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?
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 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.
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.
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.
How and when the employees were informed of the upcoming sale of the business.
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.
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.
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.
"The entire process went smoothly and professionally. The BTS team kept me fully informed at every step. They worked hard and were effective in bringing the deal home."
"Skip and I continue to be grateful for all you have done to make the sale of Pure Flow come to fruition."
"BTS’s level of expertise in the process and close attention to detail enabled us to successfully navigate the deal."
"These types of transactions are often long and complicated and I doubt it could have been successfully completed without your close ongoing involvement."
"The outside objective point of view that you have brought us has been invaluable as we prepare for the rapid growth."
"John then found the right buyer and coordinated a seamless transition—he doesn’t miss a single detail."
"John immediately identified our strengths and experiences and discussed a business that ultimately was more in line with our goals."
"The BTS team came in, evaluated everything in a professional and thankfully non-threatening manner."
NH-Based Techinical Manufacturing Company Sold
Hampshire Controls has a bright future with new ownership. The company was recently sold by Diane Rush, owner and president, to Pillar Imaging and its leader Dr. Michael Pilon.
Be Ready When You Are Ready
When a business owner says it’s time to sell, I ask, “How fast do you want to be out?” The answer I hear most is, “Yesterday.” But sellers underestimate how long the process takes.
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.
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.
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.
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.
Buyer Trends in Lower Mid-Market
Other businesses are a significant market for companies being sold within the lower mid-market.
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.
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.
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.
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.
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.
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?
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.