North American Wholesalers' Regional Meetings

A r ITS series of regional meet- Iilgs held across the country each fall, the North American Wholesale Lumber Association presents its forecast of next year's business conditions.

At the meeting shown here, held at the Balboa Bay Club, Newport Beach, Ca., NAWLA executive v.p. H.M. "Pete" Niebling ventured that housing starts next year would be 1,620,000, slightly off the average 1.7 million during the 1970-1979 period. He foresees a housing mix favoring singles over multiples, adequate financing, better F.O.B. mill prices and a continuation of the current intensity of competition.

He told the meeting that industry problems in 1986 would include direct selling by manufacturers, transportation ("either be in it or be out of it"), increased operating costs and high insurance rates. Niebling stressed the importance of increasing productivity at the wholesale level. Interest rates will

(Please turn to page 74)

"LOOKINGAROUND"says Paul Bunyan

Paul does not rest on his fame as the lumberman's symbol of accomplishment. New requirements and changrng conditions keep him alen to progress.

Buyers Seek the Undervalued

Merger and acquisition activity among smaller to mid-size privatelyheld companies is at record levels because experienced corporate buyers are taking advantage ofthe knowledge that many of these acquisition targets are undervalued.

"Not since the late 1960 s has there been such a high level of buyer interest in middle market companies with revenues from $l million to $50 million," said Gary Roelke, Geneva Business Services, a merger and acquisition firm. "Most sophisticated buyers know that these business owners don't have an accurate picture of the true worth of their companies.

"That's why we are forecasting that 12,500 middle market businesses will change hands in the coming l2 months. The average private business owner may sell a business once in a lifetime, but he's usually overmatched when dealing with a sophisticated buyer who may be buying as many as six companies annually," Roelke added.

Sellers need to understand that the buyers are seeking return on invest- ment levels better than they can get from passive, risk-free investments, according to Roelke. "In addition, buyers expect to see growth potential and synergy possibilities when evaluating acquisition candidates," he stated.

In addition to exploiting the awareness that a company is undervalued, Roelke cited l0 of the leading motives for mergers:

(1) Achieve growth more rapidly than by internal effort.

(2) Satisfy market demand for added products or services.

(3) Avoid risks of internal start-ups or expansion.

(4) Increase per share earnings.

(5) Reduced dependence on a single product or service.

(6) Acquire market share or position.

(7) Offset seasonal or cyclical fluctuations in present business.

(E) Increase utilization of present resources, such as physical plant or personnel.

(9) Acquire outstanding management or technical personnel.

(10) Open new markets for present products or services.

Nawla Regional

(Continued from page 72) stay essentially the same, he said.

Gary Schlossberg, senior economist with Wells Fargo Bank, San Francisco, Ca. prophesied that 1986 will be about like 1985, suffering only mild inflation, that California will outperform the rest of the country, that consumer spending will continue at a vigorous level and that interest rates will increase slightly then retreat as part of a general downward trend in rates. The western economy will continue to benefit from the growing strength of Pacific Rim business.

The economist said that he sees concrete action on protectionism as the only likely area of Congressional action. He does not expect the nation's lawmakers to make meaningful progress in either tax reform or deficit reduction.

NAWLA vice president John Weston, Far West Fir Sales, also spoke briefly to the meeting on association affairs. Chairman for the October 16 event was Ted Gilbert, Product Sales Company.