Get the Most You Can for Your Sign Business

LAST MONTH WE discussed the overarching idea that we’d like to get as high a price as possible when selling our signshops, and some general ideas on how to do that. I’d guesstimate that 50% of what a buyer looks for lies in your financial statements and net owner’s compensation, 25% in your product mix and clients, and 25% in your assets, procedures, location and growth potential. Also keep in mind that 97% of statistics are made up on the spot.

What exactly is “owner’s compensation?” Well-known (and much missed) printing industry consultant John Stewart defined owner’s compensation as “the total financial benefits an owner derives from the business.” While this obviously includes salary and company-share of taxes, we also need to include the following:

• Bonuses
• Company-paid health insurance
• Other insurance paid by the company (e.g. dental, vision, short- and long-term disability, life, key-man policies, long-term care)
• Retirement contributions
• Personal expenses paid by the company (e.g. auto expenses, meals, travel, phones, entertainment)
• Dividends and distributions
• Excessive compensation to family members
• Club memberships and charitable contributions

These values all need to be “added back” to your salary to get a true picture of total owner’s compensation. You want this number as legitimately large as possible because most offers you receive will be based upon a multiple of this amount.

You will want to make your own spreadsheet for the last three years that demonstrates your enhanced owner’s compensation number, which will be requested by a buyer 100% of the time. Anticipating that a potential buyer will want receipts or other proof of these addbacks will save you time when you are asked for them and show how on top of things you are. Set up a folder to hold these receipts/bills/statements, etc.

Other items the buyer will want to see include the following:

• 3 years of balance sheets
• 3 years of income statements
• 3 years of business tax returns
• 3 years of personal tax returns
• 3 years of W-2 statements (you and other family members employed by you)
• 3 years of retirement plan contribution statements for you and other family members employed by you)
• 3 years of health insurance premiums paid by the company for you and other family members employed by you
• Most recent 6 months of company A/P statements
• 3 years of A/R reports
• Lease documents for your building and any equipment not owned by the company, as well as current service contracts
• 3 year of company payroll reports
• Current inventory list

Items that a savvy buyer might request:

• Receipts for any material payments (multiple thousands of dollars) that will not recur if you no longer own the business (e.g. executive coaching, special consultants)
• Personal credit card statements paid by the company
• Invoices for other insurances paid by the company for your benefit
• List of current employees, with title, start date, compensation, bonuses and date of last increase for each
• Current vendor list with helpful notes and information
• Any operations or employee manuals you have created
• Equipment list with whatever information you can scrounge up (asset type, vendor, serial number, date acquired, cost, current value, expected lifespan)
• Top customers with information on industry, annual sales, percentage of total sales, average invoice, number of jobs
• A wide sample of large, completed job invoices showing a range of your product offerings
• A description of your print management software
• All your current licenses and certifications
• Your owners’ compensation spreadsheets
• Recent photos of your shop, layout and equipment
• A brief, written history of your company
• A description of your market area
• A list of any proprietary systems, products or services you offer
• A list of your company advisors and any additional shareholders
• If you have outside sales reps, a list of each one and their sales by year for the past 3 years
• An organization or accountability chart
• Any employment agreements signed by your employees
• A list of your competitors
• Your marketing plan
• Any sales contracts or recurring business agreements
• Sales by product type for the past 3 years
• Any documents outlining your company values, mission statement, local positioning in the marketplace
• A breakdown of sales done in house vs. outsourced

This is a lot of stuff! You might be feeling a bit overwhelmed thinking about accumulating all these items, and some of them might not even be requested. However, looking for them, having them in one place for reference, reviewing them and evaluating them yourself might be a beneficial task for you. You might discover cost savings to implement, or expired contracts that need your attention, or ideas for process improvements. And the benefits of doing this now, BEFORE you start trying to sell your signshop, are that you won’t have to do much later (other than get the most recent versions), you’ll be prepared and responsive when you do get the requests, and your company can profit from the additional intel.

Also, I’m not saying you need to provide all this information on your first date. And you should not provide any specific information at all until you have a signed NDA (non-disclosure agreement). I would provide the requested/required information in a timely manner when asked, and then “wow” them with your other data once you are confident that they are a serious buyer.

I’m not gonna lie — this accumulation of information is time consuming and can be a bit demoralizing. Likely what you need to put this all together is spread out in dozens of different places and it’s easy to say f**k it, I’m just not doing it. I myself might have said that out loud on a number of occasions throughout my journey.

At the end of the day, you never know which is that one crucial piece of information that will be the tipping point causing your prospect to say, “Yes, this is the company I want to buy.” If you can put aside 15-30 minutes each day to hunt for these little treasures, eventually you will have all you need gathered in one location, easily accessible and making you look like the superstar you are!

Happy hunting!