I get this question a lot recently both from both possible sellers and buyers. Here’s why I think values are rising:
1) The recession is officially over and most printers are seeing better financial results this year so most think their business is worth more today than during the recession.
2) Printers have right-sized their businesses for the current sales levels so profits are steady.
3) Many printers are experiencing significant growth for the first time in several years albeit at the expense of some of their competitors.
4) Most low value companies that were distressed are either out of business or were tucked-in with competitors.
5) Healthy companies are now contacting us to sell as they feel the timing is right but they will be patient to find the right deal and price.
6) Demand has changed as the number of Buyers far outstrips the number of Sellers. The few healthy companies that are on the market are getting a lot of interest and getting multiple offers.
7) Capital investment has increased as many printers have diversified and moved into wide format, ink-jet, digital, signage, mailing and packaging. Buyers who have bought new equipment want to fill capacity whereas Sellers who have invested in new equipment and have diversified are more attractive to Buyers.
8) Buyers are more willing to buy a going concern and take on an additional location instead of just wanting to tuck-in a competitor. This is especially true for larger printers who want to be perceived as regional or national players.
9) We are beginning to see national consolidators re-entering the market. While consolidators tend to be very selective in whom they purchase, they will find good healthy companies will command a higher value.
10) Companies are struggling to find good sales people and organic growth is still tough. Buying a business to gain sales is quicker and less risky.