Client Situation
A 30-year-old logistics company operating throughout the US was owned by a broad collection of private investors and original owners who decided they wanted an exit by selling the company. The service segment in which the firm operated was enjoying several years of substantial growth, so it seemed to be ideal timing. An investment banking firm was hired to handle the sale, but it was not getting adequate support from within the company due to lack of bandwidth for this special project. Some of the problems included not having an adequate data room and a lack of credible, detailed financial projections, which led to a difficult start.
The investment bank recommended to executive leadership that the company bring on additional resources to assist with the transaction. Despite some initial reluctance, company leadership eventually agreed.
Solution
A E78 Partner was engaged to provide transaction process leadership in support of the company’s CFO and in collaboration with its investment bank. After assuring the CFO that he was not acting as an interim CFO but was simply there to facilitate an optimal transaction, he led all matters related to this including the following:
- Build-out of the data room with all relevant information to satisfy most prospective buyers;
- Development of a fully supportable projections model with documented assumptions and evidence of their reasonableness;
- All matters related to a requested Quality of Earnings Study;
- All ad hoc requests by prospective buyers, many of which could not have been handled given the lean finance staff within the company.
Results
After several months, the company was sold to a leading private equity firm ideally positioned to add value and therefore able to make the most attractive offer. The sale price reflected an EBITDA projection that was more than 50 percent higher than the most recent actual year at a very attractive multiple. Shareholders were very pleased with the timing and the amount. The company’s CEO commented that the E78 Partner “provided tremendous leadership and insight, without whose services we would have never completed this remarkable achievement.”
