There’s little doubt: It’s a great time to sell your business. And the big dogs want to buy it.

A combination of industry consolidation and steady performance by the label industry has made our sector an objective of the big dogs. The big dogs are financial buyers (private equity firms that may or may not have a platform company) or strategic buyers (large corporations).

According to James “Jim” Hill, executive chairman of Benesch, Friedlander, Coplan & Aronoff LLP, “The goal for these larger players is to find smaller EBITDA companies to integrate onto the larger platform, giving the acquirer a more national base.” In other words, the big dogs would like to add some smaller dogs to their pack.

It’s consolidation, in other words, the same trend that has reshaped other industries. From railroad mogul Jay Gould’s railroad consolidation efforts of the 1880s, to corporations building conglomerates in the 1960s, to today’s vertical mergers in the tech world, consolidation has always been a method for big business to get even bigger.

The label industry has already experienced significant merger and acquisition activity among larger players in years past. According to Blaige & Company, “58 percent of the top 50 US players across all plastics manufacturing segments have either been eliminated or changed ownership (merged or sold) since 2001.”

The rate of these mega-mergers in plastics has slowed, however, and so the big dogs are looking downstream.

They’re not just looking for anyone, however. When Wall Street comes to Main Street, they are in search of profitable, well-organized and well-managed companies with a significant infrastructure and unique niche. Acquisitions don’t just happen for acquisitions’ sake. These are sophisticated buyers, and they can afford to be choosy.

Yet they are definitely shopping. Hill notes that the lack of sellers, combined with pent-up capital that’s been sitting on the sidelines, has created “historically high multiples.”

So how do you take advantage of this marketplace? If you’re a little dog, here is a step-by-step approach for selling a business to the big dogs and achieve some tail-wagging results in the process:

Step 1 – Make the Big Decision
Jim Hill notes there is a dearth of sellers in the marketplace. This seems unfathomable, considering the historically high multiples and the eagerness among financial and strategic buyers.

Selling a business isn’t entirely a rational decision, especially for the baby boomers who have grown their company for decades. An owner establishes a sense of identity with their company, one that in many ways transcends dollars.

Your company isn’t just a place where you go to work. It’s something you’ve created, a force that has helped your employees build careers and families. It’s done the same for you.

No matter who is waiting in the wings, this is difficult to walk away from. It’s not really a decision of whether or not to sell – it’s coming to grips with the fact that you are going to sell your business and where you will put the money.

So how do you do it? How do you say good-bye to a huge part of your life?

You do it by saying hello to the next part. One of the main reasons people don’t retire is they have no vision of their own future. They simply can’t imagine what they’ll do with themselves.

This is why establishing your vision for the future is critical. Not your company’s vision, but your own.

Apply the same strategic planning principles that helped you build a successful company to your own life. Plan your own vision of what your retirement will hold. Think about what you want to do: Will you engage in philanthropy? The arts? Open a new business? Consult?

The options are endless, but you must choose one. Without a clear-cut vision of your next step, you’ll never take it.

Step 2 – Get Your House in Order
Do you ever notice how much stuff people throw away when they move?

They clear out all the clutter and accumulated junk from years past, and then leave with the truly meaningful items.
The same principle applies for selling your business. Your new owners don’t want to have to clean out your “basement.” They don’t want to have to deal with bad debts, staffing overages, or unnecessary equipment.

They want a company that’s lean and mean. That will require performing due diligence – on yourself.

As Jim Hill notes, these are sophisticated buyers you’ll be dealing with, and they’ll be scrutinizing your finances, operations, marketing and management. You’ll want to assess your own business with a “jaundiced eye.”

“Don’t be caught off guard,” Hill says.

Buyers are sophisticated, yes, but they’re also extremely busy. If your internal processes are in such a mess that they can’t clearly decipher if you’re profitable, or more importantly, how you’re profitable, they’ll simply walk away from you. Buyers want prospects, but they’re still the ones in the driver’s seat.

If you’re intent on pursuing the retirement vision we stated in Step 1, and it involves passing on your business to your family, then getting your house in order is just as critical. This isn’t just a sale for your own retirement — it’s a strategic transition that will ensure your family and employees have a future of their own.

Step 3 – Build Your Team
The sophisticated buyers Jim Hill refers to have built out their M&A capabilities. They have a network of M&A specialists, including financial and legal experts, who conduct the process on their behalf. They also have an experienced transition team, ready to take the reins after the sale (unless you have built a solid management infrastructure).

If your revenues are south of $5 million, you may not have all those capabilities. Instead, you may be reliant on your current accounting, finance and legal teams to help you with the process.

Many smaller companies choose to stick with their preferred vendors through this process, as you’ve likely built up a long-standing relationship. My advice is to reconsider that strategy.

A merger and acquisition is a highly-technical, nuanced transaction. It’s not that many financial and legal specialists couldn’t do this – it’s just that they don’t have the knowledge base that comes from conducting numerous transactions.

When Wall Street comes to Main Street, they are in search of profitable, well-organized and well-managed companies with a significant infrastructure and unique niche. Acquisitions don’t just happen for acquisitions’ sake. These are sophisticated buyers, and they can afford to be choosy.

Step 4 – Focus on Your Business, Not on Buyers
If you have a thriving business, you’ve likely worked very hard on business development. You understand how to generate growth for your company, and push your products and services.

But just because you know how to sell your products and services doesn’t mean you’ll know how to sell your business.

Your customer in this case is different, and they’re not all that easy to find. They will want a discreet sale, and that’s not easy to achieve if you don’t have any contacts in the investment world.

Can you do it yourself? Can you hit the pavement, visit the trade shows, attend the executive summits, and put in the long hours to establish relationships with investors?

Sure you can. But while you’re doing that, who will keep an eye on your business? Who will ensure things stay profitable when you do find a buyer?

Just as you want to build a team to help you with the selling of your business, you also need someone with capabilities to help you find the right the buyer. Again, industry experience and a proven track record are key criteria for a vendor.

Step 5 – Open the Lines of Communication with Your People
Remember your employees? Your family? The people who helped you build your business and create your dream?
Of course you do. But in the midst of selling a business, it’s easy to overlook the people who put you on the map in the first place. That’s a huge mistake.

Step 5 should actually be part of Step 1, but I put it here in the hopes that it will stay with you after you finish the article: Don’t forget your people. If your plan is to sell the business, enlist them to help you do it right.

Why? No one performs well when there’s uncertainty in the air. If your team is unsure about their future, and doesn’t know what your plan is for them and their families, they’ll head straight for the door.

This isn’t the buyer’s problem, either. It’s yours. A sophisticated buyer isn’t making a purchase on what’s in place today. They’re buying a company that will be there for the future. That includes a staff that is fully on-board with the new ownership.

Being transparent with your people and making them part of the process, will build – not lose – momentum. Perhaps you’ll even add to those already sky-high multiples.

These are my five steps to set you on the right course for selling your business to the big dogs. In this era of rapid-consolidation, these are the fundamentals that savvy investors will look for in a purchase.

Selling to the right big dog can help you exit on top, and keep your company on top for the next generation. That’s a legacy bound to get your tail wagging.



Rock LaManna, President and CEO of LaManna Alliance, helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path.