Commercial Services

Time on Market: 3 months

Client Objective: “Sell my company and retire.”

Discovery Meeting: The owner started this company 20 years ago after immigrating to the US from Brazil. The company had a great reputation, loyal clients, steady revenue, and consistent year-over-year growth. The owner asked, “How much is my business worth and how long is the transition process?” We provided our opinion of value and explained that transition times typically vary between one and twelve months depending on the buyer so having flexibility helps. When asked about any company issues, the owner mentioned that several years ago he caught an employee embezzling from the company. He stated that the employee was prosecuted and found guilty so that issue had been resolved.

Assessment: The company had clean financials, low overhead, strong consistent cash flow, and could be optimized and scaled.

Deal Process: We quickly identified and qualified a financial buyer and enticed a full-price offer. This buyer wanted to leverage the operational experience he had gained over the years in the corporate world and purchase a business in Dallas, Texas with an SBA loan.

Major Challenge: About a week prior to closing, the bank’s legal department discovered a pending lawsuit that had been filed against the company. Our client said he never thought to mention this because he thought it was frivolous and had been settled. The bank would not fund us until we provided documentation proving the case had been settled.

Solution: We contacted our client’s insurance company and were told the case was open so they could not provide any information. We requested contact information for their law firm and spoke with the attorney handling the case. We were told that the settlement amount had been agreed to, however, the funds had not been released so they could not provide any documentation. After some discussion, the attorney came up with one possible solution which was to ask the plaintiff to give written consent. We asked the attorney to contact the plaintiff.

Result: Closed transaction at the high end of market value.

Conclusion: It is extremely advantageous to have an experienced Mergers & Acquisitions advisory firm on your side when it’s time to sell your company. It is also extremely important to disclose any past, present, or potential litigation with them prior to going to market.