Construction Materials – Sale of Business
CHALLENGE
Company is a well established $100 million Construction Materials Manufacturer, owned by a 75 year old entrepreneur and run day‐to‐day by his two sons.
The family wanted to sell the company and one son wanted to stay involved in the business. The company had excess land not required in operations, which had a challenging shape and access.
Accounting was done by hand and controlled closely by the long serving soon to retire Controller. The owner retainedan investment banker to divest of the majority of the company.
No one outside Family and Controller were to know of the transaction taking place until it was completed.
QUICK FACTS
Deal Type : Sale of Business
Deal Size : $50,000,000
Industry : Construction Materials
Ownership Structure : Family Owned
FINANCING
- Majority sold to two Private Equity groups at over 6 times EBITDA Multiple
- Real Estate sold to Separate Investor
- New CEO hired
- Automated Accounting System implemented
SOLUTION
Step 1) Advise owner, and sons, that a new CEO would have to be brought into company in order to make it appealing to outside parties.
Step 2) Advised owner they would need to begin investment in management and accounting systems.
Step 3) Found two Private Equity firms who both wanted to invest. Help create an agreement both were comfortable with to move forward on purchase within 6 months.
Step 4) Negotiated purchase price on behalf of owner
Step 5) Helped Private Equity firms find CEO
Step 6) Managed due diligence process to ensure confidentiality of transaction as requested by owner.
Step 7) Approached appropriate Real Estate operators and investors and found a group of investors interested in property. Closed real estate transaction 5 months after sale of Company
CONCLUSION
The end result was that the owner was able to retire with a considerable amount of cash from a 6 times EBITDA purchase price. The son was offered a contractual position in the company going forward. No one outside the Family, controller, and suppliers knew of the transaction until it was closed.
The real estate was dealt with separately so as not to effect the negotiations around the business.
A portion of the proceeds was directed into an Automated Systems.
