Sale-Side Services Deliver Value in Excess of Fees

July, 2013

Situation Overview

The owner of a mid-market process manufacturing company planned to sell his successful company and exit the business.  In the absence of other financial advisors and any prior experience with transactions, he needed a “helping hand” to prepare for the due diligence process and with negotiating several elements of the transaction. As the deal progressed, the buyer proposed new terms complicating the transaction and increasing the amount of communication required between all parties.

Issues

The sole owner of the company was looking to exit after successfully growing his business for many years.  He did not have a Chief Financial Officer (CFO) or other transaction advisors. He needed a trusted advisor to guide him throughout the process.

Action

WBL acted as the seller’s primary financial advisor, advising the owner and analyzing various alternatives in the structure of the sale.  WBL was involved in four phases of the deal:

  • WBL met with the seller and potential buyers to assist in the negotiations on the letter of intent
  • WBL worked closely with the seller’s attorney to provide input on the financial implications of the deal  including reviewing the sale documents
  • When the buyer wanted to modify the terms of the transaction, WBL assisted the seller with the negotiations
  • WBL assisted with the tax allocation of the purchase price of the assets sold in order to maximize the after tax proceeds to the seller

Outcome

The sale was a success for all parties.  WBL was able to maximize the seller’s after-tax cash flow in excess of his original expectations, creating the “nest egg” the seller wanted as a return on his investment and ensuring that he could live comfortably.  WBL negotiated a deal structure that was more acceptable to the seller than the originally proposed structure. The buyer was very happy with the business he bought and with the thorough work performed by WBL.  They hired WBL to provide services to the new company and were able to grow it and increase profitability.

For more information about this case study or to discuss your next transaction, contact:

BenatorBruce Benator, Audit Partner
Transaction Services Practice Leader
(770) 512-0500
bbenator@wblcpa.com
 
Pursuant to IRS Circular 230 disclosure requirements, please be advised that any written tax advice or information contained herein is not intended to be used to avoid any penalty imposed by a taxing authority, nor may the recipient of this document use such information for that purpose.  Please contact the author of this document with any questions regarding this disclosure.