The Dashing Document Company had four distinct divisions that were all interrelated. My wife, Isabel and I had started the business upon arrival in Sydney in December 1980. The business was quite seasonal and like any other had its ups and downs. The business had four divisions including traditional retail access print on demand, operating 24 hours a day, retail and wholesale office supplies, and outsourcing of print and copy services for major corporates (using our equipment, labour and materials on their premises).

 

Each of these had their challenges, including:

 

 

Another significant issue for us was that a large percentage of our revenue and profits were generated by a very small group of clients. To lose any one or two of these clients was potentially very dangerous.

 

Although we have two daughters, neither interested in taking on significant roles within the business. We had attempted to fill the role of General Manager at least four times without success.

 

I was personally tired of the day to day running of the business and, being entrepreneurial, was constantly seeking new exciting angles for the business to address.

 

In late 1999 we thought about an exit plan. There appeared to be a great opportunity for us to become a part of a larger business which might have an interest in growing any or all of the divisions we had proven to be successful. To achieve this goal, we realised that we were too small and localised, being essentially a Sydney based company.

 

After some months I successfully found four other similar businesses with the broad definition of printing offering other services ranging from signage and digital posters, architectural plans and digital colour printing. We were confident we could bring different skills to an aggregation of the sum of our companies.

 

We commissioned a major accounting firm to determine what a combined company might look like in a theoretical sense. We reviewed equipment needs, savings in administration, staffing, marketing and sales.

 

The resulting estimated income and expenditure looked very interesting: sales of $55 million pa and EBIT expectations of $4.5 million pa. We could benefit even more by cross-selling our various specialties.

 

We then approached two major companies who had expressed some interest in being a part of this potential consolidation.

 

We started high level negotiations with these two companies. The plan was for one of them to purchase a majority interest in each of the companies.

 

With a sale, we would simultaneously create a company that effectively merge our businesses. We would rebrand all into one new brand and image. All principals would sign three-year contracts and take on differing responsibilities.

 

We agreed on terms and conditions.

 

We made our decision as to which company to sell to. The heads of agreements were signed by all and the buyer commenced a due diligence process. Some twelve months later the deal was done.

 

With the benefit of hindsight there were a few strong lessons learned:

 

After about three years, most of our contracts were completed. The Public Company shared had taken a battering (for this and other reasons) and the Directors decided to sell off the various units. Some of the original sellers bought back their businesses for a great deal less than they had sold them for.

 

I learned many lessons from this process and would be happy to share them with others contemplating a similar move. Even though this particular project was not successful the concept of aggregating small businesses still makes sense and I would recommend this being considered, especially in today’s times as there are:

 

Michael Shur can be contacted on 9241 4598 or

mshur@theventurebankgroup.com