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An Undervalued Gem!

The situation

The client was a second-generation family business with third-generation family members becoming active in the company. The owners were unsure if they would be able to “pass the baton” to the third generation. They struggled with the options to sell or to create a way for the next generation to run the business. The company operated a very profitable service business with few assets that could be leveraged to support a leveraged buyout. As a result, both industry and private equity players placed low valuations on the company due to its asset structure.

How our professionals helped

Our professionals assisted the owners with the difficult emotional issues of selling the company and—while doing so—addressing the concerns of the third-generation family members who were active in the company. But after reviewing their situation, our professionals built consensus on what our professionals found to be the best business decision and best strategy for the company, its employees and family members: the company should be sold. With that consensus, our professionals were then able to develop a compelling value proposition for the acquisition of the company. And our professionals conducted a worldwide search for prospective acquirers who understood the unique nature of this family business and its value.

The result

The company sold for three times its revenue and eleven times its book value in a leveraged buyout financed by a major money center bank. In the end, it achieved a valuation more than twice what the owners expected. From initiation of engagement, including drafting the information memorandum and conducting global search for acquirers, the transaction was consummated in less than 60 days.

   
 
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