This document summarizes options for owners of successful printing and graphic communications companies to maximize shareholder value, including private equity, employee stock ownership plans (ESOPs), and strategic mergers and acquisitions (M&A). It provides an overview of the characteristics of companies and owners that are ideal candidates for these options, and discusses factors for success and aligning objectives with potential buyers.
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Maximizing Shareholder Value in the Print and Graphics Communications Industry 2012
1. Executive Briefing for Owners of Successful
Print and Graphic Communications
Companies: Maximizing Shareholder Value by
Private Equity, ESOP or Strategic M&A
Presented by:
John Hyde, Senior Vice President, NAPL
Tuesday, February 21, 2012
8:00 8:45 AM
2. Shareholder Options for Leading
Companies
Only Top 5% of the Printing
Industry is Prepared for:
Private Equity
ESOP
Strategic Sale
4. Characteristics of Leaders
Entrepreneurs and family owned company
Successful b i
S f l business overall
ll
Pride in employees, customers, and reputation
Facing h ll
F i challenges and concerned about future
d d b tf t
Would like to reduce risk by getting cash out of
company
Achieve value for all the years of hard work
Not interested in selling the business in pieces
5. Profile of Ideal Candidates
ESOP Greater than $15 million EBITDA greater than
annual sales $2.0 million with
Private Equity “Financeable Cash
Flow”
Strategic Sale
Debt to Equity Ratio 3:1 Transaction value no
or Less less than $6.0 million
6. Align Cash Out Objectives with Buyer
Buyer Category Transaction Value/Structure
Financial ESOP Going Concern/all cash
Private Equity Going Concern/mostly cash
Individual Investor Going Concern /some cash
Strategic Leading Company Going Concern/mostly cash
Merger Partner Going Concern or Assets/low cash
“Tuck in” Sale Assets/low cash
/
Lifestyle Partners/Managers Going Concern/low cash
Entrepreneur/Job Going Concern/some cash
Family Going Concern/low cash
7. Success Factors and Shareholder Options
Financeable Cash
Flow
Flo
Strong Balance
Sheet Private Equity
ESOP
Defined Growth
Potential Strategic Sale
Quality
Management
0 25 50 75 100
Increase in Importance
8. Financeable Cash Flow
Consistency and Predictability
Real Profit (Net Income % of EBITDA)
Mission Critical Product or Service
Defensible Market Position
Recurring Revenue Stream
Diverse Customer Base
9. About ESOPs
Succession Planning
Capital E
C i l Event for Maximizing Shareholder Value
f M i i i Sh h ld V l
Tax Advantages
Employee Productivity
E l P d ti it
Strengthens Corporate Governance
Examples…
10. About Private Equity
Betting on a person
“If i can b modeled, the deal can get done.”
it be d l d h d l d ”
Ability to support 20% annual compounded return
Platform th t can b l
Pl tf that be leveraged
d
Opportunity for upside potential
Examples…
11. About Strategic Sale
Involves sizable, profitable companies
Synergies increase the value
S i i h l
Must quantify revenue enhancements and
consolidation savings
Industry specific expertise is a double edge sword
Capabilities matter!
Examples…
12. What Would You Do Differently?
Will Provide Results from Informal Survey
13. Preparing For the Future
Invest in Formal Business Valuation….NOW
Use Diagnostic Tools to Measure Trends
Maintain “Transaction Ready” Financials
Engage in Network/Peer Groups/Trade Associations
Run Your Company Always As If It’s For Sale
14. Thank you!
For more information, contact:
John Hyde
NAPL
201.523.6313
jhyde@napl.org / www.hydingout.org
