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 an owner that knew he had taken his company as far as he could on his own knowledge and experience. Read about how he got the best of both money and knowledgeable partners to help grow the business.
Enjoy
The founder and owner had grown his business to $50 million. He had sold it once before and had to buy it back. This time, he knew that he needed help to take it to the next level, but he wanted to be careful to pick the right group to partner with.
Company is a market leading manufacturer of kitchen and bath cabinets sold to commercial contractors and distributors. Its fully integrated state of the art manufacturing capabilities make it a low cost producer in the industry. The Company serves five distinct markets nationwide; military and government agencies, builders of multi family dwellings, wholesalers, select mass merchandisers and finally its own retail outlets. The Company has taken advantage of advancing technology to deliver higher quality products at no greater cost to the customer.
The founder had a nice business. At the time he was a regional player in the cabinet business and was doing about $50 million per year with a $7 million EBITDA.
He was approached by several Private Equity Groups and received several offers. After careful consideration he accepted a proposal that offered him $10 million less in cash up front than another. Why did he leave $10 million of cash on the table? His experience and instinct told him his better value would come from selecting the right group to partner with.
Importantly, he chose the offer that allowed him to keep about 40% of the business. He continued to run the business and still does. With his financial partners, he has purchased 3 additional companies, added several lines and expanded his business nationally. They stick to the niche they know: producing a full line of products for the trade segment of the cabinet industry. They can now meet the needs of the building and remodeling markets with a full line of kitchen and bathroom products. How successful are they? Well how about $200 million in Revenues with $30 million EBITDA. in only 4 years.
By picking the right partner, a savvy business owner can grow his business with less personal risk, yet retain an interest in the company. His share now is worth over 2 times what he already received 4 years before.
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 ...
HIG specializes in providing capital to small and medium-sized companies with attractive growth potential. HIG aligns itself with visionary management teams and entrepreneurs, who take substantial equity positions in their companies, and help build businesses of significant value.
The HIG team has substantial operating, consulting, technology and financial management experience, enabling them to contribute meaningfully to their portfolio companies.
Sami Mnaymneh, a founding partner of HIG Capital, recently indicated "With our operating experience and our extensive network of industry relationships, we help talented management teams and entrepreneurs take their companies to the next level."
And he followed up with "We make a concerted effort to structure each transaction to meet the specific financial and personal requirements of each seller. An owner can generate maximum liquidity by selling all of his interest in the company, or alternatively, 'take some chips off the table' while retaining a meaningful equity interest and management role in the company by partnering with H.I.G. "
Would you like an introduction to HIG Capital? I will be happy to provide it. Just send us an note ...
For more information on HIG Capital, 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.
To discuss which Private Equity Group will meet your current needs, let us know here ...
has partnered with a top notch operations consulting firm:
Allomet specializes in helping equity investors, owners, lenders and other stakeholders assess operational problems, understand how to solve them and help oversee implementation.
Would you like to determine if an assessment of margin enhancement, operational strategy, or crisis evaluation is right for you? For a thorough preliminary consultation let us know ...
has partnered with a turnaround consulting firm:
Business CPR specializes in Manufacturing or Service companies that have revenue between $10 Million and $100 Million.
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7 Best secrets of managing a Corporate Renewal from Dr. Kash.
