Name of Project – Confidential Sale
The President of a small environmental regulatory compliance and testing firm was desirous of growing the business and developing an exit strategy for the existing shareholders. While the firm had been consistently profitable over the years, it had not been able to grow beyond its current size due to funding and human resource limitations. Additionally, there was tension between the major shareholders.
Process Method and Customer or Industry Needs
Through open and honest, structured dialogue, we were able to identify the major constraints to growth, and the desires of the major shareholders of the business in terms of roles and responsibilities and exit strategy. The two major impediments to growth identified were limitations related to human resources and the inability to fund the necessary staff and capital equipment needed to implement a growth plan. This dialogue also uncovered that there was a divergence of desires in regard to organizational roles. The current President and majority shareholder was looking to exit the business while a significant, yet minority shareholder wanted to continue but admittedly did not wish to lead the organization. It was agreed the best solution would be to find an acquirer for the firm that would allow the President to exist within a two year time horizon and provide the significant minority shareholder an opportunity to continue their existing role in the acquiring organization.
Solution and Performance
The Winchester Consulting Group LLC assisted in developing the necessary documents to effectively tell the firm’s story, and researched the industry outlook and the opportunities for growth, which would be of interest to a potential acquirer. WCG also prepared a valuation of the firm to determine what the owners might expect in an acquisition and to serve as a negotiating tool for the firm later in the process.
Using industry contacts, WCG was able to identify a number of potentially-interested acquirers of the business. WCG assisted the company with the presentations to these parties, and helped evaluate letters of interest/preliminary offers received.
WCG also assisted in the negotiations and helped the firm secure outside legal representation specializing in transactions in the environmental services industry.
These activities led to a successful sale of the firm in a 10 month timeframe at the valuation initially provided. The sale allowed the President to exit the firm within a 2 year timeframe as desired and also provided the minority shareholder a liquidity event and an opportunity with the acquiring firm.
Benefits (Customer or Industry Benefits Delivered) –
- Successful sale of firm at valuation amount
- Completed within a one year time frame
- Majority shareholder able to exit within two years of deal
Products/Equipment Used –
- Valuation model
- Industry contacts
- Understanding of acquisitions process