Past Engagements

past engagements

Full Sale & Equity Investment Transactions

Figures denominated in US Dollars (USD $)

FULL SALE (CLIENT #2719T CASE STUDY) : MINING EQUIPMENT SERVICE COMPANY – TAKEOVER BY LARGE INVESTMENT FUND

This group of companies had multiple owners with different objectives. Some wanted to retire, and some did not. Eventually, they all agreed to a possible sale if they could walk away with $24 million for the group of companies. With profits slipping on a quarterly basis this created a difficult situation which required some creative ideas as well as fairly extensive marketing focusing on the potential of this business under new leadership that was willing to invest additional capital into the business post-closing and work to expand its national footprint and also by using it as a platform for other strategic acquisitions. This approach worked and we had over 330 potential buyers review the business and generated 12 written offers both domestically and internationally.

The offer our client ultimately accepted was from a large investment fund we had worked with previously and did require some of the owners to remain for as long as 12 months in the business. The final deal was for $33 million all cash at closing without any note or earn-out component. This was $9 million more than our clients wanted for the business.

EQUITY INVESTMENT (CLIENT #1422H CASE STUDY) : HEALTH PRODUCT MANUFACTURER COMPANY – $220 MILLION CASH AT CLOSING

The company held multiple patents in multiple countries and sold its line of patented products globally throughout Europe, North and South America, Asia, Africa, and the Middle East. Most sales were to OEM’s, some were direct to distributors and a small portion through online retail channels. The founders of this manufacturing business recognized the company had grown to the level it needed a stronger management team and an equity partner to capitalize on future growth opportunities. Due to the highly confidential nature of this transaction the owners only approved a very short list of potential investors, all of whom had to be financial investors not already invested in any competitor or related business. Though this was a very focused approach it was not easy. After carefully culling through a very large global pool of potential financial investors we approached less than a dozen approved and thoroughly vetted acquisition candidates. This was all done under very strict signed confidentiality agreements at the very early stages with all potential investors. After several rounds of negotiations with all each group it became clear who the leading candidate would be. This fund was also a client of ours who managed $6 billion in capital.

It was an ideal fit, and the investment transaction was closed for $220 million (all cash at closing). Eventually, our client fund who acquired a stake in this business sold their interest and the company is now held by a larger $40 billion fund and the value of their stake in the business is north of $1 billion.

FULL SALE (CLIENT #583M CASE STUDY) : SELLER FAILS TO OBTAIN $12 MILLION - OUR TEAM DELIVERS BUYER FOR $31 MILLION

This manufacturing client had originally retained our firm as their advisor for their previous company which was owned by a holding company that was publicly traded. After helping them sell that business the senior management team started a new manufacturing business which they grew quickly. As this business was approaching $2.5 million in annual EBITDA, they attempted to sell the business on their own for $12 million, but without any success. After realizing the difficulties in selling the company on their own they once again retained us. We then undertook some extensive market buyout research and created the appropriate materials to properly present this company to the market.

In the end we procured 35 bona fide written offers for our client from a variety of public and private companies, strategic buyers, private equity groups, hedge funds, and even large investment banking firms. The highest offer was for just over $31 million (approximately 13 x earnings), with all cash at closing. This was over $19 million more than the client wanted but had failed to generate through their own efforts in selling their business.

FULL SALE WITH 12 MONTHS POST SALE EARNINGS UPLIFT ADD-ON (CLIENT #4320L CASE STUDY) : $150 MILLION HOME PRODUCTS SERVICE COMPANY – BOUGHT BY PRIVATE EQUITY BACKED ROLLUP

This family business managed to max out their annual sales in excess of $150 million with net profits exceeding 10% of revenue. The business had several owners, some were active managing the business while others were passive. There was no compelling reason or motivation to sell the business, and each owner had different personal and financial objectives which led to a stalemate among the owners, and this also limited future growth rates. They couldn’t agree to proactively go to the market with a full sale, bring in equity capital to expand the company’s geographical footprint and product offering, or take on debt and invest profits to acquire competing businesses to continue to grow. Eventually, we were able to get some traction in the market for this business by getting the company to make offers to acquire similar businesses and lining up financial partners to fund those acquisitions. As this was in well underway one of the equity backed groups we worked with on another transaction decided to make an all-in 100% offer for this company that they were initially hoping to support financially.

In the end 100% of the business was sold for over 10 times earnings. In addition, the selling shareholders would get the same multiple on any uplift in earnings 12 months after the sale but no penalty if the earnings dropped. Due to the financial and operational support from the buyer the following year was a record year for this business and the shareholders received over 10x earnings for the additional uplift in earnings from the previous year.

EQUITY INVESTMENT (CLIENT #465U CASE STUDY) : OUR TEAM EXCEEDS CLIENT PRICE EXPECTATIONS – OBTAINS FINAL PRICE OF 12 x EARNINGS

This patented manufacturer had over $5.5 million in annual EBITDA and had been trying to sell their business through another intermediary firm they had retained prior to us. That intermediary charged them very large up-front retainer fees but delivered little beyond lengthy, ill-conceived, confusing marketing documents which completely missed the mark of clearly disclosing to the market the core business as well as detailing the opportunity on a going forward basis. Their efforts fell flat in the market, and they were not able to bring a single qualified buyer to the table. The owners became very frustrated as their personal plans were on hold since their business was in a state of limbo. Management came to us to see if we could help. Our team got involved and started digging into what had been done as well as identifying what had not been properly done. Once we got clarity on this, we needed to explain to the owners what went wrong under the previous efforts. After understanding the seller’s objectives, we explained that they should consider a partial sale (40-60%) with a suitable group that could not only support them in growing the business further but also allow them to de-risk by putting a significant amount of money in their pockets as part of the buy-in transaction. They agreed with this idea, and we then agreed to take on the assignment. After completing the necessary research and initiating the required marketing process to properly represent the client the results started to show immediately. We ended up with 51 potential buyers now interested in our client’s business and we received multiple offers. Some offers were in fact to acquire 100% of the business and others were for a minority interest. After a couple months of marketing, meetings, negotiations, and facility tours, we put a deal together with a private equity group we knew well as we had previously sold a few other companies to them.

Our client was hoping to get 4-5 x earnings for the entire business when they first decided to go to the market but at a price of 12 x earnings for only half the business our client was very happy as this got them more money at the close (for only 50% of the business) than they had hoped for by selling 100% of it. The structure we put in place with the investment fund would also allow the founders to continue growing the business further and also give them the rights to sell down their remaining ownership interest over time at a preset multiple of future earnings

FULL SALE (CLIENT #682E CASE STUDY): CLIENT SEEKS $18 MILLION - OUR TEAM DELIVERS BUYER FOR $36 MILLION

This client owned a construction related contracting business with just over $30 million in revenue. The seller wanted $18 million for their contracting business. In this case the seller had retained another advisory firm but did not have any offers that approached their $18 million price. Once we were retained, we subsequently organized and initiated the full process with a detailed strategy and performed a thorough financial and operational review, we created the necessary materials required by sophisticated buyers, we researched the relevant transactions within their industry, we marketed the opportunity and created a well-managed blind auction process for our client. We were able to procure close to a dozen offers for this business and we continued to negotiate with each prospective buyer and eventually got two of the prospective buyers north of $30 million with all cash at closing. These two buyers were both private equity groups which we had dealt with on a number of previous transactions. One group got as high as $34.5 million while the other group eventually offered $36 million. Our client eventually agreed to accept the lower offer of $34.5 million because they were very comfortable with the individual that private equity group had brought in to run this business after the sale.

We informed our client that we were confident we could get their preferred buyer up to match the higher $36 million offer without any further concessions. Our client wisely agreed with our strategy, and we were able to get their preferred buyer to match the other offer and the business was sold for $36 million all cash to their preferred buyer. This $36 million all cash at closing transaction was a full $18 million more than the client wanted for their business. The buyer was a large multi-billion-dollar fund that was doing an industry rollup to take public.

FULL SALE (CLIENT #896W CASE STUDY): TECH BUSINESS LOSING MONEY - OUR TEAM DELIVERS BUYER FOR OVER $13 MILLION

This tech company was losing money at a rate of around $1 million per year and the shareholders just wanted out. They could not see a way to turn their business around. After retaining us we set about to identify what value the business might have to a strategic buyer instead of being saddled with the fact that it was losing money. After we held discussions with management to really understand their business in depth and determine what value it might have outside of its financial results, we were able to identify how a narrow niche of strategic companies could leverage this opportunity and increase their own earnings significantly.

After identifying and approaching a handful of potential buyers and opening a short window for bidders to submit their best offer we were able to generate four offers for the business. Within two months we were able to close with the buyer who believed they had the most to gain by acquiring this business and who also wanted to prevent any of their competitors from acquiring it. We sold the company for over $13 million all cash at closing which was a win-win for both our client and the buyer.

PARTIAL SALE (CLIENT #748K CASE STUDY): MANUFACTURING BUSINESS – MAJORITY INTEREST SOLD TO OVERSEAS BUYER FOR OVER $50 MILLION

The owners of this global manufacturing business approached us hoping to sell their family owned and operated business. They key person, and majority shareholder, was burned out from years of extensive overseas business trips. They recognized the difficulties in finding a buyer for the business due to numerous risk factors related to any new owner not being able to maintain the current earnings level. This business was highly dependent on the current owner’s knowledge and his personal relationships in the industry. This family was hoping to sell the entire business for $12 million. After a thorough review of the business operations and quality of earnings we determined an overseas buyer would benefit the most by becoming a majority shareholder in the business and certain overseas operations. We then developed a detailed scenario that outlined how an overseas buyer/investor could not only ramp up earnings but also greatly hinder outside competition to their existing consumer base as well as their current geographical markets. Though we had domestic buyers willing to buy the entire business, dozens of overseas buyers also recognized the detailed opportunity we outlined to them. We had over 270 groups globally take a detailed look at this opportunity. We procured multiple signed offers from private equity firms, family offices, and private and public companies, both domestically and overseas.

In the end we closed with an overseas investor for over $50 million who acquired a majority ownership in the business while the family still maintained a minority interest which would deliver further financial benefits to them in the future. This $50 million + was $38 million more than the $12 million the family wanted for the business, and they still maintained the original domestic business which was much easier for them to operate. They were able to turn over day to day management of this smaller business to the key employees who had been running the domestic operation originally.

FULL SALE (CLIENT #8313Q CASE STUDY): CONTRACTING BUSINESS – PRIVATE INVESTMENT FIRM RETAINS OVER 320 EMPLOYEES

The owners of this family-owned business had been in operation for many years and the family members who were responsible for the day-to-day management wanted to retire. The business was subjected to many risks outside of its control including new home development volatility, personal relationships with home builders, and interest rates. This risk had to be quantified in financial terms as the owners were not willing to accept anything less than a 100% buyout and without any earnout or seller financing as any part of the sale. Additionally, the outside accountant for the company was a single operator that could not provide the accounting support necessary so getting financial information or transparency was difficult and slow. After preparing the offering memorandum, even given the lack of financial transparency we knew the company needed to put forth, we completed our research and began marketing the business to over 4,300 potential buyers we identified.

This resulted in 81 potential buyers doing preliminary due diligence and 3 offers on the business. We were able to negotiate the final transaction terms with a private equity firm based in the Midwest for the full price the sellers wanted for their business.

FULL SALE (CLIENT #171A CASE STUDY): SELLER READY TO ACCEPT $8.5 MILLION – OUR TEAM DELIVERS BUYER FOR $26 MILLION

This industrial electrical product manufacturer company our team sold had close to $2 million in annual profit and was originally approached by a private equity group who evaluated the business and subsequently offered them $6.7 million. The seller and their lawyers negotiated that up as far as $7.6 million but the seller wanted $8.5 million for the business. After several frustrating months of protracted and stalled negotiations the seller retained us to represent them. We then organized and initiated a full marketing process by outlining a detailed strategy with our client, conducting a financial and operational review, creating the necessary materials required by the sophisticated buyer community, researching the relevant transactions within the client’s industry, marketing the opportunity, creating and managing a blind auction, etc. This process brought forth a number of other qualified buyers to the table which included several private equity groups, private and public companies, strategic buyers, and a few high-net-worth investors. We then negotiated with the original buyer and got them to raise their offer to $9.8 million. However, they eventually dropped out of the process as the deal price went beyond what they were willing to pay.

We negotiated with several other buyers and ultimately sold the company for over $26 million cash (13 x earnings). Had the sellers taken the original deal they were able to negotiate they would have left over $18 million on the table.

FULL SALE (CLIENT #4812V CASE STUDY): BUILDING SERVICES COMPANY – TWO BUYERS COMBINED TO PAY 277% OF OWNER’S TARGET PRICE

The owner of this $60 million building services company wanted to retire. The company had multiple locations and operated in over a dozen US states and covered multiple time zones. This posed a challenge to similar companies, most of whom operated very differently and with much tighter controls in place as well as operating only within one or two time zones. This company also paid its staff of 300 wages far above the industry average. While this was good for retention and morale it posed a real challenge for strategic companies who would struggle with how to have their existing staff paid industry average wages while paying much higher wages to the new employees that came from the acquired business. We determined the best solution was to sell the company to more than one buyer and focus on the geographical footprint and limited time zone coverage that could be offered to each respective buyer. This way the buyer’s existing management structure could fold in a more geographically concentrated acquisition to stay within their current time zones/operational footprint and make it easier to deal with the wage gaps of a smaller number of employees coming in.

Our marketing process brought forth over 90 interested buyers. The end result was two different buyers wanting to acquire different parts of the business and at a combined price that was 277% of the seller’s price goal.

FULL SALE (CLIENT #7210H CASE STUDY): RETAIL LEASE IMPROVEMENT & DESIGN & BUILD-OUT COMPANY – LARGE STRATEGIC COMPANY PAYS 419% OF SELLER’S TARGET PRICE

The owner of this $30 million company contacted us to sell this company as he wanted to focus on other business ventures he had underway and did not have the bandwidth to continue to manage this business. After we were retained, we reviewed the business operations and management requirements and subsequently determined the best buyers would either be owner operators, private equity, or a strategic company. We put together an offering memorandum that provided not only transparency on the business but also outlined the opportunity going forward to grow the business under three different scenarios.

We marketed this business to over 2,100 potential buyers and had 63 potential buyers perform preliminary due diligence on the business which resulted in 8 offers. The highest offer came from a large strategic company that we outlined in detail how buying this business would greatly enhance their own current operations and allow them a further stronghold on the geographical markets in which they currently operated. The diligent efforts of our team and our in-house research resulted in a final price that was 4.2 times higher of what our client originally hoped to get for this business.

MINORITY EQUITY INVESTMENT (CLIENT #8215P CASE STUDY): SOFTWARE COMPANY – MINORITY INTEREST SOLD TO PRIVATE INVESTMENT GROUP THEN SECOND ROUND MAJORITY INTEREST SOLD TO EUROPEAN PUBLIC COMPANY

The two owners of this software company had grown their company beyond their ability to manage it properly any longer and approached us to sell 100% of their business. While a full sale was one option, we suggested bringing in the right equity partner might make more sense. This client company projected their then current year at $30 million revenue and profit of just over $3 million. Instead, revenue actually came in at $26.3 million with profit of less than $1.6 million. In spite of this drop in revenue and profit the client wanted to press ahead and go to market. We created an appropriate offering memorandum for the company and researched potential investors for this business. We marketed to over 4,700 potential investors domestically and overseas which generated 83 serious buyer/investors who performed preliminary due diligence on the company. We were able to procure 7 written offers for our client’s business. We negotiated with each of these 7 groups and advised our client that we felt one in group in particular would resolve their lack of board depth and limited management strength. We felt they would also provide them with an opportunity to dramatically grow the business beyond what they had ever envisioned. They agreed. The first transaction we structured allowed the private equity firm to acquire 21.21% of the business for $2 million. After the initial investment this private equity firm invested another $1.9 million over the 18 months in order to acquire four additional bolt-on companies whose revenues totaled $70 million. Our client agreed to these add-on acquisitions (as was their option in the shareholders/operating agreement we helped structure) and to being diluted from 78.79% ownership down to 65% in order to help fund these new acquisitions. We assisted in structuring these additional acquisitions with cash, institutional debt, and notes. Two years after the first transaction closed a German headquartered publicly traded company, with over USD$500 million net equity and over a USD$1 billion market cap acquired 60% of our client’s business for $26.4 million (effectively diluting all current shareholders).

The Bottom-Line Result: Even though our client’s original company only generated $1.6 million in profit with an EV (Enterprise Value) of around $6 million at the time we were engaged, our client ended up with $2 million cash + another $17.16 million cash for a total of $19.16 million cash and still retained $11.44 million worth of equity as a 26% share of a much larger business which continues to grow and increase in value at a high rate.

Currently, we estimate our client’s remaining equity in the business is worth in excess of $30 million alone. So, instead of selling the entire business for around $6 million we were able to get them over $19 million in cash and another $30+ million in equity. Effectively, approximately $50 million instead of $6 million.

(The private equity firm we brought in initially invested $2 million, then another $1.9 million and received $9.24 million in cash plus equity now valued around $20 million.)

FULL SALE (CLIENT #3811D CASE STUDY): GREEN TECHNOLOGY MANUFACTURER – LARGE STRATEGIC COMPANY PAYS 132% OF SELLER’S TARGET PRICE

The owners of this Green Tech Electrical Manufacturing company sold globally through various distributors to local governments. The active owners wanted to retire but the passive owners were not willing to buy out their interest so having us advise and represent the company in a full sale made the most sense. Unfortunately, the business lacked any core management team that could operate the business post sale. This meant new owners would have to provide the required caliber of management to sustain the business going forward. This limited our pool of potential buyers so we developed a marketing plan to approach both domestic and overseas buyers that may have an interest in their green technology products or be able to cross-sell products either through the existing distributors or direct to local governments.

We marketed the business to over 3,300 potential buyers and had 105 buyers perform preliminary due diligence on the business. This resulted in 9 offers and the highest offer came from a $350 million strategic company headquartered in Taiwan which we identified through an existing relationship we had with their advisory team. Our team’s non-stop efforts and follow-through yielded a price that was 132% of what the owners had hoped to get for their business.

FULL SALE (CLIENT #954R CASE STUDY): SELLER'S FAILED EFFORTS TARGETED 4 x EARNINGS - OUR TEAM DELIVERS BUYER FOR 9 x EARNINGS

Another manufacturing client had been trying to sell their business on their own for over two years. They finally came to an agreement to sell to a strategic buyer they had been negotiating with for several months. Unfortunately, after many months of time-consuming and costly due diligence that anticipated transaction ultimately fell through leaving the owners of the company very frustrated. Their law firm suggested they contact us and shortly thereafter our firm was retained to secure a sale to either a strategic or financial buyer. After we developed targeted offering documents on the company and began marketing the business, we were able to procure offers from several different buyers. These included both financial and strategic buyers identified through our research as well as our existing network.

The advantage to the client in this case was not only a successful closing but the bidding war we created eventually led to the highest offer being 9 x earnings. This was more than double the price of the failed transaction the seller had originally put together on their own and an outcome only achievable because of the diligent efforts of our entire team.

EQUITY INVESTMENT (CLIENT #4621U CASE STUDY): CLIENT TAKES LOWER VALUATION MINORITY INVESTMENT FOR DISTRIBUTION OPPORTUNITY LEADING TO SUBSTANTIAL GROWTH IN ENTERPRISE VALUE

This manufacturing company became a client in order to gain some liquidity as the owner had the bulk of his net worth tied up in the business. He also recognized the business was growing beyond his capability and skillset to manage its future growth prospects. This client had grown a solid manufacturing business with consumer electrical products sold to large nationwide domestic big box retailers as well as direct to the design and building industry. After gaining a clear understanding of the business, the limited ability of the management team, and the owner’s objectives we looked to the financial markets for a suitable institutional investment and operational partner. We procured multiple offers for this business including several high multiple all cash-at-closing full-sale offers as well as various equity investment structures. We advised our client to evaluate what these equity partners could bring to the table instead of just focusing on the valuation multiple they were offering. One of the minority (30%) equity offers we procured for our client came from a group with a board member who had been a former CEO of a large international publicly traded retail conglomerate. The investor group committed to putting this company’s product line into that large international retailer which would now lead to global sales.

After several rounds of negotiations, we were able to secure an investment by this group which included substantial financial penalties if that group was not successful in meeting certain purchase order commitments post-closing. Though this offer was at a lower multiple/enterprise value it turned out to be a highly successful investment partnership. After the closing this led to a rapid increase in both revenue and profit for the company and allowed our client to then sell another tranche through a recap to a larger $30 billion + private equity group at a much higher valuation and making our client’s family very wealthy. This was another example demonstrating how partnering with the right investment fund can not only solve liquidity issues but also provide a framework for growth and a ten-fold increase in enterprise value in a relatively short time.

FULL SALE (CLIENT #637Y CASE STUDY): NICHE SERVICE BUSINESS – SOLD TO EUROPEAN BUYER FOR 35% PREMIUM

The owner of this niche service company came to us as he wanted to fully retire within months. He did not want to work in the business after the sale. He made it clear he wanted to retire on very short notice so would not assist the buyer with any transition beyond 30 days post-closing. Though his business generated just over $4 million in profit it was a very niche business with limited upside…effectively it had maxed out in its market. We determined the best buyer would be an overseas buyer who wanted to get into their domestic market, so we focused most of our marketing outreach efforts abroad.

We identified both overseas strategic companies as well as overseas private equity and family offices that owned somewhat related overseas businesses. One group we found agreed there was a strategic advantage to acquiring our client and immediately put their acquisition team on a plane and flew into look hard at the business operations. We were able to close in an all-cash transaction at a price 35% above what our client was hoping to get for their company.

FULL SALE (CLIENT #589S CASE STUDY): HVAC BUSINESS – SOLD TO OUT OF STATE BUYER FOR 58% OVER ASKING PRICE

The owner of this $12 million HVAC business wanted to sell his business and retire. However, the profits were on a downward trend which would cause the bulk of potential buyers to not pursue the business or to want a discount on price. Our belief was the buyers able to pay the highest price would be out-of-state strategic companies looking to expand their geographical footprint or companies who could cross-sell related products or services to their existing customer base. After we completed the necessary research and developed the appropriate marketing materials we went to market.

We had over 30 potential buyers review our offering package, and we procured multiple buyout offers for our client. The highest offer did come from an out-of-state buyer we identified through our in-house research of a large number of related industries. This buyer wanted to both expand their own geographical footprint but also cross-sell related services from their other portfolio companies. This was the highest bidder and was at a price 58% higher than our client hoped to get for their business.

EQUITY INFUSION (CLIENT #9417P CASE STUDY): INDUSTRIAL EQUIPMENT COMPANY – INVESTMENT BY OVERSEAS STRATEGIC COMPANY

The three owner/operators of this business had all of their net worth tied up in the business and wanted to cash in and sell. When they came to us, they had just enjoyed a few years of solid growth (revenue $14M revenue with $3.1M profit, which the following year grew to $15M revenue with $5.8M profit, which then grew to $20M revenue with $7.3M in profit). These figures then started to flat-line and were expected to drop off and buyers would see this. Our client wanted $27 million for the entire business. We advised our client to reconsider selling the entire business and instead consider whether it made sense to just “take some chips off the table” and bring in a well-capitalized partner who could help them grow much larger than they could on their own. We explained how this might yield a higher price for the business and allow them to build a stronger and deeper management team and better financial systems and operations. We believed that interested parties could come from the domestic market or overseas markets and may be strategic or financial investors. We put together a well-crafted offering package on the business and marketed it to over 12,600 potential buyers and investors globally. This resulted in 329 potential buyers/investors doing a more thorough review of the business which ultimately resulted in 9 offers for the business. After negotiating further with each of these parties the client accepted an offer from an overseas strategic company that we had pitched to.

The transaction was for $30.5 million for a 50% ownership in the business. This transaction would allow the owners to take some money off the table and continue to manage the business. With an overseas strategic company as a 50% equity partner the business would now be able to penetrate overseas growth opportunities that were not available to it previously. While our clients wanted $27 million for the entire business, they would receive $30.5 million cash at close and still retain a 50% ownership of the business with an enterprise value of $61 million.

FULL SALE (CLIENT #4918L CASE STUDY): SOLAR PRODUCTS MANUFACTURER – SMALL FAMILY OFFICE BEATS EVERY OTHER OFFER

Both the original founders and outside investors were ready to sell out and turn this company over to a new owner that could continue to grow the company internationally. The current owners did not want to undertake this themselves nor did they want to invest the capital required. They also recognized it was outside of any of their core skill set as well as their desire to invest in more passive investments and lead a less demanding lifestyle. Owning and/or running the business no longer fit with their different objectives. Though the business was growing year over year there were some real challenges as the company lost its #1 key employee, the general manager, while we are on the market. We marketed directly to over 13,400 potential buyers globally and though we had multiple offers from very large private strategic companies, public companies, and private equity groups we were able to keep the process moving forward by quantifying the upside potential without that long-term general manager remaining onboard and instead focus on bringing in a stronger, fresh, new general manager.

In the end one of the offers, from a family office, not only outbid all the other buyers but was also able to close very quickly and wanted to bring in a new general manager from their group. This family office was able to move quickly due to the single decision maker advantage they had over the other buyers. Despite none of the senior management owners being willing to stay on post-closing and the company losing its general manager during the process, we were able to get our client’s original asking price for the company.

FULL SALE (CLIENT #7616E CASE STUDY): SPORTS BAR & RESTAURANT CHAIN – SOLD TO PRIVATE REAL ESTATE INVESTMENT GROUP

This client came to us in a desperate financial situation. We had previously sold his interest in a high-tech surveillance manufacturing business he founded several years earlier. We had multiple offers which netted our client an 8-figure after tax payout for his interest in that business. Thinking everything he touched would again lead to success he invested several million dollars buying a new business he knew nothing about…only that it would surround him with people drinking and having fun. When he contacted us, he was incurring increasing monthly losses. We informed him that it was not something we could properly help him with but agreed to take a quick look and offer some free advice. At his pleading we agreed to present it to some potential buyers for his type of business in spite of the fact that loses were growing. This resulted in 10 potential buyers undertaking some preliminary due diligence, with the best offer to simply let him walk away and take over the business for zero consideration, something our client was willing to do.

We quickly looked at a different approach and discovered major new development was being proposed near the main location. If this major redevelopment went through the value of the real estate, which was being leased from a 3rd party, would increase in value significantly. Through some creative negotiations we were able to finalize a 12-month purchase option as part of the ongoing lease which we took to several real estate funds we had worked with on a several previous sell-leaseback transactions. In less than 30 days we put a deal together for $3.1 million to sell the lease and relieve our client of the business and the financial stress of increasing losses.

PROGRESSIVE SALE (CLIENT #8314W CASE STUDY): CLEAN TECHNOLOGY COMPANY – 60% INTEREST SOLD TO PRIVATE EQUITY GROUP WITH SELLER PUT OPTIONS FOR BALANCE OF OWNERSHIP

The owners of this Clean Tech Energy business faced a dilemma as the older 50% owner wanted to retire while the younger 50% owner wanted to keep working in the business. We knew in order to maximize the price we would need to get creative and structure a deal where the younger partner could continue working in this business while the older partner phased out more quickly. We felt one particular private equity firm would be the best fit for this opportunity. They were an out-of-state private equity firm to whom we had sold several previous client companies. This group was in the final stages of finalizing a pre-IPO rollup. We created a detailed offering memorandum for the business and marketed it to several hundred potential buyers.

This resulted in 41 potential buyers doing some preliminary due diligence review on the business and two offers for the business. Having these two strong fallback offers put us in a strong negotiation position with the private equity firm we identified as the likely ultimate buyer. In the end we were able to negotiate and structure a closing with our target private equity group as part of their IPO rollup.

The transaction we negotiated was for 60% of the business at closing with the sellers having put options for their remaining 40% (20% each and a maximum of 1/3rd each year for 3 years). These put options were set at specific 12 month rolling dates and were pegged at a set multiple of earnings (5.5x). That way if the business had a good year our clients could exercise their put options at a set 5.5 times multiple of TTM (trailing twelve months) earnings but if the company had a year with low earnings, they could just defer that option into a later year. This was a win-win as the private equity firm was willing to pay 5.5 times earnings whether earnings were good or bad and the seller had the luxury of hindsight (the TTM earnings) to continue to meet their own financial goals.

The terms we negotiated for our client also provided an opportunity for significant further upside to the sellers by being able to manage and grow the business further with the financial, board, and strategic support from an experienced and qualified private equity group buyer. The private equity firm did go public with their rollup and all parties to the transaction did very well. Under this structure both of the owners realized much more than they had originally hoped for through a traditional sale of their business.

FULL SALE (CLIENT #5324E CASE STUDY): FOOD DISTRIBUTION COMPANY – SOLD TO HIGH NET WORTH INDIVIDUAL

This company had multiple owners who had different objectives. Some wanted to retire while others wanted to continue working. After failing to come to an agreement for a management buyout the owners retained us to sell the company.

After analyzing the strengths of the business, we determined either a strategic buyer or high net worth individual committed to growing the product line or distribution reach.

After commencing a wide marketing campaign, we had close to 40 qualified buyers review this business. These included private equity groups, high net worth individuals, strategic buyers, as well as advisors representing potential buyers.

In the end there were competing offers and the transaction closed with a high-net-worth individual who was committed to growing the business further.

FULL SALE (CLIENT #6623K CASE STUDY): HOME REMODELING COMPANY – SOLD FOR $22 MILLION ($15.5 MILLION MORE THAN SELLER’S TARGET PRICE)

The owner of this company retained us and was hoping to get $6.5 million for his business. The company had just come off several consecutive years of losses in spite of being in an industry that was growing. We needed to change the buyers focus away from the net losses. We determined the best approach was to create offering materials which would focus potential buyers on the company’s revenues, cost cutting measures, and the return on capital allocated towards expanding the business.

We targeted both financial and strategic buyers and had 113 potential buyers review our offering package on the business. Ultimately, we obtained multiple offers on this business. With these offers we were able to create a very competitive blind bidding war which resulted in the successful buyer paying a price nearly 3.5 times what the seller originally hoped to get for the business.