Written by Howard Fenton,
Senior Technology Consultant, NAPL
There’s an interesting infographic on the MarketingProfs Website about a survey done with 917 small businesses. The survey asked decision-makers across many kinds of businesses if it’s harder today to run their business or if it was harder five years ago. According to the survey, most (59%) say it is harder today, 30% said it’s the same, and 12% say it was harder five years ago.
But these responses are not limited to executives in our industry, leading to the question if we think things are better or worse than it was five years ago. In my opinion, I recall that it was more difficult five years ago. Let’s take a brief look back in time. In the printing industry, 2008 was the beginning of the great recession. Although it was not immediately obvious, it was the beginning of the financial freefall.
Overall revenues were falling rapidly from around $90 billion to about $85 billion, the number of printing establishments, which have been falling since 1994 from 39,000, had just dropped below 30,000 companies, and the dollar volume of offset lithography, which had been falling from about 90% in 1998, had fallen to about 64%.
Mergers and acquisitions
For many companies who were already struggling, this was the year they started to seriously consider merger and acquisition (M&A) options. Of course, considering M&A activities does not always translate into success. Many of us at NAPL work on the M&A team and remember 2008 as a time when companies started to talk about M&A, discovered that their companies were not healthy enough to garner a good deal, and decided to wait it out.
But as our chief economist Andy Paparazzi often says, “The days of ‘a rising tide will lift all boats’ is long gone. You can no longer expect a recovering or growing economy to right your ship.” The results were not pretty. Those companies who were hoping at the beginning of the great recession that things would get better and that they could sell their businesses were unpleasantly surprised when it continued for years. Unfortunately, many had to close.
But this opens a more interesting question– what determines M&A activity? According to a June 4, 2013 article on soberlook.com, it’s CEO confidence. The article talks about the boom days of M&A activity as 2006 -2008, how CEO confidence was down at the end of last year, and suggests that another boom might be right around the corner.
Do you agree? Is your business better today or was it better five years ago? Have you been considering mergers and acquisitions as a way to grow your business? Have you been waiting for a stabilization or improvement in your business to make the move? Will this be the year you make your move?
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Howie Fenton is a consultant and business advisor at NAPL as well as a paid contributor to this blog. Howie advises commercial printers and in-plants on benchmarking performance against industry leaders, increasing productivity, and adding digital and value services through customer research. For more information click here.