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Green Product Company

Our client manufactured and distributed its own waterproofing products that are environmentally sensitive yet highly effective. The niche products contain no VOCs, qualifying them for favorable environmental designations including being Green Spec™ listed, Singapore Green Label Certified, and additionally could enable those in the construction or design field to gain LEED credits by using or specifying the product. With a strong commitment to marketing, our client grew sales organically through independent stores, small chains, cooperatives and to resellers. The question was how to convert the hockey stick sales growth to the next level?

Possibilities and Concerns:

Our client owners could dig in for the long haul, invest in a management team, leverage the distribution paths already in use and continue to grow top line revenues. The firm would need to implement a tighter structure to enhance the bottom line. Further, a national sales team would be needed. However, this would take five years or more. Owners simply lacked the horsepower to do it.

Production and Sales Channels:

Production was being done in small batches, with inventory of core elements made at a sister plant 1500 miles away. The final blend and packaging was being done at the sales office, then shipped to end users. This created logistics and timing challenges. The solution would be to combine the divisions into one location.

Choices, Choices:

Owners were initially bearish, but came to realize that building would require additional investments and years of work. Retirement would have to be put off. Selling would not be easy, either. The product was young and sales seemed on the threshold of exploding.

The Plan:

Take the coatings products, intellectual property and business operation to market “as is.” Seek a strategic acquirer who could incorporate the product line into its own operation, leverage its own sales channels and achieve efficiencies by using its own manufacturing capacity.

The Employees:

How and when the employees were informed of the upcoming sale of the business.

The Outcome:

We took the opportunity proactively to market, and approached private equity groups and companies doing rollups in the fragment coatings industry. We found several interested enough to offer Letters of Intent. We met with owners, their accounting and legal team to evaluate the offers, and selected a buyer. After months of diligence, including a Quality of Earnings study, the deal closed. The proposed strategy became the final plan.

The Deal:

Owners received seven figure proceeds at closing, and have an upside opportunity for substantially more earnings by helping the buyer with strategy and sales, enabling them to profit as the product line grows.

About BTS:

Business Transition Strategies is a New England-based mergers and acquisitions firm advising owners of privately held companies navigate the sales process. Our team of professionals also provide advisory services to help prepare for a sale down the road. We also provide buy-side assistance. If you are considering a transition, now or in the future, contact us to begin the discussion.

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BTS News

  • Looking at a Sale Through the Right Lens

    Looking at a Sale Through the Right Lens

    Sometimes our vision about the future is blurry because we aren’t considering the whole picture but only parts of it.

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  • 5 Deal Points from the Trenches

    5 Deal Points from the Trenches

    Today I work with clients of Business Transition Strategies who are implementing Growth Through Acquisition strategies. Here are a few observations from working on a wide variety of projects.

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  • Tax Changes Could Hurt Net Proceeds

    Tax Changes Could Hurt Net Proceeds

    Changes proposed to the capital gains tax suggest they may need to get 30% more in a transaction in the future just to net the same value they would get today.

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  • Good Ideas From Shark Tank Deal

    Good Ideas From Shark Tank Deal

    One of my colleagues in Cornerstone Alliance was front and center in a recent Shark Tank exercise. A business that had been sold was put in front of four potential buyer groups.

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    Buyer Trends in Lower Mid-Market

    Other businesses are a significant market for companies being sold within the lower mid-market.

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  • Things to Consider in Transition Thinking

    Things to Consider in Transition Thinking

    As a business owner, you have to consider the role you want to play in the business in the immediate future following a sale and how that could impact the sale.

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  • Spring Cleaning is Good for Business

    Spring Cleaning is Good for Business

    May is a good time for spring cleaning, especially at your business. It is a good time to look at your business as though you were in the throes of due diligence. Here are a few areas to consider.

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  • Planning Ahead for a Sale

    Planning Ahead for a Sale

    As you start thinking about selling your business, it is important to engage with someone who can coach you. There’s a lot of value you can create over the final years before you sell.

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  • Economist Suggests Business Owners Sell by 2024

    Economist Suggests Business Owners Sell by 2024

    Economically speaking, COVID-19 was a “natural disaster.” That’s according to Brian Beaulieu, CEO and chief economist of ITR economics.

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  • Update on PlasTech Machining and Fabrication

    Update on PlasTech Machining and Fabrication

    PlasTech Machining of Dunklee Road in Bow, a company recently acquired by DelCam Holdings, is in the process of rebranding with a new website www.PlasTechFab.com and expanded social media exposure.

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Case Studies

  • Precision Machining Company

    Initially, liquidation was a serious consideration. It would offer a quick exit but would hurt loyal employees and disrupt the customers who had come to rely on its quality production.

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  • Green Product Company

    Our client owners could dig in for the long haul…However, this would take five years or more. Owners simply lacked the horsepower to do it.

    Read more >

  • Water Purification Company and Young Buyers

    Owners decided they wanted to retire. They also wanted to be fair to the staff who had been loyal to them. Could the company be sold, the staff retained and the facility remain in use?

    Read more >

  • Magnetics Company with High Profile Customers

    (T)he manufacturer would need to focus on growing EBITDA to capture interest from major strategic buyers and achieve a higher multiple of earnings.

    Read more >