What’s The Buzz?

Here’s what PPMN members are saying:

“I certainly understand that in many cases mergers and aquisitions can be of significant benefit to all parties involved. It may be difficult for some distributors to adjust to these kind of changes.  But, to quote Mark Twain,’live and learn!’ Generally, I'm in favor of the subject.”

Reg Marsh, MAS

Graven Image

“My answer on this is going to be indirect--sometimes it's good and sometimes it's not. When a smaller company which is a really good company with a unique product line is floundering and a larger company can take it over and keep it going--then that is a good thing. To gobble up companies for the sake of gobbling them up--not so good.

"For example, when a company not familiar with our industry buys up companies and then proceeds to do business not within the standards of our industry, such as going direct to the end user because they do not understand the way our industry works, or they are greedy and want all the pieces of the pie not just the one they are given, then that’s not good.

“Thanks for the opportunity to answer this. I have been with all sizes of companies including those that have been gobbled up and those that have been bought to make a better liason for each company in the mix.” 

Carol Walkner, MAS

JAYLINE

“Mergers and acquisitions are good for the industry, because they enable owners to realize value on the investments in their businesses.  Most of our unique industry is made up of very small businesses, with ‘sweat equity’ being the primary form of investment.  Without an active buy/sell market, there is precious little opportunity for the risk takers in our business to realize the value of their investments.

“I do not see our industry as a ‘roll-up’ opportunity for big investment firms, simply because there is so little synergy available to leverage an initial position.  Such an investment strategy has been tried and, in my view, has been proven not to be a viable approach.”

Mel Ellis

HumphreyLine, Inc.

“It is not really good or bad but rather a business cycle that I have observed for several years. As the economy expands there are more people who start their own business. People leave big distributors and try it on their own. New people from outside the industry buy franchises or see the industry as any attractive entrepreneurial opportunity. Last year we started to see a sight downturn in the economy and that was when I really started to notice the mergers and acquisitions. There will also be more CorpLogoWare- type collapses but companies have expanded based on a business forecast that will not be able to be achieved.

“It is the life cycle of any industry that is heavily small businesses.”

David C DeGreeff, MAS

Asgard Promotional Services

“Mergers and acquisitions cannot be labeled either good or bad. The consequences of M&A's can help or harm the industry. Just like any change has the potential to help or harm.

“There are aspects of M&A's which can be good. Things such as improved pricing through buying power or efficiency and improved processes and services. Business turn to M&A's as a method for growth, which can increase shareholder value.  Successful M&A's will merge the business competencies of two companies into a new organization that has the best of both. M&A's can provide more capital for growth and improved technology.

“However, there can be problems associated with M&A's, too. One of the biggest problems comes when the business cultures of the companies do not mesh. Company A's button-down culture doesn't fit Company's B's tie-dyed attitude. Poorly executed M&A's lead to poor business. A poor integration of companies can mean poor service, increased turnover, poor morale and loss of business. Then there's the threat that too many M&A's can lead to less competition and higher prices or consolidation could lead to fewer products and fewer choices.

“When things do go bad, they can ultimately lead to good. Anytime a change in business produces a gap between what's available and what's desired, a new business opportunity is created.  When M&A's produce gaps in products and services then there's an opportunity for new companies to be created to fill the gaps.”

Steven Benson

AIA/Distinctive Image LLC

'I think mergers and acquisitions are great for this industry. For some industries where there is a huge capital investment necessary to enter the market, mergers and acquisitions may stifle competition. Let’s see, world wide, how many oil companies are we down to?  In the service side of our industry there is a minimal capital investment needed to start a distribution company (supplier or distributor), mergers may create a large organization with the economic clout needed for huge programs but such programs are beyond the financial scope of a small distributorship anyway.  Such large successful programs are good publicity for our industry and this is useful for the smaller distributor who is serving a segment of the market that is below the radar of the merged company.

“On the supplier side, small manufacturing companies, places where things are actually made, have been disappearing for years. Unfortunate perhaps but the marketplace has a way of hastening the departure of a weak player. Here again the large corporations formed by the mergers or acquisitions are able to do projects beyond the scope of a small producer, but they usually leave significant gaps (opportunities) in their coverage of the marketplace. 

“If we think mergers or acquisition are good or bad, they are a reality we need to professionally deal with. Do what we do and do it well and find where the value we bring is recognized.”

Ken Zieska

Wendell's

“If M&A activity increases the quality of the solutions provided to clients then they are a good thing.  Increasing the professionalism of those in our industry is our biggest challenge.  Meeting this challenge will allow us to be a permanent part of the marketing mix.”

Joseph G. Scott, MAS
Scott & Associates, Inc.