Goals of Ownership
- Company founder spent 25+ years building a successful composite products manufacturing business and was seeking to retire with a preference to sell 100% of his personal equity stake along with the meaningful stake held by family members both active and not active in the business.
- Founder was concerned about the “right fit” and wanted a buyer that would respect the company’s culture and leave it intact post-transaction.
- Founder wanted to ensure that the Company’s seasoned management team remained in place and had proper incentives to grow the business; management team would benefit from 20% phantom stock plan triggered at the time of the sale, but none of the executives would be in position to retire based on the amount of after-tax sale proceeds.
- Founder sought a part-time consulting role to remain active in the industry along with continued health insurance due to ongoing health issues.
- Founder had been unsuccessful in trying to sell the business on his own after approaching a number of buyers one-by-one, obtaining offers that were not competitive in terms of price, terms, and structure.
- Given the attractiveness of the business and the sellers’ willingness to consider a broad set of buyer options, the De NES Partners principal who led the transaction approached over 100 strategic and financial (private equity firm) acquirers in the U.S., U.K., Europe, and Mexico.
- 8 potential acquirers made preliminary offers; 4 companies were selected to meet with ownership, including finalists from the U.S., U.K., Finland, and Mexico.
- Completed transaction with large United Kingdom-based company traded on the London Stock Exchange (LSE) with over $1 billion of revenue seeking complementary products to its line of carbon steel products to counterbalance raw material pricing cyclicality and seeking to diversify its customer base
- Sale proceeds were considerably higher than the final offer that the owner negotiated on his own, plus transaction terms were less onerous in terms of financial deliverables at closing.
- Transaction allowed business owner to fully sell his stake and provided liquidity to extended family members whose shares were held inside and outside trusts.
- Management team remained intact, and the company’s culture was preserved
- Strategic buyer provided short-term consulting agreement to company founder along with multi-year employment agreements to key management.
* This transaction was completed by a De NES Partners Principal while at a predecessor firm