Business for Sale

The business: Here's a company that's tailor-made for someone who wants to buy a small business in a magnificent setting, work a bit, and hang out a bit more. This commercial-printing business in a Rocky Mountain valley will appeal to people who yearn to fly-fish, hike, and ski in their free time. The owner, who had no previous experience in the printing industry, bought the company six years ago from other former nonprinters. He works three days a week and has learned the process of copying blueprints and designing and printing brochures, business cards, and other documents for neighboring businesses in northwestern Montana. The 14 staffers -- some with more than six years at the company -- include two graphic designers; the crew will probably stay on to teach the tricks of the trade to the new owner.

The company has about 250 regular accounts between its two locations near Glacier National Park, and no one customer accounts for more than 4.5% of sales. The current owner offers a portfolio of customer-friendly services (including design, pickup and delivery of orders, and shipping and bulk-mail processing) that have extended the business well beyond the reach of the average copy shop. The owner has also invested $250,000 to update the company's equipment and strengthen its color-printing capability with a new machine for four-color jobs.

Price: $650,000, with an option to buy the real estate (a 10,000-square-foot lot with a 5,000-square-foot building) at one of the two locations for an additional $400,000

Outlook: Solid. Although the highly competitive and fragmented printing industry has had a tough couple of years owing to both the general economic downturn and consolidation in the industry, this company has held its ground.

A new owner could spend more time on marketing, as efforts thus far include word of mouth, involvement in community events, and a newsletter. Advertising in newspapers and the yellow pages is a possible next step. Also, a recently hired sales rep has been lining up new customers. On the technology side, another four-color press would increase the company's production capacity, although at a price -- upwards of $100,000.

Price rationale: Small commercial-printing businesses usually sell for 2.5 to 3 times EBITDA. That would suggest a sales price of $622,500 to $747,000, so the deal seems fairly priced.

Pros: Location, location, location. A new owner should have enough free time to enjoy the picture-postcard beauty of the area. Plus, the recent investments in equipment and new services have positioned the company to grow.

Cons: Printing is a competitive business: hundreds of small printers stopped their presses last year. Furthermore, clients are suddenly asking for high-tech graphics from companies built to provide old-school artistry. To stay competitive, the company will have to keep pace with (and have the capital to pay for) new technology. And to grow, the business will have to consistently expand its product line.

Montana Printing Company
EBITDA* Owner's
2000 $1.1 million $198,000 $75,000
2001 $1.1 million $185,000 $75,000
2002** $1.2 million $249,000 $75,000

*Earnings before interest, taxes, depreciation, and amortization.

Inc has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Mark DeGroot at Compass Advisors, at 406-282-6000.


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Published on: Oct 1, 2002