Strategic Acquisition as Relates to M&A

By Tom Cobery
In March 18, 2014

Presently there are two major methods in which a merger or acquisition occurs in the graphic communications industry. It is either “strategic” or a “tuck in.” Last month we talked about a “tuck in,” this month we will address a strategic acquisition.

A strategic acquisition occurs when a buyer is seeking to merge with or acquire a company that may have a geographical location the buyer is seeking, technology that the Buyer wishes to possess, or is a competitor that the buyer wishes to absorb. These are but a few of the reasons that a strategic acquisition is contemplated. Typically a candidate for such a buy has good or strong earnings and the purchase price will be based on a multiple of adjusted EBITDA. The buyer is seeking to purchase the seller’s fixed and intangible assets, rarely is a stock purchase made. The seller’s operations and facilities typically remain intact and most personnel are kept in place. The acquiring company may want to keep the seller’s working capital in place and will consider that in the offering price. The acquiring company may or may not retain the seller’s sales personnel, and in most cases duplicate administrative roles between the companies are eliminated.

The seller will retain all of their long-term debt and possibly the closing working capital. The seller will then proceed with an orderly liquidation of their business. In most cases, the buyer works with the seller to make this as painless and seamless a transition as possible for both the seller and the customers.

If you want to chat, give me a call at 201-523-6326 or email me at tcobery@napl.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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