Creating Value: A Client’s Desire to Sell His Business Leads to a Buy-side Assignment

Situation

The owner of a $20 million mail sorting business wanted to retire. A Letter of Intent was signed and the buyer asked a good question: “Are you committed to staying and running the business for the next several years?” The owner looked at the buyer and found himself wanting for words. The realization came that what he really wanted to do was to get out of the business, spend more time with his family and pursue other business and investment activities.

Challenges

• The owner had been CEO for more than a decade and the business centered around his management, decision making and leadership.
• The buyer respectfully declined to pursue the acquisition due to the owner’s lack of commitment.
• There was no one on the management team that the owner could turn to create the leadership for the future that would give the buyer adequate comfort.
• Taking the business to other buyers would simply result in the same question being asked and the same answer being realized.

Solution

Dean Bachelor, Platinum Group founder and chairman, asked the owner another question: “If you had your choice of having anyone run your company for you in the future, who would that be?” The answer came very quickly. There was a gentleman who was president of similar-sized company in the industry that he respected and admired. That business was far enough away that it did not pose a lot of competition, but was close enough to possibly be a good acquisition target. Bachelor and the owner drove over to meet with the owner of that company and arranged for a merger of the two companies. At the closing, Platinum helped to facilitate the transaction, and the acquired company’s president became CEO of both companies. During the next year, Platinum facilitated a series of planning meetings to assist the companies in the integration of operations, finance and marketing.

Results

The new CEO, reporting to the owner (now the chairman of the board) worked hard to complete the integration, and to position and package the company for a subsequent sale. Platinum facilitated the sale of the company, resulting in a successful liquidity event for the owner and a new opportunity with equity for the new CEO. The solidified leadership position provided a way for several buyers to express their interest and the end result was a private equity firm has acquired the company, which now is building for the future. Platinum’s client? He acquired a condominium on Lake Pepin, bought a boat to enjoy his time and is now working with Platinum on consulting assignments where he can use his strong financial and management skills on a limited basis, providing the personal, family and consulting time that he has wanted.