September 1, 2024
We recently completed the sale of a manufacturing company, equally owned by three active partners. The group had acquired the business 29 years ago and was now looking for an exit. We were referred to this company by a Financial Advisor who did an excellent job showing the client how the transaction would play into their retirement planning. Once we were all aligned on realistic scenarios, we were off to the races.
Not all deals are perfect, and some take more elbow grease than others. During the first marketing outreach, everything was going as planned. We were under exclusivity with a large private equity group that was looking at our client for an add-on acquisition, and everything was going smoothly until the news about Silicon Valley Bank broke during Q1 of 2023. Unfortunately, this made the buyer uncomfortable with the capital at risk, and there was no workaround. The post-environment from the bank failures wasn’t in our client’s favor either. Although we received even more interest than the first time around, these weren’t highly capable buyers, and we never ram something down our client’s throat that doesn’t make sense. The good thing is we’re not buyer-dependent, and whenever we start a new outreach for our client, 95% of the buyers that express interest weren’t involved the first time. This allows us to maintain leverage and keep our client’s needs above all.
As our client’s financials continued to grow, we received a total of 21 bids when we completed the next outreach. After conducting management meetings with the five best companies, our client ended up going under exclusivity with a large family office that had a smaller portfolio company where our client solved a crucial element they were missing.
One of the main challenges during due diligence was maintaining our client’s trust as they began to feel some deal fatigue. There were times when they threatened to walk away, but our team did a great job navigating those conversations and reminding them why they started this in the first place. Additionally, it was very important to our client that we sell the real estate with the business, and when the environmental study revealed two issues, our team worked with both legal sides and was able to come to an agreement where everything ended up working out in our client’s favor. In the end, this deal took two years from start to finish, and we were able to accomplish our client’s financial goals and help them transition toward retirement.
Every profitable business can be sold, and because we’re not buyer-dependent, we have a solution if the initial outreach doesn’t fit. During each new outreach for this company, we were able to generate increasing interest for our client, giving them options and the opportunity to find the perfect buyer for both their business and financial needs. Right now, buyer appetite is the strongest we’ve seen in 31 years, and we’ve had some recent deals on the market that are breaking records, including one that has over 100 bids! As you begin to figure out what timing is best for your business, we are always happy to discuss the trends we are seeing in the market and the value we feel confident in achieving.