Case History 1 - Family Succession
History:
The founder, president and sole shareholder of a Construction Subcontractor business wanted to retire on the equity of his business, and he wanted the business to continue under family ownership and management as his legacy. His wife, two daughters, two sons and a son-in-law all worked in the business. At his son-in-law’s urging, he retained Advantage Business Advisors to do a BVAL3 ® business value study and strategy engagement.
Challenge:
There was several problems right from the beginning. First, there was no buyout mechanism for mom and dad to cash out their equity. Second, much to dad’s surprise none of his family shared his legacy vision. Third, much to his disappointment we determined the value of the business to be only 1/3 of what he thought it would be. And fourth, dad is not in good health and the family wants him to retire while he is still healthy enough to enjoy it!
Solution:
We determined the current, future and maximum value of the business and interviewed all of the family members. We designed a three phase exit strategy as the best fit solution to the collective objectives of the family. Phase 1 is the exit preparation phase that includes an interim management succession to the son-in-law, the exit of family members from key management positions, and the implementation of specific recommendations to optimize industry value drivers. Phase 2 is active marketing of the business for sale or dissolution, depending on market conditions. Phase 3 is completion of a sale or dissolution with a final exit no later than 42 months from today.
Very satisfied. The process was enjoyable and insightful. It is evident that much time and thought went into the analysis and report. It served our intended purpose of providing a baseline for future success. (General Manager and son-in-law.)
Case History 2 - Three Partners
History:
Three retired Army officers huddled around the kitchen table and decided to start their own human resources consulting practice. Within three years they were grossing over $1.0 M and starting to believe they had created more than three pretty decent jobs for themselves. They retained Advantage Business Advisors to do a BVAL3 ® analysis with a focus on exit strategies for each partner and the future value of the business.
Challenge:
Each partner had different personal, professional and financial objectives. The CEO and majority shareholder wanted to grow the company and eventually merge with or sell the company to a larger consulting practice at a premium price. He was primarily interested in the business of the business. One of the minority shareholders wanted to exit the business as soon as possible, being primarily interested in finding a less stressful position with another firm. The other minority shareholder wanted to cash out sooner rather than later when the money is right, being primarily interested in a financially secure early retirement.
Solution:
We determined the current, future and maximum value of the business and recommended an M&A exit strategy focusing on business maturity, specific industry value drivers uncovered by our research team, and quality of earnings. We outlined a plan and made a referral to an estate planning firm for the details of a mechanism to buy out the two minority partners. The plan also calls for annual updates to the business appraisal to mark progress and establish the buy out price.
On behalf of the partners, we truly appreciated your responsiveness and professionalism on our small company, trying to sort out its path. Your insights were invaluable for us and we have some "Big Picture" decisions to make- know they will be much better decisions because of your quality work. (President and CEO)
Case History 3 - Quick Exit
History:
The founder and president of a relatively large and profitable commercial construction contractor contacted Advantage Business Advisors to sell his business as soon as possible. Although still a young man, he was burned out and ready to pursue other business interests.
Challenge:
The business was too expensive for an owner-manager to acquire, too large for a local contractor to acquire, and too immature for an out-of-town synergistic buyer to acquire. In addition, the financial performance was erratic due to the focus and energy of the owner that waxed and waned based on what else was going on in his life at the time.
Solution:
We insisted on a full BVAL3 ® engagement before even considering the sale of this company. We determined the current, future and maximum value of the business, produced an offering memorandum in the form of a Confidential Business Review, and tested the market. Based on market feedback, we put together a plan to address the key hindrance to a transaction - the seeming irreplaceability of the owner in the day-to-day operations of the business. We are preparing to launch the second marketing campaign to over 100 individually selected companies spanning the entire Eastern Time Zone.