Distribution

Time on Market: 14 months

Client Objective: “What is my company worth and how do I create an exit strategy?”

Discovery Meeting: The owner started this company 15 years ago and was becoming burned out. When asked about this, he stated that he was making good money and didn’t think the company would sell for enough to maintain the lifestyle he and his family were accustomed to. After learning about the company and reviewing the financials we provided our opinion of value which was about a million dollars less than the owner had been thinking it would take for him to sell the company.

Assessment: The company had clean financials, an average year-over-year growth of 14%, and was very scalable. We knew the target price for the company would be challenging. Due to the quality of the company, we suggested performing a 90-day market test. If entice an acceptable offer the owner could sell now and if not, we could help him develop an exit strategy.

Deal Process: We immediately had interest from buyers and as expected they were coming in under the target purchase price. As is usual, we had developed a strong trust relationship with our clients and after 90 days we mutually agreed to pause the engagement. Several months later we came across a large strategic buyer that wanted to acquire exactly this size and type of business. They had an aggressive growth strategy and had just missed out on a similar acquisition. This buyer was extremely impressed with our client’s abilities. We were able to negotiate an acceptable price if our client would retain 15% equity and agree to manage this division for their platform company.

Major Challenge: Although the purchase price worked for our client, he did not want to continue in the business. The purchase price was contingent on the owner staying and managing this division of their company.

Solution: We listened to our client and discovered that he was still passionate about the business. He had simply grown tired of some of his more mundane responsibilities. We explained to the buyer that if our client could delegate certain responsibilities, he would be able to focus on management and growth.

Result: Closed transaction for 37% over market value. Additionally, we were able to negotiate that after achieving certain milestones our client would be able to transition into an advisory role.

Conclusion: We listen to our clients and leverage our experience to help them maximize their exit.