The seller had a good business but had gotten into a difficult financial situation and didn’t have the capital or the access capital to get himself out. We quickly found several strategic buyers, and one of them was able to close rapidly and relieved the seller of debt and personal guarantees. This also freed the owner to pursue a new career without the burdens of debt. The new buyer was in need of additional space and capacity, and interestingly enough, the seller had never heard of the buyer even though the buyer was located less than 30 miles from the business.
The seller turned out $35 million in sales, but he suffered from low profit margin, large debt load, and a questionable relationship with a Factor. Staying afloat was difficult in an ever-increasing competitive industry. We came in, and he was able to sell 100% of the company with a multi-year employment agreement to a strategic buyer and competitor -- an $800 million company. Freed of the headaches, debt, and strained relationships that come with a high-pressure business situation, our client, still in his 30s, was able to explore other career opportunities.
The owner built an SAP technology and applications software company with offices in three nations. His software product, which integrated third-party software applications with SAP for large projects, had substantial market potential. But, he needed a buyer who could take advantage of that potential and provide the muscle to grow the business even further. We found a buyer in a U.S.-based public company, with an even larger office in India, and proceeded to structure an advantageous transaction that assured growth and placed high value on the owner’s technical talents. After the deal (which consisted of cash, a note, an earn-out, and even an opportunity to obtain stock) the owner finally had the resources to grow the company to its full height.
The owners were all under 40 and ready to sell. We brought in many offers, with the two highest presenting an interesting conundrum: the first was a substantial cash offer, while the other was half the cash of the former but with a very substantial note and an extremely large block of stock in the newly-formed public company. With our foresight of the offer’s potential, we encouraged the owners to opt for the latter, taking more risk in the present for what would prove to be a higher payoff in the future.
Based in the American South, the company specialized in HIV drugs with the average Rx being more than $250. Sure enough, a private equity group recognized its growth and high margin opportunity and made an offer. With our mediation, they bought 85% of the company and even gave one owner a 15% interest to become the CEO of the company. The buyers added organ replacement drugs as a second specialty, allowing for exponential growth. But the story doesn’t stop there. The PEG then bought the pharmacy for $15 million plus the 15% to the newly appointed CEO, and six years later, sold it to a large pharmacy chain for $350 million. In the end, the CEO’s share was well over $50 million.
Our client was the only manufacturer of this particular automotive accessory in the world, protected by its unique services and numerous patents. However, it only had three clients and 85% of business revenue was generated from one of those three. After hundreds of strategic and financial buyers turned the risky prospect down, finding the right buyer would require one that saw our client’s customer concentration to be a feature, not a liability. At the time of our arrival, we knew this would be a matter of highly focused research, and instead set our sights on private equity groups (PEGs) that already had an auto-manufacturing company in their portfolio. With our client’s best interests in mind, we were able to navigate the field of offers, avoiding potential dead-ends, and come up with two lucrative offers from PEG firms: the first was right on the mark for our client’s price expectations, and the second was from a much larger firm that displayed a unique need for this company. The latter owned several auto-manufacturers and did business with other car makers, but they could seemingly never get a call back from our client’s three customers. Meeting this strategic need, our client ended up striking a deal 33% higher than their original price expectation -- all cash -- that included transition employment agreements for key employees.
The company had an excellent reputation and more than $30 million in sales, with the owner widely recognized as a leader in his industry. There was just one problem: he was heavily burdened by a large debt to a German bank that ceaselessly placed enormous pressure on him. The owner wanted out and tasked us with finding a buyer to take over the debt. We set up a confidential auction and quickly obtained four offers. Our client ended up accepting a buyer that took over the entirety of the debt as well as provided him with $5 million in cash. He was able to enter retirement unburdened, claiming that our fee was “the best money he ever spent”.
- 85% cash
- 15% equity
- Two key employees were even given employment contracts and further incentivized by the 15% equity in the firm.
- 70% cash
- 10% earn out
- 20% shares in the company going forward
- 70% cash
- 10% earn out
- 20% shares in the company going forward
Our client, though maintaining good profit margins, had experienced flat growth the previous four years. Notably, however, during those four years all of the company's long-term contracts had expired, and the company was successful in replacing them with new business. We made sure to convey this story-behind-the-numbers to all prospective buyers. Our client's price expectation was 5x EBITDA (earnings before interest, taxes, depreciation and amortization), and surely enough, the owner received six offers.
Three of the six came from private equity groups, with one already having portfolio companies in that industry and the other two wanting to acquire our client as a platform, all offering the client cash for a majority of his stock and asking him to keep a percentage of the ownership as an incentive to grow the business.
The other three offers were from larger strategic buyers. In the end, our client accepted one of these because:
- The offer exceeded the owner's price expectations
- The buyer only required the owner to stay for a short (2 month) transition period after the sale was closed
- The buyer's excellent reputation in the industry gave the owner comfort that his employees would be treated well after the acquisition was completed.
Our client was then able to retire knowing his business would be able to grow in the hands of a very capable gardener.
Our client had an excellent customer base in government, education, and corporate markets and began growing very rapidly. As a by-product, cash flow became its primary problem. The owner/CEO spent long hours and tried various avenues to alleviate this situation to no avail; so, the decision was made to sell the company. A large ($500 million) strategic player was selected as the buyer, and the deal was structured as:
- A mandatory 4-year employment contract for the CEO
- In addition, there was an open-ended earnout based on sales, with the expectation that the CEO would earn an additional $150,000 per year.
Our client was still relatively young (around forty) and very successful when he engaged our firm to market his company. Though he made a good living, nearly all of our client’s net worth was tied up in the business. We contacted a wide array of prospects, and the owner received offers from both financial and strategic buyers. While the strategic offers had strong valuations, the owner ultimately accepted an offer from a private equity group. The buyer provided both expertise and capital to help the company grow to the next level. Under this structure, the owner was cashed out for a majority of his stock, and retained a significant share of the company. From this point, the goal was to ultimately take the company public or sell it to a major strategic buyer. Once sold, the owner’s retained shares would be worth far more than the shares he sold, with the cash portion of the transaction already more than enough to secure the owner’s future. At the same time, he would be able to participate in the company's growth and help create a second payday -- having his cake and eating it, too. This client has already referred two other business owners to NBS.
The owner built six franchise restaurants in two states. None were in the city where the owner lived, thus he operated them absentee with managers in place at each location. The demands of his primary occupation became too burdensome for the owner to oversee the restaurants, so he decided to sell them. We stepped in and sold the restaurants in two stages: three in one state to one buyer and three in the other state the next year to a different buyer. The owner, relieved of debt caused by rapid over-expansion, was now free to place his focus on his primary source of income.
Our client was owned by a large children’s photograph and portrait chain and received the “step-child treatment”, resulting in losses totaling $1,000,000 every year. Regardless, the subsidiary had a cadre of brilliant people at its helm and outstanding, effective products well deserving of proper utilization. Our services were enlisted, and our buyer search discovered that one of the largest educational companies in the country had a major problem. Whenever the company had to change the online curriculum for a course, it would take more than a year and several million dollars to accomplish the change. Clandestinely, our client's technology could accomplish the results in a 90-day timeframe at a cost of less than $50,000. A perfect fit, the company was sold at a large premium comprised of 75% cash and 25% based on future profits. All parties, including the parent, the subsidiary, and the buyer, came out winners.
Our client engaged our firm to market a subsidiary that manufactured products that were not related to its core business. This subsidiary had been acquired three years earlier and was taking resources away from the parent company, cutting into the parent’s credit line in order to service its debt. Additionally, management at the parent company was allocating too much time to the subsidiary and not enough toward taking care of its primary business. We were able to arrange the sale of this subsidiary to a private equity group that owned several portfolio companies in allied industries and was looking to expand. This divestiture freed up our client’s financial and personnel resources previously directed to the subsidiary, as well as provided a substantial amount of cash. The owner was very pleased with the results and even engaged NBS to sell a second subsidiary.
Our client engaged our firm to divest its U.S. manufacturing subsidiary, whose products were sold to end-users in the U.S. and other countries. A significant percentage of these products were also sold back to the parent company, which was then marketed along with other products. Due to the nature of the industry, confidentiality was of the utmost importance. Once we understood our client's goals, we prepared materials to document the complex intercompany arrangement and marketed the business worldwide. We were ultimately successful, with a multinational corporation chosen as the buyer. The divestiture was so lucrative, in fact, the seller received the contract to market its former subsidiary’s products as it had before. Later, the company further engaged NBS to sell a second subsidiary.