Transportation

Time on Market: 9 months

Client Objective: “Should I sell my company or hire someone to replace me?”

Discovery Meeting: The owner started his business 30 years ago and it quickly started cash flowing. Over the years he invested in various real estate properties including one that had a pecan orchard. The owner had always worked in the business full time. Three years prior, he hired someone to take over many of his responsibilities and was now only working about 15 hours a week. The owner wanted to sell the company if he could get the right price. If not, he would just hire someone else and become fully absentee. His reason was so he would have more time to focus on his pecan orchard and real estate investing.

Assessment: This was a quality business with a great reputation and consistent historical cashflow, however, it was in a small rural town and the owner wanted a premium. We advised the owner that this would be a challenge and if we were not able to entice an acceptable offer we would pause or cancel the engagement and focus on an exit strategy.

Deal Process: We targeted a strategic buyer in the area and although he had an interest in the business and the associated real estate, he thought the price was too high for that area. We knew this would be a good fit due to the proximity to this buyer’s other locations, so we facilitated a meeting with our client. The meeting went extremely well and soon we were able to agree on an acceptable purchase price. We created a structure that provided enough cash at close to make our client happy and a seller note with terms that worked for the buyer.

Major Challenge: The global pandemic Covid 19 hit and the buyer decided to postpone the closing to see how this would affect business. Soon after, the price of oil plummeted. This buyer was heavily invested in oil and gas and decided to put the acquisition on indefinite hold.

Solution: There was simply not much we could do in this case other than maintain relationships and communication with our client and the buyer throughout this very difficult time. As the months passed the company proved to be an “essential business” and eventually, oil and gas prices started rebounding.

Result: Closed transaction for 34% over market value.

Conclusion: Marketplace conditions and timing are critical elements to consider when selling your business. While no one has a crystal ball, ATK Ventures will help you make informed decisions and complete a successful transaction.