June 6, 2024
We recently facilitated the sale of a service provider specializing in the repair and remanufacturing of industrial equipment. The owner started the business 46 years ago and grew it significantly. He decided to engage with Woodbridge because he felt ready to retire and wanted to maximize the value he would get for the business while maintaining the legacy he created.
After sending out our teaser to strategic and financial buyers, we signed confidentiality agreements and provided books and videos to 414 potential buyers, of whom 24 submitted bids for the business. After much consideration, we ended up signing a letter of intent with a strategic company backed by a $500 billion+ private equity group. Up to this point, we had never done a deal with this private equity group, but our client solved a real business issue for their $1 billion portfolio company, and the timing made sense. As we went deeper into due diligence, the owner’s strong personality came out, and he did not control his emotions. Despite spending significant time and money in due diligence, the buyer backed out.
After regrouping and updating the marketing materials, we went back out to the market and saw similar interest from buyers. We signed confidentiality agreements and provided books and videos to 336 potential buyers, of whom 18 submitted bids for the business. Our team vetted all the potential bids and then set up virtual management meetings with those we felt had a strong strategic angle, likelihood to close, and access to funds.
The ultimate buyer ended up being a strategic company backed by a $3 billion private equity group. For the strategic company, our client ended up being the perfect fit and was a great avenue to help them maximize their growth. Diligence was a very smooth process and there was a ton of momentum to close. However, in the weeks leading up to the close, the buyer sprung upon us that they would walk away if the owner did not roll 25% equity, which was something the owner had voiced early on that he wasn’t interested in. Because of this, we fought for the position of our client and ended up negotiating a deal that was majority cash, with only a small portion of the deal as an equity roll, which satisfied our client’s
needs. There was also an issue with the owner’s brother, who was a minority class B shareholder, which caused some turbulence at the end. However, our team worked through this and quickly put out the fire.
At the end of the day, the owner was overwhelmed by the response and range of offers received during our selling process and found the ultimate buyer to be the ideal partner. This success wouldn’t have been achieved without a deadline-driven process that emphasizes the importance of reaching out to the most potential buyers and finding those that are the most motivated for a transaction, as timing is everything.