Frequently Asked Questions

As global competition continues to intensify, investors and boards are demanding more top-line growth as a way to further increase shareholder value. Many are pursuing this growth in revenues and earnings through mergers or acquisitions, which are some of the more challenging endeavors any company can or will undertake. These transactions are like assembling a complex puzzle with thousands of unique pieces.

This guide provides a starting point for answering the core questions identified in mergers and acquisitions (M&A) deals – from due diligence to the integration of people, processes and technology, supported by key project and change management enablers. It is designed to serve as a convenient and user-friendly resource that executives and managers alike can consult to utilize the lessons learned and improve the odds of achieving the targeted values of proposed transactions in a timely manner.

Is M&A for big companies only?

No. Any size company can participate in M&A.

Are there print businesses for sale that are not publically listed? 

Yes, most are not listed. Signal Capital Management can assist you in finding businesses for sale. The best opportunities exist among owners of companies networking with each other and through professional contacts. Signal Capital Management will work with you to utilize these contacts for M&A purposes.

Why shouldn’t I use a business broker to sell my company?  

Business brokers do not have the industry specific knowledge and contacts to ensure that you transition from ownership in a way that maximizes the value of your asset.

How important is it for the acquiring company to have financing? 

Not very. Except when leading companies are being sold, most transactions do not involve significant amounts of cash at closing. The reason is that Signal Capital Management guides buyers on how to structure the transaction so that the seller is allocated a portion of the risk to ensure that the merged business will succeed.

Does Signal Capital Management represent buyers and sellers? 

Yes. Signal Capital Management works with clients who are using growth by acquisition as part of a larger strategic plan as well as owners who wish to transition from an ownership position while preserving capital and maximizing value.

How does succession planning fit into all of this?  

Some owners prefer to sell the business to their family via a succession plan. These can be more difficult transactions as they involve family emotional issues as well as the lack of inherent savings through the consolidated resources of two companies into one. Signal Capital Management can provide an objective valuation of the company and help to manage generational expectations.

If I acquire a company do I have to take on their debt?  

No. However, some acquirers view reasonable debt assumption as an opportunity. You may want to assume some of the other party’s debt as a way to structure and finance the transaction. We caution potential acquirers to avoid focusing on the seller’s debt too early in the process. They should first focus on chemistry and strategic fit. The debt can be addressed and dealt with in the context of structuring the transaction.

What is a “tuck in”?

A “tuck in” is predicated on “tucking in” the sales of one company into the infrastructure of the buyer. Profit expectations are based on the consolidation savings and the revenue enhancements. The incremental profit to the buyer is used to formulate a “price” for the general intangible assets of the seller, the customer relationships. The “structure” is based on risk allocation between the parties, meaning, what happens if things don’t work out as planned. One of the keys to success of a “tuck in” strategic acquisition is that the
customer requirements of the seller have to fit the capacity and infrastructure of the buyer.

What are the most important considerations in evaluating a strategic partner?

Two things – chemistry between the parties and strategic fit. Strategic fit is defined by consolidation savings and revenue enhancement for the partners.

What if both companies in a strategic transaction are Signal Capital Management clients?

Given Signal Capital Management’s strong market presence in the rapidly consolidating printing industry, this is a common situation these days. Our policy is to provide independent, objective advice. Any confidential client information that belongs to either company will remain confidential. Our advice in this matter reflects both parties’ interests but we are mindful of potential conflicts. Feel free to seek your own advisors if concerned about this relationship. If the transaction process reaches the “legal stage,” you will each need to have separate attorneys to handle paperwork and closing mechanics.

How do I determine the value of my business?

Unless you’re doing valuations in the printing industry every day, you don’t know what your business is worth. It’s important to get an objective value of your business based on solid industry knowledge. The two primary ways to value printing companies – earnings-based and asset-based – are included in the Signal Capital Management Business Valuation report. In addition, Signal Capital Management provides an equipment valuation based on current market conditions as one element of the overall valuation.

How much effort will it take me to get an Signal Capital Management business advisor up to speed on my situation?  

Less than you think. The typical client is able to respond to standard information requests within a few days of beginning this process. Most clients are able to put a package together without creating new data or engaging their staff, with the possible exception of the financial person. We’ll then call or email with a few questions.