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The Art of the Acquisition

(February 2009) posted on Thu Feb 26, 2009

The right way to buy a rival.


By Jake Widman

With the acquisition of Advanced Digital Graphics of Columbus, Ohio, in November 2008, KDM doubled its capacity and now has 12 digital printers in all. Besides just doubling overall capacity, KDM also gained the ability to offer its customers new point-of-purchase and event products. "Basically, they do vehicle wraps, which we do, too," says KDM president Bob Kissel. "They have another EFI Vutek, which we added to ours. But they also have a dye-sub printer and an Oce LightJet photo printer, which complement what we currently offer. We both sell signage, but now we can offer photographic pieces and continuous-tone backlit pieces."

Advanced Digital will continue to operate out of its Columbus location, and all of its employees were retained. KDM plans to place a member of its existing staff at the Columbus site to work with the Advanced Digital personnel "to instill our culture and our expectations, values, and vision," says Kissel.

The acquisition was a long time developing. "They were kind of a competitor, but very small," recounts Kissel. "I asked them probably two or three years ago if they were interested in selling. They weren’t at the time, but they came back to me during the summer to see if I was still interested. That’s how it started, and it happened pretty quickly. It wasn’t a large purchase, and it was something like our fifth acquisition in the past six years."

So would he do it again today? "Yeah, I think I would," he says. "It’s an opportunity for us to continue to grow, and an opportunity for us to pick up a customer base and some quality people. It gives us the opportunity to increase our capacity and offer new products to our current customers. And, of course, to acquire new clientele."

Square One Signs: Becoming a major player
Square One Signs (squareonesigns.com) was established in 2006 as a manufacturer of architectural signs and structures. Its primary customers are commercial properties, such as high-rise buildings. In the fall of 2008, the Newnan, Georgia-based Square One acquired Eagle Signs, a five-year-old digital printing company located in Tyrone, Georgia. The combined company will have eight employees, and operations will be consolidated at Square One’s site in Newnan, which is larger and more convenient to Interstate 85 for shipping and receiving.

"I would say Eagle was both a complement and a competitor," says Square One president Brian Coursey. "We would bid on the same jobs in the area, but looking at the strengths of both companies, our primary core businesses were different customers. We’re more into the manufacturing: We have a Gerber Sabre 408 router and a hotwire cutter, and we do a lot of foam-based monuments and that kind of thing. Eagle was involved more in wide-format printing-trade show graphics, banners, vehicle graphics, vehicle wraps, that kind of thing. They had a Mimaki printer, so they were in the solvent market as well. So we were kind of in two different areas, but they had a few strong customers we were interested in-some of the larger builders that had survived the real-estate problems."

The acquisition process took about six months to complete, starting in early summer of 2008. "We were using Eagle to do some of our digital printing," recounts Coursey, "and had built a bond with the owner, Rich Eagleson, based on that. In the conversations we had, it came out that Rich’s strengths were going out and making the sales and retaining his customers, but he was frustrated with the operations side-trying to manage and run the business. I made the pitch to him: ‘Your strength is in sales, so how about we acquire your company and work out compensation for you as a sales and marketing person?’ So we started bouncing some ideas around to see what kind of package we could come up with. We wanted to make it fair so it was win-win. He actually makes more money now with less headaches and stress."

Coursey says that Square One has seen enough benefit from the acquisition already that he would not hesitate to do it again. The merged companies have seen an overall increase in revenue: "By combining the two companies," Coursey says, "I would say our target for the first year is in the million-dollar range. In another two to four years down the road, we want to be a major player in the market."

Jake Widman is a freelance writer based in San Francisco and a longtime contributor to The Big Picture magazine.


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