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. 

YOU SHOULD!!!....


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. 

You only sell your business once. It is important to be well prepared when you want to cash in on your years of hard work. Although every transfer of business ownership is unique, there are some key elements  you need to consider. The sooner you start thinking about an exit strategy and make
a plan, the better. We have collected some tips that we find useful:

1. Sell at the right time for the right reasons

You get the best price when the market is up and your sales and profits are good, stable or even increasing. Selling a company takes time. There may be things you want done, before you put your company up for sale. The sooner you start planning, the better. 

Many owners wait too long because of a lack of planning for a sale, emotion or unrealistic price expectations. Here are a few indicators that it is time to sell: You loose your motivation, your health is deteriorating, you are no longer inclined to invest or engage in new projects, you feel its time to spend more time with your family or on other things in life. Buyers always ask and judge the reason for a sale as they want to preempt hidden issues or trouble ahead. 

If you are more owners, it is important you all agree. You get the best value when you offer 100% of your company.

2.  Determine what you are selling 
 
There are basically two ways of selling – the legal company (limited or incorporated) with everything, assets and liabilities – or only the assets including the physical assets, goodwill, customer lists, etc. Some buyers prefer an asset purchase as it prevents them from taking over any hidden liabilities in the company. 

Real estate is another key factor to consider. If you own the land and buildings, you will often not get the market value of the real estate. Many owners therefore rent or lease the buildings to their label company. We recommend you consider to offer your company with an option for the buyer to in- or exclude land and buildings.

Are there any other restrictions you want to impose ? Some owners do not want to see their company moved to another location. However, the more restrictions you put up, the fewer potential buyers we will find.

3.  Sell at the right price and get paid

There are many ways to determine a fair market value. See my blogs on that subject. You may want to get a professional valuator to determine the value of your company. We can help with typical valuations in the label industry. However, at the end of the day, what counts is what buyer and seller can agree in terms of price and how it is paid / financed. Some deals are fully paid in cash, other deals  are more complicated with buyers making a down payment in cash and then pay some or all of the remainder in installments. The outstanding amount could be dependent on pre-determined criteria such as sales and profit numbers. Other buyers offer stock in their company. A willingness to be creative with the terms can go a long way toward a successful sale.

4.  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, etc. Serious buyers want to buy well-run businesses, not neglected ones.

5.   Get professional help

We can help you to find serious buyers. Once they are on the scene, the process of negociations, signing of letter of intent, due diligence and final closure can start. As you proceed in your sales process you will need at least a professional lawyer and a certified accountant with experience in M&A on your team. 

6.  Brace yourself

Selling a business is serious business, so you want to make sure you take the time and trouble to do it right. It can be a long and hard journey, but one with a very tangible and rewarding light at the end of the tunnel. Once you’ve successfully sold your business, savor an accomplishment that not every entrepreneur gets to enjoy. Whether you’re lying on the beach, retiring by the lake or starting your next venture, you did it!!