Laminate Company Owner's Successful Transition

About the Company:
JAMES and METALCO were introduced by their CPA. A year after the initial introduction, JAMES initiated contact with a strategic competitor and divulged a target price for the sale of the business.

Challenges:
Unfortunately, this disclosure was made prior to JAMES soliciting our involvement. We were able to identify unique value drivers in this niche manufacturing enterprise, which allowed us to conclude that a fair transaction value could be 30-80% greater.
When the strategic competitor was approached with the revised strategic valuation, they did not engage constructively in creating a win-win transaction. Instead they responded by proposing that we market the company and “come back and give them last look.” We decided to go to market and prepared a Confidential Information Memorandum.

Actions:
We marketed the company 1) on the internet, 2) directly to other strategic acquirers, and 3) to select private equity groups. Several buyers expressed interest in the company at the same value range as the original strategic acquirer.
When we were unable to convince other buyers to recognize the strategic value and opportunity, we approached JAMES with the idea that we would raise the capital to acquire the company. Based on my experience in similar industries, JAMES quickly warmed to the idea that this might be a good option for him.

Results:
When we presented the package, we quickly raised the capital and acquired bank financing to make an offer to JAMES. The assets of the company were acquired at a 30% premium over the original target price. An earn-out provision resulted in JAMES eventually realizing a 50% premium.