By Ed Avis
Let’s say you learn about a competitor’s shop that’s on the market. You reach out to the owner and tell him you’re interested, and a conversation starts. What’s next? In a webinar on Tuesday, APDSP members heard from three reprographics shop leaders about how they executed recent acquisitions. The info provided by these leaders – Carter Crisp from Crisp Imaging, Tom Taubenheim from A/E Graphics, and Mark Langdon from Eastern Engineering – ranged from how to evaluate a prospective acquisition to how to integrate it. Here are three take-aways from the event. (This is just the tip of the iceberg – to watch the whole webinar, click here to log into the Member Center and click on the Reports and Recorded Webinars tab on the left; a transcription of the event is available there, too.)
Take-Away 1: Ask a Lot of Questions
Taubenheim discussed some of the questions he asked in the process of acquiring a nearby repro firm: “Will employees stay? Are they making a fair wage? Do they have any benefits? … Other considerations like the age of the equipment. Are there loans, leases, liens on that equipment? What are those terms? Have they kept up with technology? Is the shop run efficiently, is it clean, is it orderly? What does the customer list look like? Is it diverse? What are their print services? You want to go back, see the sales. Sales by customer for three years, if you can. And what other services do they do to offer? Is there more diversification than just one thing or one core thing? What supplements that?”
Take-Away 2: Consider an “Undercover” Visit
Crisp and Langdon both mentioned that they visit the shops they’re considering acquiring before the employees of those shops know an acquisition is pending. This gives them an inside look without special treatment.
“I think it's good if you can do a lowkey visit the shops before you acquire them and see their employees, the machines they have, and you can get a feel for how they can plug into your shops,” Carter said.
Langdon echoed that idea: “We were able to get into the facilities ahead of time, undercover so to speak. So we already had a game plan in place, knowing what we needed to do [once the acquisition closed]….The very first time we went into Toledo, the owner let us in at night, so we could walk around and so forth, and come the day of closing, we're going to start making changes and we're going to put the secret recipe or the Eastern stamp on each facility at that point.”
Take-Away 3: Make Sure Key Employees are Happy
A reprographics shop without the staff is not much of an acquisition, so it’s important to make sure the key employees stay around after the sale. That might mean giving them a raise, or improving the facility, or just letting them know that they’ll be taken care of.
“When we acquired Coastal, Tony said something that rung true for me. He said it was good for his customers and it was good for his employees. So I think you have to show that too. The employees will feel if your company is good for them, so you want to upgrade their equipment, upgrade their facilities. And promoting from within too is really good. So if you can find, when you go and you vet all their employees, if you see someone who you can maybe bring to the hub -- we call our central location the hub -- people see that people are getting promoted from within and that the acquisition is going to be better for them. They're going to have more opportunity. There's always going to be a little bit of rockiness with any acquisition. But I think if you show your employees through your actions that the acquisition in the long run is going to be better for them, and the company's more stable because you've acquired them, that ensures buy-in is a lot stronger.”
Naturally, benefits and pay are essential to maintaining happy employees, and in the case of an acquisition, continuity of benefits is key. Langdon recognized that fact when he made his acquisitions: “We allow those employees to carry over their years of service to Eastern at that point. Like one lady at Toledo had been there for 30 some years, we allowed her then to carry over her 30 years of service from a benefit standpoint, because that is a big concern for the employees. Am I going to start all over at that point? Am I starting day one from a benefits, from a PTO standpoint? And so forth. And we found that it's just best to let them carry over their years of service.”
These three take-aways are just a small part of the story. To watch the whole webinar, click here to log into the Member Center and click on the Reports and Recorded Webinars tab on the left; a transcription of the event is available there, too.