At the request of the parties no further information will be provided about this transaction.
In a transaction facilitated by CompanyXchange BV and its website LabelCompaniesforSale.com Qualiprint Holding AG has acquired a significant stake in one of Poland's leading label companies, Dekor.
At the request of the parties no further information will be provided about this transaction.
Guest blog by by Rock LaManna of the LaManna Alliance
Perhaps, this new year was the first time you seriously considered selling your printing business. You have always known that you would have to sell your business someday. But maybe this January you resolved to act. It's a good time to reflect on the direction of your life and what you want to do differently.
Here are six things to consider if you've got the itch to sell.
The Process will be Emotional
Everyone has a different motivation for selling. For some it’s related to their age or health. Some owners aren’t making money and are just eager to get out of the mess and pass it on to the next buyer. Some are just tired of keeping up with all of the changes, risks, and investments. They are just ready to retire and move on.
Perhaps you always envisioned passing on the business to your sons or daughters. It can be heart-breaking to learn they really aren’t that interested in running your business. It might take three or four years before you are emotionally prepared to sell it someone outside of your family.
These emotions are normal and understandable. But as you get ready to sell, you must learn to think more like a buyer.
Every Seller Starts with Similar Questions
When should I sell? How should I sell? Who’s going to buy me? While the questions may be the same, the answers will differ greatly for every business. A lot depends on the current state of your business and how much potential prospective buyers can see in it.
You May Not See Your Business the Same Way a Buyer Does
Considering how many years of hard work you put into building the business, you might think it is worth more than a potential buyer does. But potential buyers will be less interested in the history of your company than its future. A buyer will want to verify that all the upbeat statements in your press releases and promotional materials are indeed true.
Buyers are Sophisticated and Rational
For you, this may be the first time you ever sold a company. But private equity buyers have been down this road many times before. They have assembled a team of experts who will evaluate all aspects of your business.
You must be prepared to answer tough questions about your financial positions, sales team, technology, and market niches. Most importantly, they want to know if your company is in a growth mode or if sales are flat.
Most buyers can determine whether your company has ROI potential within 30 days of meeting you. They know the value of companies and use logical processes to make their buying decision.
Equity Buyers Want Different Things than Strategic Buyers
A private equity company will look for everything to be set up and turnkey. Their decision to buy is based on the how quickly they can capitalize on the potential of a market opportunity. If your printing business is set up for success in a fast-growing niche, buyers will be attracted.
Strategic buyers might be less concerned if everything in your operation is ready to roll. They might be more interested in buying additional production or finishing capacity or access to specific groups of contract customers.
The Transition Process can Take Longer than You Expect
In the old days, selling your printing business was relatively quick and straightforward. These days it can take several years because so many different legal, financial, and tax experts are involved.
If you are serious about the process of getting started this year, reach out to some of your own trusted experts for some objective advice. Find out more about what you need to do to prepare your business for sale.
Each year, the trade magazines report on dozens of printing businesses that are bought and sold. But each transaction is never as simple as it sounds in the press release. The process of selling a printing business can induce just as many sleepless nights as the start-up days did.
Deciding to sell your printing business is a big step. Our goal is to give you the education you need to feel empowered about each of the many decisions you will make during the selling process. We want you to feel at peace with the transaction and embrace the next phase of your life to the fullest.
At the recent AWA Packaging Mergers & Acquisitions Executive Forum in Chicago all participants reported strong activity and optimism regarding the immediate future across the entire packaging space. The continuing consolidation in a still fragmented industry, entry of new players and access to cheap and plentiful capital all contribute to a strong market. As a result of this valuations are at an all-time high and well above the long term average and with interesting acquisition opportunities in short supply, there are no signs of this changing anytime soon.
This certainly also applies to the label industry where buyers outstrip sellers by a significant margin and where many of the larger acquisition opportunities have already been consolidated into one of the growing or emerging groups.
For owners of well-run label companies thinking of selling or considering what to do with their company longer term, this offers an excellent opportunity to maximise the value of their company before the cycle turns down again. As the process from first thought to actual transaction can easily take up to 3 years it is none too soon to start thinking about it. If you want to discuss this in full confidentiality and with no obligations, please feel free to contact us.
With the dust settling after the referendum the only certainty is that the uncertainty will continue for a while yet; which type of Brexit, when, how etc. ? In the general M&A market this led to a clear slowdown in activity the third quarter of 2016 while investors on both sides of the Channel were trying to process the shock result.
At the same time uncertainty offers opportunities. The pound is low, helping British exporters and companies competing with imported products, while also making investment in British companies relatively cheaper. The cheap funding available due to the current policies of the European Central Bank also helps. If you believe in the British economy longer-term and you want to gain a foothold there, this may well be the time to do it.
Another factor contributing to the opportunity is that despite significant M&A activity in the British label industry in recent years, there are still a large number of companies unofficially, semi-officially or in a few cases officially up for sale. This is being driven both by strategic considerations due to the heavy consolidation that has taken place and by the simple fact that many owners are nearing the retirement age without any clear successor lined up.
Are you seeing the threat or the opportunity ?
A ‘multiple’ is then applied to the appropriate cash flow measurement which differs by industry and changes over time. In the label industry a multiple of 3-6 is typically used. 4 is a good starting point for a baseline valuation. The product of the cash flow and multiple becomes the basis for the valuation. Adjustments are then applied based on the particular circumstances and other factors.
In addition to the cash flow there are many other factors which will impact the business’ valuation. These factors may include fixed and current assets to be transferred to a buyer, liabilities including interest bearing debt to be assumed by a buyer, lease and contract rights and obligations, past and projected future growth and profits.
Unfortunately for the business owner, a single formula to compute the value of a business does not exist. Nonetheless, a valuation of 3-6 times a label company’s EBITDA is a good starting point. You are welcome to contact us for a confidential, no-obligation discussion.
Bemis Company, Inc. announced mid September that it is selling its global Pressure Sensitive Materials (MACtac) business to a California-based private equity firm, Platinum Equity, in order to raise $170 million in cash to fund the growth of its flexible packaging business. The sale is expected to close in the fourth quarter of 2014. Bemis actually agreed to sell MACtac already in 2002 for $420 million, then to UPM-Kymmene. The transaction was however blocked by the US Department of Justice.
Over the 12 years Bemis has probably focused on their core business, flexible packaging, and not invested in MACtac. They only managed to grow sales by about 10% over the 12 years, while operating profits were higher in 1998 - 2000 than the last many years. So a sale was overdue.
The selling price of $170 million represents a multiplication factor of about 5,5 on operating profit. The $420 million represents a factor of over 10. A strategic buyer like UPM-Kymmene would at the time have been able to gain an important presence on the North American market as well as access to technology they didn't have back then.
Timing, positive top and bottom line results and the right buyer is critical to get the best price for your company.
Label Companies for sale.com has successfully connected sellers and buyers of Appia Etichette s.r.l. in Italy.
The owner, Giorgio Tabasso wanted to retire after having built a successful label company over the past 20 years. With the support of Label Companies for sale.com an advert was posted on their online marketplace for selling and buying label companies. Also a ‘teaser’ and a confidential information document was put together for potential buyers.
Mr Giorgio Tabasso, owner and seller of Appia: ‘We are very pleased with the professional support from Label Companies for Sale.com. Thanks to their contacts and online marketplace, we had interested buyers not only from Italy, but from all over Europe. A few, selected candidates visited our facilities with whom negociations took place. Finally, the right buyer was chosen and a sale has been made at a price acceptable to both parties.’
Label Companies for sale.com connect sellers and buyers of label companies around the world in full confidentiality. Searches for buyers or sellers can be done on request or be posted on our online marketplace www.labelcompaniesforsale.com.
With the day-to-day demands of running a label businesses, most owners put off getting a valuation until a sale is imminent. And then they often get disappointed. Many owners believe their companies are worth much more than they really are. But some are starting to treat the act of valuing their business as an integral part of running it.
“Everyone likes to think they’re building something that they can sell someday, but unless you focus on it, you don’t know if you really are.”
It helps to have at least a basic understanding of the valuation process. Here is what you need to know:
THREE VALUATION APPROACHES There are essentially three methods for calculating the value of a business.
The asset approach, typically used in distressed situations for the sale of defunct businesses, determines a company’s value by adding up its tangible and intangible assets.
The market approach, probably the most common way to value a healthy label business, produces a valuation based on a multiple of the company’s past earnings — usually the last 12 months of Ebitda (earnings before interest, taxes, depreciation and amortization), which is a good proxy for cash flow. If you found that the last 12 months of Ebitda totaled €1 million and you chose a multiple of, say, four, you would get a valuation of €4 million.
The income approach, is forward-looking, relying on the present value of expected future cash flow. More common in high-growth sectors like technology, this method tends to paint the fullest picture of a company’s potential, but prospective buyers may view it skeptically. That is why some people prefer a blended approach.
PICKING A MULTIPLE While multiples can vary widely, most have fallen since the financial crisis. Part of a valuation expert’s job is to analyze the multiple of earnings at which comparable businesses have been selling, to choose the appropriate multiple for your business. We have seen many deals done at multiples of 3-5 in the label industry unless there are specific circumstances impacting the value.
CONSIDER YOUR BUYER Another factor that figures heavily in the size of the multiple is the type of buyer you think might want to acquire your business. Strategic buyers — those with a vision for how to improve your business’s operations, possibly by combining it with the buyer’s operations — tend to pay more than financial buyers, like private equity funds, which focus on maximizing their returns when they eventually exit the business. For strategic buyers factors such as location and relocation, synergy, management, equipment, markets and and types of labels will impact the value to them.
GET YOUR HOUSE IN ORDER Take the buyers view. Assume he will find problematic areas and that eventually all will be discovered. Ensure neat, clean, attractive surroundings, keep machinery well maintained, clarify agreements and contracts, settle minor disputes, update relevant records, get your books in order and prepared by certified accountants, etc. Serious buyers want to buy well-run businesses, not neglected ones.
Business owners who do not form a succession plan create a time bomb that can not only destroy their companies but tear apart their families. Time is catching up on many owners of label companies and they are forced to think about exit strategies. Here are some suggestions to avoid a succession disaster:
IDENTIFY YOUR SUCCESSORS Deciding which child or relative will sit in the corner office is often so emotional that it can stop succession planning before it starts. But it is the necessary first step. Don’t assume the next generation has the same skills.
Some succession specialists advise business owners who can afford it to put their possible successors through rigorous outside analysis. The advantage to creating a scientific and merit-based process is that it not only finds the best job for each member of the next generation, it takes the emphasis off family politics like birth order and gender.
Also, the future of your business will be best assured if you have choices...and good ones at that. It is not just big companies that need independent board members, small ones do too, so that they can gain a different perspective and subject the owner to a reality check once in a while.
If there are no family members or employees who are willing and able to take over the business, a sale may be the best option. Certainly, inheritance will be made much easier that way. To maximize profits proper planning and preparation is crucial to get your company ready for a sale.
PREPARE THE NEW BOSS If a child or other relative expresses interest in taking over the family business, the owner should set up a formal system of hurdles to make sure the child gets the skills required of any other prospective manager.
One way is to send your kids to work somewhere else for some time until they get a raise and promotion. It gives them self-respect and brings fresh blood and ideas into the family business. It also mirrors the spirit of many label companies that you have to earn your way in. There‘s not much value if you’re simply gifted something.
When the owner(s) has finally decided who will get the company’s reins, it can also avoid sibling power struggles by not passing on shares — especially voting ones — to children and other heirs who will not be directly involved in the business. Instead, they should receive other assets, retirement accounts or life insurance.
DEAL WITH CRUCIAL EMPLOYEES Often there is no family member who is interested in and capable of taking over the business. And even if there is one, tensions can drive out important nonfamily employees who feel overlooked. To ensure that a new leader does not lose top lieutenants, it can be smart to offer them a piece of the pie.
COVER YOUR TAX EXPOSURE A lot can be gained by proper tax planning as a crucial step of succession planning. As tax rules vary by country, make sure you take the proper advice to avoid a tax hit and keep the business in the hands of the people you prefer.
Buying a label company is an important decision. Many acquisitions do not generate the expected profit. To make sure you are getting a good deal and not a bad bargain, follow these steps.
1. Find out the real reason for selling
Buyers want to preempt hidden issues or trouble ahead. Is the company for sale due to health issues, retirement, change of life, family disputes, need for investments, loss of customers, etc ? It is critical to understand the real reason.
2. What are you buying
What machinery and equipment is included, get a list of assets, liabilities and contracts, does the seller own the premises and are they included or not ? What is the net asset value ? Is the seller offering the total limited/incorporated company or does he accept an asset sale, so unexpected liabilities do not transfer ? Who owns the company and is 100% of it for sale ?
3. Find out what is it worth to you
Cashflow is a key parameter in determining value. It is critical to ‘normalize’ the cashflow to compensate for extraordinary and nonrecurrent items. A key question to understand is whether the owner and his family take a salary and how much. Make sure the books are prepared by a certified accountant and that you get one with experience in M&A on your team.
There is always the risk that some customers will leave especially if they get special treatment by the current owner. How big a share do the largest customer(s) generate ? Will they stay once the owner is gone ? A risk analyses will typically include a scenario, where 20% of the business is lost within the first year.
A label company may have a market value, but factors such as location, markets, synergy, what types of labels (blanks, rolls or sheets, simple or high-end print, special constructions) will have a major impact on the value for a strategic buyer. Whether he will share part of that with the seller is up for negociation.
4. The human factor
Companies are run by people, so it is important to evaluate whether the people will stay, whether there is someone who can manage the company locally and what kind of agreements are in place.
Some buyers expect the seller to help financing the deal with payment over some years. Sellers will want to know if the buyer has the cash or financing in place to buy their company.
6. Look under the hood
Once negociations are done, a letter of intent is normally signed followed by due diligence. This is the period for the buyer to confirm that everything is as outlined by the seller. Some buyers use it to continue negociations, but the best deals are made when it is used to check facts.
7. Final contract, payment and integration
Once the final contract is signed and payments made, the integration process, which eventually will make or break the value of the deal, can start.