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  • 6 Key Considerations in Defining Compensation for Former Owner Who Becomes Part of the Acquirer's Organization
    By John Hyde - Friday July 6, 2012
    By John Hyde A critical component of many M&A transactions in the printing and graphics communications industry is to define the role/compensation for the former owner(s) who is becoming part of the acquiring company. I'm not referring to the so-called "transition period." Rather, I am referncing the numerous cases in which the former owner or the partners are becoming valued employees of the acquiring company, whether in sales, operations, finance, etc. My perspective is that the compensation needs to reflect these 6 considerations: Affordability Fair market rate for services regardless of ownership or employee status Incentive and upside opportunity Lifestyle (what has he or she become accustomed to, including the value...

  • How Business Valuation Becomes an M&A Offer
    By John Hyde - Thursday June 21, 2012
    As an M&A advisor to owners and senior managers of print and graphics communications companies, I'm often asked how we come up with an offer. In other words, how does a business valuation translate into "price" and "structure" in the Term Sheet stage of the process? My colleagues and I at the NAPL M&A Advisory team usually start an assessment with the NAPL "State of the Industry Report" which is even more important than the financial statements. Simply, is the company a "leader" (as defined in Andy Paparozzi's research) or is it "treading water" or just being "milked"? You probably know by now that a high "price" and favorable "structure" with mostly cash at closing is reserved for "leaders." From an analysis perspective, we value the...

  • You Are Only as Good as Your Worst Employee
    By Debra Thompson - Monday June 18, 2012
    “You are only as good as your worst employee.” I heard this from one of the attendees during a recent seminar. I thought it was so appropriate. There are many shops out there that will never be as good as what the owner desires, because they continue to put up with underachievers or bad-attitude employees. Even though finding a replacement for this type of individual is a top concern for owners throughout the nation right now, these employees must be addressed. • The first recommendation is to “Coach Your Underachievers.” • The second recommendation is to “Get Rid of Them.” Underachievers come in every shape, size, educational background and ethnic group. The only thing they have in common is that they are not living...

  • Why Net Income Doesn't Mean Cash
    - Monday June 18, 2012
    Just because you made a profit doesn’t mean you created that much cash. Many of us find that out at tax time. Now some know why this is, but many don’t. So disregard if you know. However, if you’ve wondered about it, then let me share a few “whys” with you. If we buy something for $100 and sell it for $400, we have $300 in gross income. Take away $100 for wages and $100 for overhead like rent and utilities; then we are left with $100 of net income (commonly called profit). Now why isn’t the $100 net income the same as $100 in cash in the bank? Depreciation is the most common difference. Ignore Section 179, bonus deprecation and the IRS mandated MACRS (Modified Accelerated Cost Recovery System) for a moment, and consider...

  • Working with GPO Successfully and Profitably Requires Expert Know How
    - Wednesday June 13, 2012
    by Deborah Snider, Senior Vice President, e-LYNXX Corporation Working with the United States Government Printing Office (GPO) to supply the federal government with printing is very different from working with private sector commercial accounts. Fundamentally, GPO is contrarian to everything printers know about selling customers. With commercial printing, printers large and small learn how to treat customers. Selling is requisite to gaining new business. Relationships are paramount. Pricing is based on what the customer is willing to pay. And when it comes to minor disagreements, the customer is always right, and if the relationship is sufficiently deep, even the cost for fixing the problem can end up in the next job. GPO is...

  • You Don't Appreciate it Until It's Gone
    By Denise Gustavson - Tuesday June 12, 2012
    Signs are something we more or less take for granted. You get on the highway and you know there will be signs that help you find the right exit, the right street, even the right address. Signs warn us when the road up ahead is treacherous or if there's a traffic camera at the next intersection. I have to admit that I didn't realize how much I relied on signs until I was in Ireland and in some cities, they simply didn't exist. It can become very frustrating to circle around a National Park that you can see on a road atlas, but there are no signs on the road to indicate the entrance to the park, the road you're on, the speed limit on the road, or even if you're in the right place going in the right direction. It's even more frustrating when...

  • What is the Owner's Job?, Part 4
    By Tom Crouser - Monday June 11, 2012
    What is the job of a business owner? In this fourth and final edition I add performance to the tasks listed in our previous three issues. Management types who work for someone always have to perform and they have to report to someone in order to keep their job. A branch manager or a store manager reports to a division director or vice president somewhere. A vice president reports to a president or CEO. Presidents or CEO’s then report to a board of directors representing stockholders. Even the board reports to the stockholders. And each and everyone can be thrown out on their ear if they don’t perform – even if it’s not their fault. So, they have one thing in common – perform or else. Only in these businesses that we create can...

  • What is the Owner's Job?, Part 3
    By Tom Crouser - Monday June 4, 2012
    What is the job of the business owner? In this installment three of four, we add to the tasks of the job described previously – especially in the areas of sales and finance. In the last two installments we said that ownership is a passive verb. An owner has a right to a return on investment in both time and money. We found owning a business was much like owning a car – that it is limited in usefulness until someone drives the car. And we found that ownership is broader than the founder – that it extends to the entire business family who are stakeholders in these businesses regardless of whether they are stockholders. Most people confuse the title of owner with the function of the one person who runs the business – the function...

  • What is the Owner's Job?, Part 2
    By Tom Crouser - Monday May 28, 2012
    The question is, “What’s the job of the person running the business?” In our last installment, we focused on the primary duty – to make and meet all budgets. In addition, we said they also are responsible for reporting on their progress of meeting the budgets to the stakeholders. Okay, you may ask, but how does that relate to print shop tasks such as writing up jobs, waiting on customers and ordering supplies? Well, it doesn’t because that’s not the job of the general manager. Huh? We must organize around functions – not people. In our size shops, the job of the general manager is not a full time job – even after you read all the things I am going to list. Rather, the job is a part-time effort even at the two and three...

  • Is Your Employee Ready to be a Manager?
    By Debra Thompson - Friday May 25, 2012
    When a managerial position opens up, it is usually an opportunity to move a top performer into the position. No one would argue that promoting from within sends a strong message to the rest of the company about investing in people and cultivating management talent. Unfortunately, when it comes to actual qualifications, current job performance is given greater weight than the competencies required for a managerial position—most notably, management traits and/or experience. The fact that individual job performance and management are two entirely different sets of competencies too often gets ignored. Before you know it, you have someone in the position that doesn't know the first thing about managing a group of people. Dr. Laurence...

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