Carter, Julie and Gary Crisp of Crisp Imaging
Editor’s Note: Gary Crisp is the president of Crisp Imaging, a 22-location reprographics firm based in Southern California that is growing rapidly. In this interview with APDSP Managing Director Ed Avis, Crisp describes the process he takes when evaluating and integrating an acquisition.
Ed Avis: What are you looking for when you are considering an acquisition?
Gary Crisp: We're looking at a couple key things. The first is, is it in our lane? Our business is basically built with three buckets: a reprographics bucket; our color bucket, which includes restaurants, retail, everything color; and our technology bucket with our scanning, Docu-Dock and these kind of products. So is it in one of our three buckets?
Next, is it a business worth buying? Does it have a good reputation? Has it been well-managed over the years? Does it make sense strategically from a market standpoint where it fits? We also look at the potential. Can we scale that business?
And finally, one of the most important things is the culture of the business. Is it a business that shares the same values as ours?
Avis: How do you figure out what the culture of a company is?
Crisp: I spend significant time with the CEO or business owner, and we can get a feel or flavor for what that company's culture is like. What we find most of the time is that these companies have great cultures. I mean they've been family businesses for decades. If the culture's a culture that's not really fixable, we'll exit that negotiation. I've seen a few of those, but not too many.
Avis: Are the financials of the businesses you’re acquiring generally in good shape?
Crisp: You find some books that are extremely clean and clear and the data's right there. It's very, very simple. I would argue, most firms are in the 80 to 100 percentile, they're generally in good shape and lined up, and they have good financials. But occasionally you'll find, especially some old-school owners who just don't want to show you stuff. It's very hard to do a deal when you have to try to figure out where they're at or guess what the add-backs might be. It certainly bodes for a lower offer because it's a higher risk for you.
Avis: In general, do the owners typically stay with the company after the acquisition?
Crisp: No, they generally don't, because they want to exit or they wouldn't be selling. We've had very, very few earn-outs involved in our acquisitions, and that's probably a little bit unique.
For example, we've bought companies in major metropolitan markets and tucked them into existing locations through an earn-out. In those cases, the former owner has incentive to make sure that business shifts over to you. That's more rare, but that does happen on occasion for follow-ups. By doing so, both sides win.
There may be a transition period. Typically, 90 days would be a transition period timeline that would probably be about the longest. Usually it's because they want to move on, and it's probably better from our side if we take the reins. But what I have found with former owners, by and large, with maybe one exception, is that these are just wonderful people. They're great people to learn from and work for them.
Avis: What’s your normal timeline for an acquisition?
Crisp: Once it's agreed upon, it's usually within 90 days we can get that done, sometimes quicker. But the actual process to come to terms sometime can take years. For example, we had been interested in Coastal Blue for over 10 years. Finally, a circumstance occurred where they weren't keeping their business in the family, so they called us, and we were able to come to terms.
Avis: What happens after the acquisition?
Crisp: One of the first things we do is go out and actually meet the leadership and their employees. I'll get to know them, let them know of the great job they've done all these years to create a company that we want to buy, let them know that our company is not for sale, so they will have security here, and that we are looking to create opportunities for them to grow themselves.
Avis: How do the employees typically feel about the situation?
Crisp: In virtually all cases, the employees are happier because they have an opportunity to be promoted. Many have been promoted. Compensation tends to increase. There's just more opportunities in a company with 22 locations as opposed to one. There's always going to be, here and there, an employee that, for whatever reason, may want to move on or doesn’t want to work for a company that's a little bit larger. But that's few and far between, generally.
Part of the reason we want to acquire a company is because the people have good relationships with the customers. They know how to serve them properly. So we want to be very careful there to respect their business and take care of our new people. Every once in a while, you'll have a situation where there's way too many people or there's people that really aren't the right fit for the business and it makes sense to part ways. But we are not in the business of buying companies and cutting a lot of people. That's just not what we do.
Avis: Can you give me an example where you bought a company and you learned something new from that business that helped Crisp Imaging overall?
Crisp: Yes, when we bought Coastal Reprographics in the Central Coast, we learned some ways to do scanning and indexing that improved our processes. Coastal is a much smaller firm than ours but, in this area, they had a gentleman who was running that side of the business that really was fantastic at this and really knew some more effective ways to function in that space than we did.
Avis: Your company has grown over this last decade where many have shrunk or gone out of business altogether. What's your secret?
Crisp: I think we've been fortunate in that we've grown for a few different reasons. One is that we continue to really focus on our customers and create products and services that they need and will use. We all know that there's been a decrease in traditional bond printing. But when you look across the landscape, we sell products like scanning. We have archiving. We have color. We have PPE and the acrylics.
Our customer base has changed dramatically from where it was. We still serve the AEC business, but we're also selling to superintendents up and down the state. We're selling to restaurants and retail and a whole host of people that you would not traditionally target. So I think, like any business, you have to continue to reinvent yourself, continue to add value to your customers and really talk to your customers, look at what they need. If you do that and a little bit of luck, you can continue to grow.
I'm also blessed with is an extremely strong leadership team here, executive board and investor group. So we're surrounded with very, very talented and smart people that make my job much easier.
Avis: Do you have a goal for the size of your company?
Crisp: Over the next few years, we'd like to get ourselves up to about $50 million in revenue and target our 20% EBITDA.
Avis: Gary, is there anything else I should have asked you about?
Crisp: I would just reemphasize that’s it's really all about the people. It's chemistry and communication. You have to get the talent and then build the team. One of my idols is John Wooden. His 12 lessons in leadership and his pyramid of success are powerful sources of how we function here. We have our own pyramid called the Win Forever, which is really focused on culture, which is key.