Potential Acquisition Targets – Pricing Strategies

By Tom Cobery
In April 20, 2015

As indicated in my last blog, I will again continue the discussion of issues that an acquiring company needs to address to get a better understanding of the potential acquisition target ― before a deal is finalized. I pulled much of this content from an article written for The International Reprographic Association (IRga) newsletter, where I discussed a few of the issues and presented my thoughts.

A key request to make of a potential target is, “Tell me about your Pricing Strategy.” Is it the intent of the potential seller to be the lowest bidder, no matter what the margin may be? You will be buying the sales of the company. If it is a “tuck-in,” can you fit those sales on your equipment and do it cost effectively?

The key element here is margin ― has the potential acquisition been charging enough on those sales for you to make the money/margin that you expect? You also have to factor in your expectations of quality and customer service. If you need to increase the selling price, you run a significant chance of hurting sales to the target’s existing customers.

You need a clear understanding of what margins are produced from the sales generated by the target company. This is whether the products are produced on the target company’s equipment or your own.

More issues will be addressed in the upcoming months. If you want to chat, give me a call at 201-523-6326 or email me at tcobery@epicomm.org.

Tom Cobery

Dealing with the day-to-day needs of running a busy printing operation often leaves company leaders little time to plan for the future of their enterprises on their own. Tom works with chief executive officers and senior management executives in the Tag and Label Industry to develop growth opportunities through strategic transactions, new markets, or new service opportunities. Available for consulting on individual projects, he can also be engaged to serve as an Advisory Partner, helping executives guide their company into the future, serving as an impartial sounding board for ideas, and working with them to set the right course for continued growth and greater profitability. Tom’s personal experience as a Tag and Label Industry company president and chief executive officer, plus his extensive networking with other industry executives through his volunteer leadership activities with the Tag and Label Manufacturers Institute (TLMI) give him a unique perspective on the tough issues today’s company leaders face in this specialized segment. Companies engaging Tom will find his insight and independent advice an invaluable asset in helping them achieve their growth and profitability goals. More than a consultant, Tom Cobery wants to be your trusted Advisory Partner.

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