Editor's Note: Ken Fick is a CPA and MBA who has been writing insightful articles about how small businesses can better prepare themselves for a sale or merger. Recently he has been looking specifically at the print industry, and he has shared this article with IRgA. (Click here for another article he wrote on this topic.)
By Ken Fick
A recent survey performed by a leading printing industry trade association, PRINTING United Alliance, which surveyed 258 printing companies about their 2025 performance, stated average industry sales growth of just 0.4%. That’s not a growth rate; that is a rounding error.
The survey covered a broad swath of industry participants, including commercial printers, wide-format graphics shops, package and label converters, and apparel decoration, with sales ranging from under $1 million to more than $500 million. The average growth rate conceals a wide swath of performance currently playing out in the industry. The top 20 percent grew 15.4%, the middle 60% grew 0.9%, and the bottom 20% shrank 19.6%.
Of course, there is no single printing industry, but a stratification of different business models loosely aggregated that perform a complex manufacturing process upon various substrates. Nevertheless, a buyer evaluating your reprographics shop to buy or merge with may compare your financial data to the the PRINTING United numbers in order to determine if your business will go the way of the do-do bird, stay the same, or evolve and flourish.
Overall industry contraction is real, but that is not the valuation problem that sellers need to worry about. The problem is that the business, as currently built, is a job with a very large piece of equipment attached to it.
The Numbers Cut Both Ways
Cumulative industry output from 2022-2025 declined 15.2%, hours worked declined by 8.4%, but unit labor cost increased 27.1%.
Meanwhile, the producer price index for the subsector has continued to climb with a sharp increase post-COVID.
Prices are rising, volume is falling, and labor continues to get more expensive. The industry survey agrees, citing operating cost inflation of 4.8% against price increases of 2.8%. Only 45.1% of companies surveyed were able to raise prices at all, with real, inflation-adjusted sales falling 2.4%, and pre-tax profitability flat or lower for 64.6% of respondents.
Product Mix Will Decide Who Bids
A microcosm of the printing industry stratification can be seen in the reprographics sub-industry. According to the International Reprographics Association’s January 2026 survey, 2025 sales growth broke along product lines. 56% of respondents stated that color graphic sales were up and 47% stated scanning was up, while 45% had a decrease in monochrome plan printing and 37% a decrease in digital services such as downloads and archiving. One respondent in the survey put it plainly by: “Our profit centers are changing and evolving. 3 years ago, I would have said we're a reprographics company. Today I say we're in the graphics and sign business.”
Migration to other product categories is not a reprographics story. Two-thirds of the 258 companies in the PRINTING United Alliance survey have diversified beyond their primary printing segment. Convergence stopped being a strategy some time ago and became the baseline. The reason is clear, clients want faster job turns, shorter lead times and job runs, and are growing more price-sensitive. Long-run economics are being dismantled by buyer behavior as much as by technology.
Buyer diligence does not underwrite a single revenue number; it underwrites each stream separately and applies a different multiple to each. Two shops with identical revenue and identical EBITDA can draw materially different offers based on mix alone.
You Have More Recurring Revenue Then You Think
Buyers pay premiums for revenue they can forecast. Most printers have more forecastable revenue than they think.
- Managed print and standing reorder programs. Scheduled, predictable, and usually invisible in a P&L organized by product rather than by commitment.
- Compliance and regulatory work. Anything a client prints because a rule says they must is revenue that does not get cut in a soft quarter.
- Franchise and multi-location brand programs. One relationship, many recurring orders, and a switching cost the client would rather not pay.
- Recurring label and packaging SKUs. A SKU that reorders on a cycle is closer to a subscription than to a print job.
- Storage, archiving, fulfillment, and kitting. These quietly convert one-time production into a monthly relationship, and they are chronically underpriced.
For those business owners thinking of selling in the next three years, a metric to focus on is the share of trailing twelve-month revenue sitting with a written agreement or a documented reorder cadence. For a quick-and-dirty analysis, a business owner can pull the last three order dates for every customer. If the average gap is under ninety days, that is a relationship. If it is eighteen months, you are on a vendor list.
Customer Concentration Is Good For Profits But Bad For The Sale
Academic research has shown that concentrated customer bases are associated with better operating performance, through lower selling costs, leaner overhead, and tighter working capital. This intuitively makes sense as serving four big accounts is cheaper than serving four hundred small ones.
Conversely, other academic and public research shows that suppliers with more concentrated customer bases carry a measurably higher cost of equity. Meaning that a customer concentration risk premium will most likely be included as an input in a buyer’s cost-of-capital model. A higher cost of capital results in lower sales multiples.
Concentration can make a business more profitable to run but less valuable to sell. A seller has captured efficiency, but a buyer inherits the risk and prices it. For printing shop owners looking to sell, consider the following.
- One account above 10% of total revenue will draw questions and a possible request for a three-year order history to ensure stability.
- Top five customers accounting for 25% or more of sales may result in changes to the deal structure such as higher escrow, holdback, or an earnout tied to retention.
- Industry concentration will be scrutinized. For example, fifteen different general contractors all building in one metro can be viewed as one customer with fifteen different invoices.
The Price Quote Problem
Owner dependence is the most discussed risk in small business M&A and the most vaguely described. In a printing business, this is most commonly seen in price estimate quotes.
Print pricing is not typically a rate card, it’s a judgment around makeready, waste, substrate behavior, run length, finishing, and exactly how much a given client will tolerate before walking. A single owner who has priced forty thousand jobs is a walking, talking sophisticated pricing model with no export function. Three things you can do within a three-year window to decrease this dependence and increase deal value.
- Write it down. Margin floors by job type, standard waste assumptions, escalation rules. Make your knowledge into a transferable asset.
- Add horsepower. Hire or promote a second or third price estimator and have them quote independently, then audit their numbers to ensure margin and capture are equal or better than what you may have done.
- Build a quoted-versus-realized margin history. This should be job-level costing by category, with a minimum of twenty-four months of history. This helps a buyer gain comfort that the business will be able to run profitably without you.
A Tax Win in 2022, Two Problems in 2028
The One Big Beautiful Bill Act made 100% bonus depreciation permanent for qualified property acquired and placed in service after January 19, 2025, and raised the Section 179 expensing limit to $2.5 million with a $4 million phaseout threshold. Treasury and the IRS confirmed the mechanics in Notice 2026-11.
1. Your equipment probably has no book value, and your buyer's lender does the arithmetic in book value. SBA SOP 50 10 8, effective June 1, 2025, provides that used or existing machinery and equipment may be valued at no more than 50% of net book value, or 80% with an orderly liquidation appraisal, minus prior liens, for the calculation of whether a loan is fully secured. A fully expensed press has a net book value of zero. The most valuable thing on your print shop floor will most likely contribute nothing to a buyer’s collateral position.
One orderly liquidation appraisal raises the collateral credit from 50% of zero to 80% of a real number. A seller who has a current Uniform Standards of Professional Appraisal Practice (USPAP) compliant equipment appraisal sitting in the data room on day one of the M&A sales process removes roughly two weeks and one argument from a buyer’s loan file, and gets credit for it in a way that is hard to quantify and easy to feel.
2. The recapture bill. In an asset sale, consideration allocated to depreciable equipment is Section 1245 recapture, taxed as ordinary income to the extent of prior depreciation, at rates up to 37% rather than the 20% long-term capital gains rate that applies to self-created goodwill. Property expensed under Section 179 is treated as Section 1245 property for this purpose, so the fastest deduction produces the largest recapture. The allocation is reported by both buyer and seller on Form 8594 under Section 1060, and the IRS matches the two filings against each other. The mechanics run through Form 4797.
Negotiate the deal. The buyer wants dollars allocated to equipment, for depreciation and for collateral but a seller wants them allocated to goodwill, for the tax rate. That is worth real money on a capital-intensive business, and it gets settled in the purchase agreement.
None of this argues against taking the deduction. It argues for knowing, twenty-four months out, what your equipment schedule looks like to a lender and what your allocation will cost you, and then building both into a price expectation rather than discovering them at signing.
Create Books That Survive Contact With a Buyer
All business sellers need to have the following.
- Financials that reconcile to tax returns. Three years of each with gaps explained, if any.
- Revenue segmented. Segment revenue by service line, by contract status, by end market, and any way you can think of, before the buyer asks.
- Job level costing. Quoted margin against realized margin, by category, twenty-four months minimum.
- A clean fixed asset register. Acquisition dates, depreciation method, remaining basis, lien status.
- Documented add-backs. Whether starting with SDE or EBITDA, any add-backs need to have documented support that a buyer can believe in.
"In the reprographics industry, we have seen that well-run companies that plan ahead for an eventual sale are attracting potential buyers, sometimes more than one. But the key is preparation: investing wisely in equipment and service lines; developing and maintaining long-term customers; hiring and retaining good employees; and keeping clean, accurate financial records all pay off when it comes time to sell."
- Ed Avis, Managing Director, International Reprographic Association
If you have the above, you are beginning the sales process and any subsequent negotiation in a position of strength that most sellers don’t.
The Twenty-Four Month Schedule
Prepare your business 24 months before going to market:
- Months 1 to 6, measurement. Segment revenue by service line and contract status. Roll the customer list up by end market. Start capturing job-level costing if you are not already.
- Months 7 to 12, dependency reduction. Formalize and document job costing estimating standards, install a second estimator (if needed), begin deliberately diluting the largest accounts by growing everything else rather than by firing anyone.
- Months 13 to 18, documentation. Convert informal reorder relationships into written agreements. Sign operator retention agreements with key personnel. Commission an orderly liquidation appraisal.
- Months 19 to 24, positioning. Assemble the advisory team, settle the purchase price allocation strategy with your financial advisor before the LOI is drafted, and go to market.
The Sale-Readiness Checklist
Work the list. Anything you cannot answer today is a project, and every one of them takes longer than it looks.
The Bottom Line
Print industry stratification is a complication, not an obstacle that can’t be overcome. To maximize sale price, focus on product mix, systems, and personal effort to convert a demanding job into a formal business. Doing these things will change what a buyer will purchase, increasing deal multiples and a seller’s take-home.
When you are ready to see what the market looks like, DealStream's printing and duplicating listings are a reasonable place to start reading the comparables on your own business.
About the Author
Ken Fick is a CPA and MBA with over 25 years of finance experience providing leading-edge solutions designed to improve forecasting, budgeting, planning, and decision-making to companies from $3 million to over $50 billion in revenue. He is a freelance writer that focuses on producing engaging content on all things business, accounting, finance and investment related. You can view a sampling of his published work at FPAexperts.com.