Does anyone know multiples for Screen Printing/Embroidery companies?
October 21, 2024
by a searcher in Denver, CO, USA
I'm looking at a business that does screen printing and embroidery (all textiles) and would love to dialog with someone who has experience in the space. I have many questions! Thanks for reading!
from Massachusetts Institute of Technology in Woodstock, GA, USA
Yes - it is often a race to the bottom. You don’t really want to be in a position where you’re competing on more or less commodity products (single color screen print, for example). I don’t know the apparel space as well, but there are very efficient large operations that will out price you every time on those orders (and their service level/quality is usually fine for the average promo customer). Promo products distributors can be very challenging to work with - large ones will expect rebates and EQP on all orders. They are not very loyal in my experience and will often shop multiple suppliers to see who has inventory and who can meet their timelines.
I would be looking for how this company wins business / what their value prop is, what is their go-to-market strategy and does it scale, and how sticky their customer relationships are.
Opportunities are in pricing strategies, service level / speed / inventory optimization, order and integrations technology (PromoStandards, CommonSKU integration, for example), and decorating technology (DTG, for example).
from Massachusetts Institute of Technology in Woodstock, GA, USA
As a direct answer to your question - depending on the business, average multiples in the 4-6x range for promo products suppliers or print shop / wide format printers, which both have similar dynamics & risk profile to the business you're reviewing. These businesses are usually very price competitive which can drive down margins & have very low barriers to entry (depending on the scale of the operation, but, as an example, a manual 1C press can be had for $100). When we were exploring the space previously, saw a lot of tailwinds in DTG printing for apparel given full color capabilities, single piece production, and web to print capabilities.
Happy to chat if it's helpful.