Project Heritage
When a custom metal building company approached us about a recapitalization, we knew facilitating a successful deal would require strategy, patience, and due diligence.
While environmental concerns and increased regulation had created a boom in our client's sustainable construction industry, COVID-19 had disrupted the market.
To further complicate matters, this was not a traditional exit. Instead, our client wanted to:
- Retain partial ownership in the company
- Access funds for new business opportunities
- Preserve the option for a “second bite of the apple”—the opportunity to cash in on the future sale of the business
In the end, our team facilitated a successful deal and helped our client achieve all of these goals. Here's how the deal unfolded.
Getting the initial prep phase right was critical in this deal for two reasons:
- The effects of the COVID-19 pandemic had created temporary abnormalities in the company’s financial performance. Because of this, we needed to carefully assess the company’s trajectory both before and after the pandemic to accurately portray the company’s true strength to buyers.
- Our client’s recapitalization goals were complex, requiring a nuanced approach to find the right buyer and structure the deal appropriately.
To address these challenges, our team recommended delaying going to market. This was a calculated risk. Yet, the strategic delay paid off, allowing time for the company to demonstrate its strength and growth potential to prospective buyers.
A well-run mergers and acquisitions process considers economic factors, adjusting and preparing accordingly.
The right marketing plan, such as our QuietAuction™ process, attracts a diverse range of buyers to foster competitive negotiations.
By conducting multiple rounds of negotiations, we can ensure the right fit for our client.
Targeted Buyer Outreach
With a clear picture of the client’s performance in the pre and post-pandemic markets, we were ready to move into the marketing phase. Balancing confidentiality while attracting the right buyers was challenging, but we overcame it by:
- Implementing our QuietAuction™ process: Rather than going public with the sale announcement, our proprietary marketing process allowed us to maintain confidentiality while generating targeted interest.
- Targeting the right sellers: Our research revealed three buyer segments:
- Private equity groups who had the industry insight and resources to empower the existing management team, ensure a seamless transition, and unlock the company’s full potential.
- Independent sponsors who had a genuine enthusiasm for the company’s mission.
- Other industry players who saw the potential of the company’s innovative products and growth potential.
Optimized Negotiations
During the execution phase, we facilitated multiple rounds of negotiations from both industry players and investment firms. We then narrowed it down to the top three bidders and further negotiated with them.
In the end, our client accepted an offer from a private equity firm. This deal not only came with favorable terms and tax benefits but allowed our client to retain a stake in the company, plus the possibility of earning more money if the company is sold again in the future
After a complex, nine-month merger and acquisition process, we helped our client facilitate a successful deal and achieve all of their initial goals. The final offer was considerably higher than initial bids. Additionally, the deal allowed our client to retain partial ownership and potential for future gains.
The lengthy due diligence process allowed us the time needed to not only secure favorable terms for our client but also ensure a seamless transition that positioned the company (and seller) for continued success.
