M&A Company: Proforma Irvine Group, Smyrna, Ga.
Dissatisfied with the cold-calling process, Bruce Irvine, president of Proforma Irvine Group, has made M&As a central part of his growth strategy. He has acquired seven companies over the last four years, including: Star Athletics, Atlanta; Ted's Promotions, Baldwin, Ga.; Livingston Business Forms, Gulf Breeze, Fla.; and several Proforma franchises.
Irvine approaches each transaction with a specific goal in mind: to obtain the seller's current book of business and build it in areas where the seller fell short. This requires open communication between both parties. "In some cases, I'm taking over a relationship that has lasted 20 years between the previous supplier and their customers, so understanding the current business that the distributor has with the client as well as the potential of that client is critical," Irvine explained.
Honesty is also important to Irvine-especially during preliminary discussions. "It is important to know exactly what type of sales volumes, margins and collections issues there are with the seller's client base," Irvine said. "The seller needs to know exactly how he or she is going to be compensated for the purchase of his or her business, and have an understanding of my strategy to grow his or her existing accounts. Setting accurate expectations early is very important."
POTENTIAL PITFALLS
The Star Athletics acquisition presented Irvine with several new opportunities, including a unique business model. "Star Athletics works solely with high schools throughout the U.S. to help them find local sponsors for their sports programs," Irvine said. "It is a business model that I had previously not been involved in, but offers a lot of potential."
There were challenges, as well. For example, Irvine inherited two employees from Star Athletics. "Acquiring employees can always be a challenge, especially if they are not familiar with selling the full suite of products that Proforma offers," he mentioned. "Many promotional products distributors do not aggressively sell a variety of printed materials, but with Proforma, we have a source for all things printed." In this case, the new employees welcomed the chance to expand their product offerings to their clients and prospects.
WORDS OF WISDOM
"If you're thinking about selling, it's best to sell when you still have a thriving business," Irvine recommended. "Many times we have seen distributors that slowly lose interest and, thus, lose clients. As the business deteriorates, the sales dry up and the value of the business drops significantly." On the flip side, know what your business is worth and work with a prospective buyer to see if you can come to an agreeable figure, he added.
Even if you don't have immediate plans to sell, you should still have an exit strategy in place. "If you are going to work the business forever, that's great," Irvine said. "If not, begin reaching out to people you know and trust and begin discussions about how your business would be sold and how the process works."
Elise Hacking Carr is senior production editor for Print & Promo Marketing magazine, and managing editor for PRINTING United Journal.