CASE STUDY #822
A husband-and-wife team, owners of a commercial printer, were planning for retirement when their do-it-yourself approach to selling the business came to an unexpected and sudden halt. The one interested buyer they were negotiating with backed out without any explanation. They had âcrossed the emotional bridgeâ and were ready to sell, but they now realized that they needed to cast a wider net to find the buyer that would be best for their personal situation. A disciplined and rigorous approach managed by an objective industry advisor was required.
The company had developed a profitable business serving large corporate clients in a major metropolitan market. Revenues were stable and profits growing as the company added fulfillment and web-to-print portals to better serve clients and build stability in the customer base. There were some issues, however, including an aging and fully depreciated equipment base, and customer concentration. The company enjoyed favorable lease rates from the owners, who also owned the real estate. The owners were wary of earnout provisions that might leave future payments to them at risk once they were no longer in control.
The owners reached out to the NAPL Business Advisory Group, whom they had previously engaged to prepare a company valuation. Senior Vice President Mark Hahn suggested a national campaign to reach potential buyers who might be attracted to the companyâs desirable location and business model. A business overview âteaserâ describing the opportunity in general terms was prepared and distributed directly to prospects and through several channels to NAPLâs extensive network. In consultation with the owners, the NAPL team developed a targeted list of regional and national prospects who would be contacted with a personal and focused message.
The owners concentrated on running their business while the NAPL team managed the sale process. Mark handled all inquiries, filtered out unqualified buyers and âfishing expeditions,â and solicited purchase proposals. The result was 51 actively interested prospects, 11 executed NDAs, four plant visits, and three purchase proposals. The finalists included a regional competitor, a national firm with several printing plants, and a specialized marketing services provider seeking new geographic markets. Mark worked with the prospective buyers to fine-tune the offers, crafting a final deal without earnout provisions. The terms included a stipulated and significant allocation to goodwill and a reduction in the portion of the value assigned to non-compete contracts. Higher lease rates were negotiated to support a higher long term building value for the owners. Payment terms included a note with strong guarantee provisions and substantial cash paid at closing.
Understanding the market value of their company is often the first step as owners consider their options. For more information about the NAPL Business Valuation process, or if you are preparing to sell your company, call (201) 523-6313, or emailÂ email@example.com Â to find out how the NAPL Business Advisory Group can find the best and highest offer for you. All responses to this Case Study will be kept strictly confidential.
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