Print Solutions December 2006
Mailbag
Editor’s note: The following letter was part of a discussion about mergers and
acquisitions that took place on DMIA
’s members-only broadcast email system.
We have completed three acquisitions over the course of five years—all of which were earn-out structures. The general valuation we used was 60 to
100 percent of one year
’s gross profit paid out over a three-year period, based on collected billings.
The earn-out was paid monthly. The percentage of one year
’s gross profit was predicated on the amount of existing salespeople that came
with the deal. The greater the number, the lower the payout—the more business we could handle with account managers, the higher the
percentage of one year
’s gross profit. We paid for any deferred inventory upon close, with
collectability clauses for stale inventory to be taken against the earn-out
payment.
We were able to use a standard asset purchase agreement to negotiate from to
keep legal bills down, consulting our attorney when we had general agreement on
the basic terms. We made the agreement contingent upon due diligence. Our
accountant did a limited due diligence and testing on the sales and gross
profit side of the Profit
& Loss statement only—in both cases, the due diligence was completed in half a day. The expense side
of the equation was not of interest other than payroll numbers of employees who
came to the table. In all cases, we absorbed the operations and people into our
existing facility, which reduced our due diligence tasks.
Fortunately, we were able to keep both legal and accounting bills to a minimum.
In all three cases the earn-out structure we used has been very successful for
both parties. You
’ll need to bring professional assistance to the table, but depending on the
complexity of your deal it may not have to cost you that much.
Dan Schroer
President and CEO
Prograde
Cincinnati
Editor’s note: The following letters were part of a discussion about cold calling that
took place on DMIA
’s members-only broadcast email system.
Short vs. Long Sales Cycle
I’m split on the value of cold calling. My first sales job required it, and I felt
you learned a great deal from walking in the lobby (or back door) to collect
names and information. I gathered information not easily found elsewhere.
Today, the internet makes info gathering much easier, but you still can
’t get some of the information you learn when you walk into a lobby and ask
questions or look around.
Eventually, I became a national account manager (and later national sales
manager) for a supply-systems company. Cold calling, as we traditionally think
of it, wasn
’t an effective way to reach CFO’s and global supply-chain directors of Fortune 500’s, so I followed the methods in the book, Calling on V.I.T.O. They were
effective because we targeted accounts with annual gross profit potential in
excess of $10 million, but the sales cycle could take one to two years. The VP
of national accounts told me and my team to stay focused on larger accounts and
to not get sidetracked by smaller business.
Now in the smaller distributor’s seat, I’m in a quandary over chasing smaller, yet more easily gained business at a
purchasing level versus staying focused on larger accounts through calling
top-down with a consultative approach. Even though calling on larger accounts
and conceptual selling is my background and strength, as a small distributor I
’m under constant pressure to generate income to support my family. I keep
getting pulled by the lure of smaller business. I
’m trying to spend 50 percent of my prospecting time in each area. Half the time
is spent researching and using the C-Level letters approach, and the other half
is spent knocking on doors, collecting info and following up, in many cases,
with a purchasing contact. I
’m not sure if splitting this effort is causing me to be ineffective in both
areas.
Since I’m primarily in the commercial business and one of my best customers is a large
commercial sheetfed and web printer in another market (for ancillary packaging
and other specialty products), I decided to pose this question to their
Director of Sales. He says they focus on leads that fit their core competency
and do all of the above. They say the one thing that really works is delivering
donuts to folks they want to have an appointment with. They leave a note about
respecting their prospects
’ time but that they really would like to get a chance to meet with them. He said
it seemed hokey and basic, but it worked well.
Steve Antkowiak
President
Pinpoint Print Solutions
Greensboro, N.C.
Small Accounts Add Up
When I worked for SRC 16 years ago, I sold forms management to large accounts.
When I started on my own, I had the same dilemma [as Steve Antkowiak]. I couldn
’t wait for the long selling cycle. I had to make money. I cold called with not
much success. Then I decided to make phone calls to get an appointment with
someone who knew what I sold and why I was coming. I started in the yellow
pages and then purchased a mailing list of businesses in my area. For every 10
phone calls I make, I get an appointment and then an order with someone (that
’s about my average). They are mostly small accounts, but they add up over time.
One of my first phone calls was to the wrong number, but the person on the
other end didn
’t like his printer and has been a loyal account for all 16 years. I am not
trying to be a large distributor, just make a nice living. Small accounts add
up, don
’t take a lot of time, are usually loyal and don’t kill the business when they leave.
Mike Reboulet
President
Integrated Business Forms
Miramar, Fla.
Editor’s note: The following letter was part of a discussion about using email that
took place on DMIA
’s members-only broadcast email system.
Email Etiquette Equals Efficiency
As we all know, emails are becoming as important to the efficient functioning of
our businesses as are phones and fax machines. In fact they are becoming so
important that every company should require all office personnel to take a
course/seminar, either internally or externally, on the ins and outs of email
software use, etiquette, legal ramifications, when email is or isn
’t an appropriate means of communication, etc.
At the moment, we have the following specific requests to make of our
manufacturing and supplier friends pertaining to emails and email addresses:
1. Have your employees identify themselves: their position/title, dept., company
name, phone/fax number and email address at the bottom of every email. We are
constantly receiving emails (especially proofs) from people we can
’t identify and some of these are being filtered out as spam.
2. The subject line should contain the specific matter covered by the email.
3. All of your customers should be notified of the important email addresses for
you company (for art files, prepress, accounting, customer service, etc.) Your
email address is no less important than your phone number.
4. We all should be on an automatic notification list for any changes to those
important email addresses.
5. Any proofs sent as attachments should show the product as it will be
produced, including punching, perfs, ink colors, etc. and should be in a format
that can be sent to the end user for final proof approval (without your name or
address on it).
Dean Demick
President
Forms Management Inc.
Royal Oak, Mich.
Talk Back
