Persistence Pays Off.
When the Owners of a commercial flooring contractor approached us about selling, they had built something rare.
Over more than six decades, the company had earned a strong reputation with general contractors, schools and healthcare facilities across the southern WI area. With tenured employees, a company-owned facility, and a loyal base of repeat clients, the business was an attractive opportunity. Our first step, though, was exploring the option of a sale to an interested employee. After reviewing our business valuation, the Owners offered their key employee financial and management support to acquire the company. Ultimately he did not move forward because of the company’s size and working capital requirements, so we began our M&A exit process.
Personalized Solutions
he biggest challenge was not creating interest. It was getting a deal across the finish line. We began writing the Confidential Information Memorandum that told the company’s story. The business was almost entirely commercial, completing over 150 jobs a year, from small repairs to projects worth several hundred thousand dollars. It also had an experienced team of installers, admin, warehouse staff, and project management in place. We compiled a list of potential strategic Buyers and a thorough data room with information a Buyer would request. From there, we launched our customized marketing plan which quickly produced multiple qualified Buyers and a winning Letter of Intent a couple months later. The Buyer invested significant time and resources in due diligence, including a Quality of Earnings review and bank financing. Months later, and through no fault of either party, the deal fell through. Unfortunately, this can happen.
For an Owner, this can be a very discouraging moment in the process. But rather than give up, we paused for six months and used everything we had learned. We weren’t starting over; we were picking up where we left off when they accepted the first Letter of Intent just months prior. We updated the valuation, CIM, and data room, so the next Buyer and their lender would know exactly what to expect. In the meantime, one of the Owners returned full time to train an additional Project Manager. Sales and production continued growing, which only strengthened the opportunity we would present.
The relaunch was successful. More interested Buyers inquired immediately, and a potential Buyer from the first round submitted another winning LOI a few months later. Due diligence began again. With SBA financing in the mix, we coordinated the lender, both attorneys, and the Owners around a closing date that fit the company’s payroll and billing cycles.
We also planned carefully for the people who made the business successful. While the Office Manager was informed from the beginning, everyone agreed to wait to announce the transition to other employees until the loan approval and closing date were confirmed. This protected confidentiality until the deal was certain. With loan approval and a final Binding Agreement, the Owners notified their team, and a staff meet-and-greet was scheduled. A paperwork session was set for the day after closing, so employees could transition without missing a beat. Banking, accounting, benefits, and vendor accounts were lined up, so the new Owner was ready to operate on day one.
Selling a business doesn’t always go according to plan. What matters is having advisors who stay with you when it doesn’t. We were honored to help our clients harvest the value of more than 60 years of history and see the company continue under new ownership.