Gavin Page

As business owner, Gavin Page, discovered, you will achieve less than ideal outcomes if you don’t have a team of experts to advise you in negotiations.

Growing a Traditional Print Company Via Acquisition

The success of any business acquisition is heavily dependent on the Deal Team you have working by your side.

The members of your Deal Team need to be people experienced in the different aspects of mergers and acquisitions, such as accountants, lawyers, taxation specialists, and human resources consultants.

Without these experts on hand to advise you before, during and even after negotiations, it’s all too easy to end up with a less than satisfactory deal.

Business owner, Gavin Page, learnt this from his first business acquisition.

Six months before hearing about the Dealmaker’s Academy, Gavin received an unexpected phone call from a Cheshire-based accounting firm.

“Somebody phoned and asked if I would be interested in a particular business in Deeside [North Wales],” he recalls. “I said, ‘Yeah, we’ll have a look at it.’ I’d never even thought about acquisition prior to that. It was something I felt I was not qualified to do. I believed I didn’t have the skillset to do it.”

“I went for a meeting, and took my accountant along. We immediately felt as though the business was a great fit with mine. There were plenty of crossovers to produce some of their work and vice versa. So we left that meeting buzzing.” “From the bit of paperwork they provided us, I could see that it was a £1.2 million worth print brokerage business.”

Gavin’s due diligence revealed that the company didn’t manufacture anything in-house, but had terrific contracts. Its specialty was continuous business forms, which are the perforated printed forms that are often used for detailed invoices.

“You would think, ‘Surely nobody uses these continuous print invoices anymore,’ but you’d be amazed by the number of people who still use them. The company was earning around £500,000 on just that sort of business”.

“It had some great contracts in place with buying groups including the car market. The invoices or delivery notes made in every car spare parts shop across the country would be printed by or organised by this company.”

“It was a nice niche market to enter. Obviously, we thought we could get some of that business and bring it inside our print company and cut more costs.” When the original owner had passed away, control devolved to his son and daughter-in-law, who had no interest to continue running the business.

Revenue was £840,000; its EBITDA was about £90,000; and the company made a gross profit of about £278,000. It had £120,000 in the bank for cash flow purposes, and a savings account with £140,000 in it “We then entered the nitty-gritties of due diligence, as well as trying to structure this deal.

My accountant helped me, as without him I would not have had a clue as to how to do it. Even though it was the first deal, we still knew more than the sellers, believe it or not.”

“When the deal was done, we paid three times multiplier, i.e., £275,000, for it. We put down an initial consideration of £100,000 using their money in the bank. We did a three-month deferment with £175,000 over 12 months.”

What he and his accountant didn’t realise at the time was that the 12-month payment period would end up putting his own business under huge pressure.

“Looking back, I feel I should have probably changed it to be paid over three years, rather than 12 months, as it put us under quite a bit of pressure cash flow wise. It nearly sunk us right at the end.”

“The final payment was due in March, which was when Coronavirus hit. I started negotiations with the former owners between December/January. I knew that it would be tight with what was happening with the cash flow. I wanted to extend it, and they wouldn’t have any of it.”

The former owners took legal action, and Gavin was forced to defend himself. “It cost me about £3,000 and a couple of grand in interest.”

 Fortunately, an agreement was reached, and the deferment was extended by nine months. “It was manageable, and we’re doing fine now.
But there was no need to get to that point. They were just trying to play hardball. But it cost me a bit of money to defend myself, and get the new structure in place.”

The acquisition proved profitable for his group with an additional turnover of £150,000. However, Gavin believes that the squeeze on cash flow
could have been avoided entirely if he had used a complete Deal Team during negotiations.

“I already had my accountant, an IP person, and an HR person who’d all been with me for 20 years. What I didn’t have was a good legal, commercial lawyer. Somebody recommended the lawyer I employed, who was making mistakes. Fortunately, someone pointed out the
way things should be done.”


Gavin didn’t actively look for another acquisition until he discovered the Dealmaker’s Academy’s podcasts.

“Somebody said, ‘Have you tried Jonathan Jay’s podcasts?’”

After listening to a few, Gavin decided to join the Mastermind programmeArmed with the knowledge he gained from the Mastermind programme, Gavin began to seek new acquisition targets.

“I started implementing Jonathan’s plans. I used his enquiry letter template and looked at every targeted companies that were based locally or in the northwest.”

He wanted companies with a minimum turnover of £300,000After sending 75 enquiry letters, Gavin began to get phone calls from interested sellers. “I think there were about five phone calls, of which I looked more closely at three.” He then whittled them down to one business, the owner of which was a 60-year-old man who had run the company for at least 40 years. He wanted to retire due to his wife’s ill-health.

At their first meeting, Gavin asked the owner to sign an NDA. “I always take an NDA with me,” reports Gavin. “It’s the one I was given as part of the Dealmaker’s Academy programme. I print the seller’s company name on it. I just say, ‘For both our sakes, do you mind signing this NDA today?

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Look, it’s an A4-size piece of double-sided paper; it’s not ‘War and Peace’.” So far, none of the business owners he has met has objected to signing the document. He discovered that the business had a turnover of £500,000 and an EBITDA of £25,000. It had a gross profit margin of £264,000. There was £70,000 cash in the bank and machine assets worth £42,000.

“I actually did a 1.6 multiplier and paid £40,000 for it. We paid a £30,000 initial consideration with three months of deferred payment.”

“I like the three-month deferment because it gives me time to get in there, sort out the things I need, and ensure that cash will start flowing. I 
just did a short, six-month earnout of £1600.”

The business sold high-end stationery to a range of B2B clients, including life insurance companies and a national funeral company. “The company served a niche market, and that’s what I liked. The skillset they had was fantastic.” 

Gavin identified some easy cost-savings during the due diligence process that would boost its profits. “Just the way they bought paper, for
example. I knew I could make £30,000 just by switching the paper supplier to our group supplier.” 

“So the savings we can make all around are going to be massive. Without doing a single thing to get another customer, we can make an extra £60,000.”

The deal involved using £30,000 from the £70,000 cash in the bank for initial consideration.

Moreover Gavin would receive a £10,000 deal fee from the acquisition, which he used to lease a £90,000 Range Rover the first time around. Since then, he has pursued another two companies that such serve niche markets.

“I’ve got a two-year plan. It’s a buy and build strategy. I want to get to the six companies that the Dealmaker’s Academy recommends, and possibly offload one. My aim is for each business to give me a dividend. If we get this right, I want to take a dividend at least £50,000 out of each company.”

Soon, he will have a management team so that he can step back entirely from the day-to-day running of the group. “I enjoy doing what I do. I don’t like the day-to-day stuff, even though I have to be initially involved sometimes. But my aim is to have the management team in place, so that I don’t need to be in the business as much.”

Gavin says that he has come to appreciate the advantage of having multiple deals in the pipeline.

“Before having any knowledge of the Dealmaker’s Academy, there was a business I was trying to buy, which I really wanted. I could see the benefits of owning it, but it was never going to happen because the owner didn’t like me. No matter how much I tried to woo him, I couldn’t get past first base. And that company ended up going into liquidation. He preferred to liquidate the company rather than sell it to me.

Nobody else was interested. It was just bizarre.” He admits that he took that rejection hard. “What I’ve learnt since then is that if a business acquisition doesn’t come off, move on to the next one. Don’t beat yourself up about it. There’s always one out there that’s got your name on it.”

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