Pre-Sale Development and Structuring

Creating value in the pre-sale process

Sometimes a company goes as far as it can in its existing structure. It may want to continue its historical success, but if careful analysis reveals that it can’t effectively grow, it’s time for some difficult decisions.

If the choices are either sell the company or run it into the ground, making and implementing smart strategic decisions can vastly improve the sales price a company can get.

Restructuring the balance sheet, cutting costs and increasing margin, and creating energy and enthusiasm behind the upside potential of a company can dramatically improve its potential selling price.

A third-generation family-owned $40 million US Manufacturer was facing stagnant sales and declining margins over a 3 year period. Their products were increasingly being knocked-off by off-brand manufacturers, who were turning the product into a commodity. Initially management didn’t see the predicament they were in, but through a tough, realistic assessment of their position, they agreed to a dramatic overhaul in preparation for a sale.

We changed their process and way of going to market so they could cut costs in materials and process, develop new markets, and increase the perceived value of the brand. We also restructured the financials, so the balance sheet was more appropriate and attractive for acquisition.

While initially an auction might have sold the company for 3 X EBITDA, because of what we created, the company was sold for approximately 5 X EBITDA, a significant profit for the owners.