Family-Owned Consumer Products Business Sells to a Strategic Buyer
THE SITUATION: The owners of a well-established, four-location, pet service business were ready to retire and needed guidance to prepare and execute the sale their company.
Key Owner Questions
What is the value of the business given the current activity in our sector?
Will the proceeds net of taxes and fees be enough to pay off the debt, fund our retirement, and meet our financial goals?
We have been contacted by a buyer. Is there a specific process we should follow?
What will we do after we sell the business?
OUR APPROACH
Create a Master Exit Plan® that answered the owners’ questions and ensured the business sale met the owners’ financial and personal goals.
Valuation: We performed in-depth quantitative and qualitative analyses to calculate a $22.1MM enterprise value in the current mergers and acquisitions market.
Optimization Plan: The valuation identified opportunities to increase operational efficiencies, and the strategies were implemented prior to going to market, resulting in increased EBITDA driving value.
Post-Ownership Plan: The post-ownership plan identified the owners’ personal goals and actionable steps to guide them through the transition into the next chapter in their lives.
Personal Financial Plan: In collaboration with the owner’s wealth manager, we created a financial plan that included the projected net investable proceeds from the sale of the business, which provided assurance that their financial goals could be met.
Exit Strategy: Based on the valuation and their personal financial plans, the owners immediately went to market and the business was sold to a strategic buyer backed by a private equity group.
Tax Mitigation and Estate Plan Review: In partnership with the client’s CPA and estate planning attorney, the estate plan was reviewed and revised to ensure maximum tax efficiency.
Result
We advised the client through a professional mergers and acquisitions process. This approach successfully engaged 58 prospective buyers within a targeted limited auction, resulting in 8 executed NDAs from highly qualified parties. The competitive environment culminated in 3 formal Letters of Intent (LOIs), providing the necessary leverage to negotiate optimal deal terms and valuation.
Final Deal:
Structure: Cash-free, debt-free asset sale
Price: Original offer of $22.9 was negotiated to $26.2MM
Terms: Cash with partial earn-out offer was negotiated to all cash. Employment agreements for key employees
Goal Realization: The owners were able to pay off debt and fully fund their retirement with the net proceeds, meeting their business, financial, and personal goals.
