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Integrity. Vision. Success.

Time on Market: 3 months

Client Objective: “Will my employees be taken care of if I sell my company?”

Discovery Meeting: This business was started by a married couple over four decades ago. Their son had recently taken over operations and the owners were concerned about his and other employees’ job security if they sold the company. We explained that our experience is that smart buyers value the employees of the companies they acquire. We always advise buyers to make minimal changes during the first twelve months after acquiring a company. Our experience is that many times employees receive an increase in compensation or a retention bonus and almost always have even better job security and opportunity for advancement within the company as it grows.

Assessment: This company had a good reputation, a loyal customer base, clean financials, and was very scalable.

Deal Process: We prepared the CIM (Confidential Information Memorandum) and put the business on the market. We had just sold a similar company to an out-of-state buyer and knew he was in acquisition mode. This buyer flew in to meet and instantly connected with our clients. Soon after we negotiated an excellent purchase price and structure.

Major Challenge: On the day of closing, our clients told us that their son had just told them that he always envisioned taking over the company. He was not happy that they were selling the company and was considering leaving and starting his own company. This would likely cause the buyer to want to reduce the purchase price or backout all together.

Solution: We knew we needed to negotiate a compensation plan that would work for the son and the buyer. The buyer knew the son was running the company and considered him to be a great asset. We knew this buyer would need an operations manager for the other company we had recently sold him once that owner transitioned out. We knew that would free up that owner’s salary. We believed the son had the ability to manage both companies due to their proximity. The buyer was receptive to this idea as this would not affect the cashflow and would save him having to interview and hire an experienced manager. We were able to negotiate an acceptable compensation package and the seller’s attorney revised the employment agreement at the closing table.

Result: Closed transaction for 27% over market value.

Conclusion: It’s wise to maintain confidentiality when you are selling your company for many obvious reasons. Although this is true, some owners feel compelled to let certain key employees know about a pending sale prior to closing. An experienced M&A advisor can help you make an informed decision as to when and how to have those conversations.


Contact us today for a complimentary one-hour consultation!