Here is a Case Study of a transaction that one of our Private Equity Investors completed. Periodically, I will send you an interesting case study -- not more than every couple of weeks. If you don't want to receive them, you can "unsubscribe" at the bottom of this message.
As a bonus, I am highlighting one of the Strategic Equity Investors we represent. They will do a transaction similar to this one.
If you have any questions or comments, please send them to me.
Sometimes doing a transaction is about more than just money. In fact, in my experience, money is key, but not at the top of the list. Here's a management team that wanted to buy out an inactive owner. But, they didn't have enough capital to pay a fair price and were concerned about shaky economic forecasts. Read about how they accomplished their objectives with a Strategic Equity Investor.
Enjoy
The Company was founded by a true entrepreneur. He had the sense to hire some very talented managers. Company was very profitable, but the founder had lost interest and became essentially an absentee owner. He was more interested in sailing than paying attention to the business. The management team wanted to find a way to cash out the founder, have an equity partner to aggressively grow the business and get some equity for themselves.
... manufactured machines that automatically cleaned swimming pools. They had a number of patents, some proprietary technology and a leading market share. At the time, the founder was somewhat interested in selling the operation to pursue his own interests. It was a very seasonal business, but had excellent margins. It was doing about $26 million and generated $5.5 million in EBITDA.
A Private Equity Group created a transaction that accomplished the objectives of the management and the founder. They paid him $30 million at close, enough to support his lifestyle, allowed key management to have 20% of the business and proceeded to grow the firm.
But, in the first year after acquisition, a recession hit that caused the business to slip from where it was before the acquisition. The Equity group helped guide the strategy to bring the business through the recession, and the management group, now owners, aggressively cut costs.
Coming out of the recession, EBITDA jumped. After 4 years, the company was doing $40 million and had an EBITDA of around $13 million. Then, another Private Equity Group paid nearly $82 million for the firm. And, the management team had the opportunity to roll over some of their equity with the second firm.
Although they didn't make any money the first time around, the management team did very well working with the Private Equity Group. They were able to cash out the founder. They had a strategic partner to help them through some tough times. And, they made several million when the first liquidity event was realized.
Private Equity groups have been pigeon-holed as financial buyers and low ball buyers for a long time. Some of their reputation is deserved. But, there are a select few Private Equity Investors that belong in a whole different investment league. To find out why most Investment Bankers think Private Equity Investors are Second Class Citizens and why they are wrong
get a white paper here ...
Dyson, Dyson and Dunn have been a Strategic Equity Investor for a long time. The firm was established in mid 1981. The firm today owns and operates eight industrial manufacturing and distribution companies with sales over $200 million.
Dyson believes that companies can best grow, innovate and respond when their owners are dedicated to the viewpoint of owning the business for the long-term. They feel that businesses prosper under long term commitments by the owners, as well as having adequate financing to grow in the future.
Joe Dunn, Jr., a Managing Director of Dyson, Dyson and Dunn, said recently "We believe that good companies are the result of good management. We will only acquire good companies and we will encourage good management to remain. The acquisition price of the company can be up to $150 million. Acquisitions will be made with cash.".
And he followed up with "The company must have a history of profitable operation. We have no interest in start-up or turnaround situations. It is our desire to retain capable existing management or to work with a transitional management team. We will operate using periodic reports and a Board of Directors."
Would you like an introduction to Dyson, Dyson and Dunn? I will be happy to provide it. Just send us an e-mail ...
For more information on Dyson,Dyson and Dunn, visit their website...
We are specialists. We match privately held companies with the right equity source. We never charge a seller a fee. Working with Strategic Equity Buyers is our specialty.
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