Business Mergers & Acquisitions Consult
The Challenge
A long-time client was approached with a great opportunity, or so they thought. They were offered what they believed to be an above-market price to sell their business; an offer that considered both the operating business and the real estate on which they operated. However, this deal included accepting stock and a company buyout from a company that was highly levered and backed by a private equity sponsor – which could be risky from our experience. The seller needed to do their due diligence in vetting this complicated offer to ensure their life’s work and livelihood were not at stake.
Our Solution
We took a deep dive into the offer and paid special consideration to their overall financial plan when dissecting the details. Since the business owners were relatively young, selling was not a necessity and we wanted to make sure they could make it through retirement living their ideal lifestyle.
Through our due diligence, we discovered that the offer for the real estate was significantly lower than what the asset was worth. We advised that the client exclude this asset from the sale and establish a long term lease with the acquiring company.
The Results
Our knowledge and expertise due to personal experience in a wide variety of private markets helped this client maximize the value of their transaction and added an additional layer of due diligence on the acquiring company.
All too often we see advisors in our industry, despite claiming to be experts, only take a cursory look into client transactions that occur outside of the day to day buying and selling of investments in their client’s accounts.
A substantial portion of Morgan Rosel’s client base acquired their wealth by building privately owned businesses over the course of decades. It is vitally important that the eventual company buyout opportunities are maximized!
Nothing in the above case study should be construed to be specific investment advice or business consulting.
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