Profit Potential of a Wrap Around or From Absorbing an In-plant Print Shop
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| Profit Potential of a Wrap Around or From Absorbing an In-plant Print Shop |
| Labor Cost Variances |
| Equipment Costs/Utilization |
| Economy of Scale |
| All Pages |
Buying or selling a printing business doesn't happen often in most managers' careers. Consequently, a road map does not always exist to arrive at a fair and equitable price. Print business brokers earn their keep advising either party in such transactions; however, the smaller businesses may choose not to retain these specialists even if they knew where to find one.
Before deciding what to seek for or offer for a small printing enterprise, it may be more helpful to analyze what the profit potential might be if this entity were absorbed into a larger printing organization. This article is intended to benefit both the seller and buyer in terms of providing valuations of several elements of the new consolidation.
For illustration purposes this small printer is assumed to have ten employees operating a single shift with high speed, digital copiers and two-color duplicators in space with no lease obligation. Such a profile might fit an in-plant whose corporate parent is considering outsourcing the service.
Three key areas of valuation are
- labor
- equipment condition/utilization
- economy of scale opportunities
As each party pursues its own due diligence, certain sensitive information should be shared. Consequently, both parties should offer and be expected to sign nondisclosure agreements. As the elements of valuation are discussed, this facet of handling sensitive information will become more apparent.
