News & Publications
News & Publications
Mergers & Acquisitions for Medium to Large Companies
Engaged in Mergers & Acquisitions since 1989
CASE STUDY #1
SELLER READY TO ACCEPT $8.5 MILLION - SPECTRUM DELIVERS BUYER FOR $26 MILLION
One manufacturing company our team recently sold had close to $2 million in annual profit and was originally approached by a private equity group who evaluated the business and subsequently offered them $6.7 million. The seller and their lawyers negotiated that up as far as $7.6 million but the seller wanted $8.5 million for the business. After several frustrating months of protracted and stalled negotiations the seller contacted us and we were retained to represent them. We then organized and initiated a full marketing process by outlining a detailed strategy with our client, conducting a financial and operational review, creating the necessary materials required by the sophisticated buyer community, researching the relevant transactions within the client’s industry, marketing the opportunity, creating and managing a blind auction, etc. This process brought forth a number of other qualified buyers to the table which included several private equity groups, private and public companies, strategic buyers, and a few high net worth investors. We then negotiated with the original buyer and got them to raise their offer to $9.8 million. However, they eventually dropped out of the process as the deal price went beyond what they were willing to pay. We negotiated with several other buyers and ultimately sold the company for over $26 million cash. Had the sellers taken the original deal they were able to negotiate they would have left over $18 million on the table.
CASE STUDY #2
CLIENT SEEKS $18 MILLION - SPECTRUM DELIVERS BUYER FOR $36 MILLION
This client owned a construction related contracting business with just over $30 million in revenue. The seller wanted $18 million for their contracting business. In this case the seller had retained another advisory firm but did not have any offers that approached their $18 million price. Once we got involved we subsequently organized and initiated the full process with a detailed strategy, a thorough financial and operational review, created the necessary materials required by sophisticated buyers, researched the relevant transactions within their industry, marketed the opportunity, and created a well-managed blind auction. Spectrum was able to procure close to a dozen offers for this business and we continued to negotiate with each prospective buyer and eventually got two of the prospective buyers north of $30 million with all cash at closing. These two buyers were both private equity groups which Spectrum had dealt with on previously transactions. One group got as high as $34.5 million while the other group eventually offered $36 million. Our client eventually agreed to accept the lower offer of $34.5 million because they were very comfortable with the individual that private equity group had brought in to run this business after the sale. We informed our client that we were confident we could get their preferred buyer up to match the higher $36 million offer without any further concessions. Our client wisely agreed with our consensus and we were able to get their preferred buyer to match the other offer and the business was sold for $36 million all cash to their preferred buyer. This $36 million all cash at closing transaction was a full $18 million more than the client wanted for their business.
CASE STUDY #3
SELLER FAILS TO OBTAIN $12 MILLION - SPECTRUM DELIVERS BUYER FOR $31 MILLION
This manufacturing client had originally retained our firm as their advisor in 1993. After selling that business the senior management team started a new manufacturing business which they grew and operated successfully for many years. After this business reached approximately $2.5 million in annual EBITDA, they attempted to sell the business on their own for $12 million, but without any success. After realizing the difficulties in selling the company on their own they retained us once again. We then initiated extensive research and created the appropriate marketing materials to properly present this company to the market. In the end we procured 35 bona fide written offers for our client from a variety of public and private companies, strategic buyers, private equity groups, hedge funds, and even large investment banking firms. The highest offers exceeded $31 million, with all cash at closing. This was $19 million more than the client wanted but had failed to generate through their own efforts in selling their business.
CASE STUDY #4
SELLER'S FAILED EFFORTS TARGETED 4 x EARNINGS - SPECTRUM DELIVERS BUYER FOR 9 x EARNINGS
Another manufacturing client had been trying to sell their business on their own for over two years. They finally came to an agreement to sell to a strategic buyer they had been negotiating with for several months. Unfortunately, after many months of time-consuming due diligence that anticipated transaction ultimately fell through leaving the owners of the company in a very difficult and frustrating situation. Our firm was then retained to secure a sale to either a strategic or financial buyer. After we developed targeted offering documents on the company and began marketing the business, we were able to procure offers from several different buyers. These included both financial and strategic buyers from our extensive network. The advantage to the client in this case was not only a successful closing but the bidding war we created eventually led to the highest offer being 9 times earnings. This was more than double the price of the failed transaction the seller had originally put together on their own and an outcome only achievable through the diligent efforts of an experienced and very focused Spectrum team.
CASE STUDY #5
SPECTRUM EXCEEDS CLIENT PRICE EXPECTATIONS - OBTAINS FINAL PRICE OF 12 x EARNINGS
This patented manufacturer had over $5.5 million in annual EBITDA and had been trying to sell their business through another intermediary firm they had retained prior to us. That intermediary charged them very large up-front retainer fees but delivered little beyond lengthy, ill-conceived, confusing marketing documents which completely missed the mark of clearly disclosing the core business as well as outlining the opportunity going forward. Their marketing efforts fell flat and they were not able to bring a single qualified buyer to the table. Understandably, the owners became very frustrated as their personal lives were on hold and their business was in a state of protracted limbo. Management came to us to see if we could help. Our team got involved and started digging into what had been done as well as what clearly had not been done properly. Once we ascertained this and clearly understood the objectives of the sellers we agreed to take on the assignment. After initiating the appropriate research and marketing process required to properly represent and sell the business the results started to show. We had numerous parties now interested in this business and multiple offers. After a few months of marketing, meetings, negotiations, and a few facility tours, we put together a deal with a private equity group we had brought forth. At a price of 12 times earnings the client was very happy as this valuation price greatly exceeded their expectations.
CASE STUDY #6
TECH BUSINESS LOSING MONEY - SPECTRUM DELIVERS BUYER FOR OVER $13 MILLION
This tech company was losing money at a rate of approximately $1 million per year and the shareholders wanted out. They did not see a way to turn the business around in a time frame that aligned with their plans. They also foresaw more competition coming into their industry and wanted to focus their time and capital into starting a new business in a niche they expected would yield much more value to them than their existing business ever could. After retaining us we set about to identify what value the business might have to a strategic buyer instead of being drawn to the reality that it was losing money. After discussions with management to understand their business in depth and determine what value it might have, we were able to identify how a specific niche of strategic companies could leverage the opportunity and significantly increase their own future earnings. After identifying and approaching a handful of potential buyers and opening a short window for bidders to submit their best offer we were able to generate four offers for the business. Within two months we were able to negotiate a deal and close with the buyer who had the most to gain by acquiring this business and also prevent any of their competitors from acquiring it. We sold the company for over $13 million all cash at closing which was a win-win for both our client and the prevailing buyer. Our client has since gone on to create a much more valuable business in the niche they believed would be much more profitable for them.
CASE STUDY #7
NICHE SERVICE BUSINESS – SOLD TO EUROPEAN BUYER FOR 35% PREMIUM
The owner of this niche service company came to us as he wanted to retire within months. He did not want to work in the business after the sale. He made it clear he wanted to retire on very short notice so would not assist the buyer with any transition beyond 30 days. Though his business generated over $4 million in profit it was a very niche business with limited upside…effectively it had maxed out in its market. We determined the best buyer would be an overseas buyer, so we focused our efforts abroad. We identified both overseas strategic companies as well as overseas private equity firms and family offices that owned somewhat similar overseas businesses. One group we found agreed there was a strategic advantage to acquiring our client and immediately put their acquisition team on the business. We were able to close in an all cash transaction at a price 35% above what our client was hoping to get for their company.