The subject of strategic plans brings to mind Mark Twain’s famous definition of a classic: “something that everybody wants to have read and nobody wants to read.” Although nearly every printer understands the need for strategic planning and probably would feel better with a written plan in place, these essential documents aren’t as common in the industry as good business practice suggests they should be.

It’s possible to run a printing company without a formal plan, acknowledge Jim Russell, Peter Schaefer, and Tom Williams, partners in New Direction Partners (NDP), an M&A consultancy. But, buying or selling a printing company will be very difficult to bring off successfully, they say, without the help of a written roadmap. An M&A strategy can be part of a general business plan, or it can be articulated separately in a document of its own. In either form, say the partners, it’s a vital navigation aid that guides the acquisition and certifies its desirability for all parties to the deal.

Russell says that a printer’s general business plan should include a strategy for acquiring another company, even if a purchase isn’t yet on the horizon. “It’s one thing to say that I have a vision for acquiring, and it’s another to have an actual roadmap for carrying it out,” he observes. Once a target has been pinpointed, the buyer then can draw up a stand-alone plan that’s specific to the opportunity.

What’s Your Motivation?

“Why” should be the operative word in any acquisition plan, says Russell.

“Why do you want to buy another company?” he asks. ”To grow volume? To add capability, such as digital printing, that you don’t already have? To acquire a skill set or a management team?” According to Schaefer, other drivers might include the desire to increase equipment utilization; build profitability through scale; reduce dependence on a few top customers; penetrate additional vertical markets; or simply to show customers that the company is in growth mode. All agree that being clear about motivations up front is the key to shaping an effective strategy.

Williams says that an acquisition plan should be thought of as a collaborative work-in-progress that complements the owner’s vision with input from department heads and all of the other key stakeholders in the company. The planning process should start, Schaefer says, with a SWOT analysis: an assessment of the strengths, weaknesses, opportunities, and threats that an acquisition is likely to entail. What’s revealed in the SWOT exercise, Schaefer says, will strongly influence the selection of acquisition targets.

He counsels, though, that “there’s no such thing as the Utopian situation where an acquisition accomplishes everything we want it to.” Williams adds that the reason some companies never make an acquisition is that the ideal targets they have in mind don’t exist. What this means, the partners say, is that an acquisition plan must be both flexible and realistic—in synch with the dynamics of the M&A marketplace and open to modification as circumstances indicate.

M&A Team in A Glass Box

Russell says that while an acquisition plan contains many of the same elements as a general business plan, its paramount purpose is to strategize integration in advance by empowering a team of people to implement the deal and bring the merged companies together.

He speaks admiringly of an NDP client that was ready with a management team he described as “well trained and well focused in what to do when an acquisition opportunity came along.” During negotiations, Russell says, the owner was able to remain relatively hands-off while his managers addressed the parts of the integration plan assigned to each of them.

Russell notes that a buyer should have a written acquisition plan if for no other reason than that lenders approached to fund the deal will expect to see one. ”Unless you have an exceptionally strong relationship with your banker, you’ll need a plan,” he says. Schaefer adds that being able to present a written plan will go a long way toward convincing the banker that the proposed acquisition is a deal worth backing.

Although there are no hard and fast rules for writing an acquisition plan, the NDP partners agree that it needn’t be elaborate. A document of 10 pages or fewer, they say, should be enough to articulate the strategy and identify the main steps of execution.

With and Without

Financial projections are a must, Williams says. He recommends a 24- to 36-month forecast of revenue, gross margin, EBITDA, and net profit that shows the numbers both with and without the effects of an acquisition. The projection should also specify the savings likely to be achieved through synergies once the companies have been merged.

Share the completed acquisition plan with your banker, advises Schaefer, even if you aren’t thinking about executing it in the near term. The document also can help M&A advisers like NDP do a better job of identifying suitable acquisition targets. Once in place, notes Williams, the plan becomes a reference against which progress can be checked, enabling the company to adjust tactics accordingly.

Dynamic strategic planning is the hallmark of a company that is truly focused on growth, the NDP partners say. One of Schaefer’s clients, a specialty printing business with annual sales in the $10 million range, has a planning document that he calls “phenomenal” for its detail and its timeliness. Management updates the plan annually, adjusting financial forecasts and revisiting the SWOT analysis to recalibrate the strategy to current market conditions.

This company understands, comments Russell, that “a strategic plan is a living document that’s subject to constant change.” He advises reviewing the plan quarterly with the benefit of input from all members of the management team.

Not for Buyers Only

Acquisition-related planning, notes Williams, isn’t just for buyers: a company wishing to be acquired needs a clear strategy for achieving that objective as well. In his view, it’s “absolutely, positively” necessary to have a written plan if the goal is to be acquired as a going concern—a tough proposition in an M&A market where being purchased often means ceasing to operate as an independent entity.

Without a well-detailed plan to show a buyer, says Williams, a seller’s chances of being acquired as a going concern are “slim to none.”