing and everybody's happy.
We walk away.
We get our fee.
If it's a distressed situation, then we'reinvolved to help figure out
where
to put the in a successful company M and Aprocess, typically we're out of the picture.
But there's a need for a consulting companythat helps with post closing transitions.
(54:27):
And I suspect they're out there.
Well, I
I would have used one had I known betterbecause it would have made it would have made
the pain a lot easier.
Okay.
But now you've gone through a closing.
You've spent all these fees that you've spokenabout.
And now the M and A advisor says, hey, Warren,I'm out of the picture, but you should hire
(54:51):
this firm that's gonna help you with thetransition, and it's gonna be another x amount
of dollars.
You're probably exhausted spending money atthis point and you just want this to happen.
There are a lot of things in transition.
Again, I'm not the right person to do it, butthere's a need for that service.
(55:12):
My
biggest experience in business has been if youneed to hire somebody to move things along, to
recreate, you know, cultures, people, etc.
It is so important and it is so worth it withthe right person, right?
Because the quicker you can get from A to Bwith minimal aggravation interruption,
(55:36):
everybody then just comes together and theneverybody's rowing the boat in the same way or
most people in the same way.
Otherwise, There are people in the industry whodo that.
Don't know that they really do transitionconsulting, but they certainly would be
helpful.
I don't want to name any names, but
Yeah, no, no, no.
That's yeah.
I can think of a couple of people that ifsomebody called me, I could say, well, call
(55:59):
this person or that person, and they probablycould help you with this process.
Oh, I think, anybody can call anybody who'sdone any acquisitions and brought companies
together for a little top 10 on what to do orwhat not to do right away to keep the ship
moving and keeping it upright.
Otherwise, it's like you're in some roughwaters.
(56:20):
But yeah, it's a never ending learning, right?
When you're doing this type of stuff.
At minimum, at minimum, put together aninternal transition team.
Yeah, and that's, you know, regardless of yoursize, to do something.
Yeah.
Right?
Yep.
You have to have even liaison, a liaison personjust within.
(56:42):
Yeah.
That works and goes with.
Yeah.
Wow.
Anyways, wow.
Time flies.
Great.
If that's for me, take a message.
Yeah, no, great conversation, super insightful.
I think these conversations need to be hadbecause more and more people wanna do
transactions and don't know what it is.
(57:02):
I think when you wanna do a transaction, Ithink you have to educate yourself a little bit
before to know what you're going into, or theup and the down and the journey is a lot
bumpier or could
be Yes, what we didn't talk about on this call,and I'm happy to talk about it with anybody at
any time really, is what are the particulars ofthe process?
(57:25):
What does the process look like?
And because it's a defined process.
It's not rocket science.
But you know what?
Let's take some time.
I'm in no rush.
And let let people hear.
What the process?
Alright.
I have to watch my time as well.
In a nutshell, okay, because it's really alonger conversation But
(57:51):
when you hire an adviser, an adviser is gonnaput together marketing materials.
And they're typically gonna put togethersomething called a teaser.
That's a document that describes the companythat's for sale, but it's not identified.
So this goes out to a broad base.
It could be an approved base, but it's a baseof prospective buyers that are going to look at
(58:13):
this and say, Is this interesting to me?
Then the next thing that's put together issomething called a confidential information
memorandum, or the book it's called sometimes,or CIM, C I M for short.
That's a lot of details.
Typically it would be 50 to 100 pages.
That's got a lot of detail about the company,financial information, customer information.
(58:36):
We typically don't name the customer names inthat, but we do call them customer A, customer
B, customer C.
But buyers are going to want to know, is therecustomer concentration or is there customer
diversity?
What's the trend from those top customers?
What's it look like over the last three years?
What industry are those customers in?
All that's identified in the SIN.
(58:59):
Where is the company?
Where is the building?
Is the building for sale?
Is the building for lease?
How big is the building?
All that information.
Why are they selling?
What's the motivation for selling?
Who are the principals?
What is their background?
What's the second level management?
What do they do?
Who are they?
(59:20):
Again, there's different levels of informationfor different sized companies and different
preferences.
So that's all put together.
The next thing you put together is a list ofprospective buyers.
In our process, we get that pre approved by thesellers.
Other people just broadcast it.
(59:41):
I don't know somebody else's process, but Iknow what our process is.
So we work with a pre approved list.
We also put forth a Why would somebody hire usversus a general broker or investment banker in
their community?
Because we know the industry.
I daresay we probably have the best database inthe industry of investors and owners in the
(01:00:08):
printing packaging industry.
If not the best, we're certainly there.
And relationships, widespread relationshipsthroughout.
We talk to owners and investors every daythroughout the industry, these different
segments, printing, packaging, mailing, soforth.
(01:00:28):
So we can put together that list of prospectivebuyers, not just as a shotgun approach, but in
a specific
From knowing.
Using the knowledge of the business.
You don't wanna send
a wide
format opportunity to a high volume web offsetprinter unless you happen to know that they're
(01:00:51):
interested in getting into the wide formatbusiness, which is that's that relationship.
But you don't want to waste being in wrong timein the wrong place for the wrong reason.
Yeah, you want to So we do that.
We also have an NDA, is well vetted by dozensof attorneys, so we provide that.
And then you go to market.
You get responses.
(01:01:11):
You solicit offers.
You provide one of the things that I have foundis that owners will hire our firm because they
think we know somebody, and we do.
But six months later, after we've gone throughthe process, and it is a process, I've had
(01:01:36):
several owners say to me, it's gonna sound alittle immodest, and it's not just about me,
it's about my partners as well.
The team, it's the team.
And
we always work two principles on everyengagement, so it's not just ever me.
It's always me and Michael, me and John, me andMitch, me and Rod.
It's always two of us together on everyengagement.
(01:01:58):
And we do that for a couple of reasons.
One, we do a peer review internally.
But two, this decision when an owner hascrossed the emotional bridge to sell is one of
their most important decisions.
They don't wanna hear that I'm on vacation orJohn or Michael's on vacation and not be and
not that's fine, but they want to be able toreach somebody and say, What's up?
(01:02:23):
Or get good advice.
So I've had owners call me six months later andsay, I hired you effectively what they're
saying because I thought you knew somebody.
But what I really came to value at the end ofthe process was you and your team's advice
along the way to get me to a close.
And that's when they don't mind the fee, whenthey say, okay, you got me here.
(01:02:49):
This is not like the real estate brokeragebusiness where you is there a dog there?
I see a tail wagging.
It's, Wally on the wall is, sitting right herebeside me.
Just got to fuck the bed.
Not like the brokerage business where you takea listing and throw mud up against the wall and
hope that something stick sticks.
(01:03:09):
It's a disciplined process to accomplish agoal.
Well, I I was gonna say before, when you weretalking, it I think in our industry or maybe
every industry, you need to go with the peoplethat know the industry, because if they don't
know the industry, they don't know the ins, theouts, they don't know, you know, the lingo on
the other side.
And then it just takes longer to do.
(01:03:31):
And I find there's even more complications.
I mean, that's the philosophy that we've usedat Graft Cards Advisors because we have
blinders on and it makes a huge difference forus and our clients.
There are other people who would rather hirethe investment bank that's in their city who
needs to learn the business, and, you know,that's okay too if that's what they decide to
(01:03:51):
do.
But, you know, we've obviously taken thisapproach where we're not industry agnostic.
We're industry specific.
Yeah.
No.
That would be my my preference.
Okay, so we went off a little, which was great,because I think that was really important for
people to hear and to know.
First of all, what a session.
Love M and A, love hearing about it becauseyou're always learning something new, there's
(01:04:14):
always something different, and times arealways changing.
So when the times change, the way people dothings change, the operation, you know, the
process.
What few words would you have for anybody outthere who's thinking about possibly, you know,
wanting to unload their business?
Well, unloads, that's a loaded term.
(01:04:36):
Oh, I'm just using different words.
Sell their business for high profit.
Everybody loves this term, Lainie.
They want to exit ownership.
Mean, that's become a popular term in the lastten years.
I Mean this is gonna sound self serving and itis is talk
your loud
or whether it's what's that
(01:04:57):
I said you're allowed
Yeah, whether it's me or somebody else one ofmy partners or somebody else who does what we
do, talk to somebody about the process.
They should be willing to have a conversationwith you upfront about what the process is
like, what the costs are, and what's going tohappen through the process.
(01:05:18):
Because it will be a little bit of a rollercoaster.
To say the least.
Be prepared for some lows and some highsthroughout the process for sure.
What's something that they should stay awayfrom or not do it or just a quick, you know?
(01:05:40):
Because everybody's quick on, yeah, I wannasell or I want.
But
The one, and I would call it a mistake that wesee, is owners will get engaged in what I call
a serial process.
The serial with an s, not with a c, and they'llentertain one they really wanna exit.
(01:06:03):
They've got a one year or two year plan, andthey think they know the perfect buyer.
So they engage with that buyer and they spend 4or 5 months, doesn't work out, and then they
say, Oh, well, that didn't work.
I'm gonna call that, and then they go throughthat.
So it's a serial process where they're goingthrough one after the other.
(01:06:26):
Before you know it, it's two years later andthey don't have a transaction completed.
You really wanna run a parallel process whereyou're going out to the market and touching
various prospective buyers at the same time.
Not only will you probably get a better offer,but you're more likely to get an offer done
because we're all human, and part of the humandynamic is when it's a competitive situation,
(01:06:51):
we up our game.
So buyers are no different.
When they know they're in a competitive I'm nottalking about a drag out knockout fight, But if
there's an adviser involved, they knowimmediately that it's a competitive situation,
and therefore, they're gonna up their game, andyou're more likely to get a deal done.
(01:07:15):
It's just the truth of it.
Yeah.
No.
It's, you know, well, again, that's why peopleshould refer to advisors for the right I think
just for the you know, help with the right wayto do it and to avoid all the minutiae stuff
and wasting time because the time fliesquickly.
The more time you spend, the more expensive itgets.
(01:07:37):
I tell people, if we're not gonna hire ourfirm, we'll hire some firm, at least get an
advisor to help you with the process.
So that's a generic statement, even though itsounds like a pitch.
It's definitely
No, I think it's great.
I think everybody should.
There's a reason that there's professionals inevery different area, even when it comes to
print.
When I'm selling print and I go to a customer,I want the customer who wants me because I know
(01:07:59):
what I know and I'm gonna save them the time,the energy, we're gonna get their brand on
mark.
Yeah.
There's no secrets.
Wow, okay, we're gonna do this again becauseit's a never ending and there's just like, as
I'm doing this, I'm thinking of like 20 morethings I'm thinking about in the process.
And I'm thinking back to some of my experiencesthat I would like to share with some because
(01:08:19):
when you don't do good, it really does suck andyou don't wanna make those mistakes again in
any way.
Thank you so much for your time, Mark.
I appreciate Yeah.
So Mark, I just, again, I wanna thank you foryour time for You're welcome.
You know, all the information, everything youput out for us.
To everybody else, I hope you walked away withsomething that you didn't know.
(01:08:39):
And if you did know, maybe you just had somereconfirmation of the right things to do.
It is a big process if you wanna sell.
It is a big process if you wanna buy.
My experience is you wanna do it right becausetime is money.
If anybody knows anyone who wants to be on theshow, let me know.
If anybody has anything they wanna share that'sgood good for people to learn and know, then
(01:09:03):
let me know and we'll work that out.
Otherwise, we'll see you again soon.
Warren Werbitt, printing's alive and I loveprint.
Thanks, Mark.
Thanks, Warren.
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