Printing and packaging industry mergers and acquisitions continue to heat up buyers and sellers need to recognize the situation

In the printing and packaging industry in the United States, the merger and acquisition integration continues to heat up, and printers are paying more and more attention to mergers and acquisitions integration. Recently, the online M&A integration roundtable forum sponsored by the “Printing Impression” magazine company in the US has attracted over 10,000 printing and packaging practitioners, and several large-scale printing and enterprise leaders have started to explain to buyers and sellers on the premise of continuation of the company’s good development situation. The responsibilities and obligations of buyers and sellers in the process of delivery, transition, and integration at the time of merger and acquisition. This article extracts important points raised by the business managers in the forum for readers.

Seller: Do a good job exit plan

Accurate price positioning

Every company that chooses to buy and sell has reached a fork in the road. Here, they choose to expand or withdraw, if the company does not see the possibility of further growth of the company's performance, or after undergoing multiple cycles of transformation and continuous remodeling of the business. Can not keep up with the pace of industrial change, this time companies need to liquidate the business can not profitable and find buyers for it.

Joe Polk, chairman of the Central Division of the American Printing Industry Association, said that the process of mergers and acquisitions is generally about 8 months to 1 year. For sellers, they must make exit plans in advance in order to achieve the desired goal. The sale of related businesses by enterprises cannot always be done overnight. If delays occur in the end, there will be more and more unfavorable factors for sellers.

Tom Williams, senior director of financial institutions, said at the meeting: “As a middleman in corporate M&A activities, we often encounter such situations: the buyer has determined the direction of business expansion plans to acquire, and the related business of the seller has also been listed. It was for sale for many years, but when the buyer offered a price that seemed reasonable to us, the seller often thought that the price was too low." He thinks this is mostly because the seller's psychological price is 20% to 30% higher than the market value.

Tom Williams proposed that the price of selling business-related businesses during a specific period of time depends on the current market value, not the cumulative value of the seller's entire life cycle, and the practice of selling prices is often not expected. As time goes by and market trends change, the companies that were bought by the buyer at the time may be less attractive to investors, and the cyclical changes in the market are more likely to drive down the seller’s selling price. If the buyer’s pricing is lower than the actual value of the company, the seller needs to carefully assess whether the buyer can work long-term cooperation as a business partner, and treat the sale as a profitable opportunity to promote the future development of the company and seize the opportunity of mergers and acquisitions.

Buyer: Conduct due diligence

Undertake follow-up work

Compared with other industries, most of the printing companies in the United States are privately held. The privacy of financial information often leads buyers to have insufficient knowledge of the trading companies. Albert Regimov, chairman of the International Printing Group, suggested that prior to the acquisition, the buyer needs to obtain as much as possible all the relevant information of the acquiring company according to legal requirements, conduct thorough due diligence on the company, and the buyer needs to ensure that all relevant information is highly transparent. To help buyers understand the company's earnings and liabilities, and eliminate potential economic risks. During due diligence, the buyer needs to fully investigate the four aspects of the company's business practice activities: customers, competitors, costs, and capabilities. If you are dealing with a smaller company, the survey may end in a few weeks. The larger the company, the longer the due diligence.

On the other hand, Albert Reggiomo stated that in mergers and acquisitions, the buyer can also perform a reverse due diligence to review his company and whether it is appropriate to carry out related mergers and acquisitions and whether it is in line with the strategic direction of the company. In addition, this process can also determine the buyer's original intention to pay when the buyer and seller negotiate, and determine the transaction method, such as installment payment, full payment or financing acquisition.

James Roseller, CEO of Amber Publishing Co., Ltd., stated that after the consolidation of corporate mergers and acquisitions, it is recommended that the seller continue to play an important role until the new company operates normally. In mergers and acquisitions, the buyer often requires the seller to provide assistance in integration and operations, and to retain the original business sales relationship as much as possible, retaining the key personnel in the original important positions. After the merger and acquisition integration, the seller should deeply participate in sales and customer relationship maintenance for more than 6 months. If the buyer is a private equity investor without experience in the printing industry, the company will still serve as the business leader in the company’s substantive sense during the transition period. It will even accept more duties from the new company. Only if the seller supports the management team of the new company and continues to participate in the follow-up integration, can the company's merger and acquisition transactions be carried out in an orderly manner and achieve a smooth and productive transition.

In addition, James Russell suggested that during the M&A transaction, the buyer needs to respect the seller's career planning and choice. “In the case of the Amber Publishing Company, we recently acquired a company. The person in charge does not want to continue to undertake business operations. The company’s management made him the person in charge of the company's sales department according to his wishes. The department played a decisive role."

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