Family Business’ Sale

Family Business – Restructure and Sale of Company (2018)

Outcome:

Successful restructure and Sale of Company

Primary Services & Tools used:

Restructure / Lead M&A Team to facilitate sale of Assets Detailed Forecast, Cash Collateral Budget, Due Diligence

Turning Point Team:

Eric Camm, Don Carlo

A family owned instrumentation business located in Seattle, Washington, approached Turning Point about implementing a plan of restructure. From 1948 until 2012 the business had been run by the founder and then his son. During that period the family had been intimately involved in all aspects of growing and managing the business, with multiple family members working for the Company.

Overview:

In 2012, however, when the Founder’s son had to step down as CEO, management was taken over by non-family members. Over the course of the next 5 years, the business consistently lost money. Revenue had dipped from $14MM annually to $10MM.

Actions:

When Turning Point was engaged, we immediately put together a comprehensive forecast and plan of restructure. The business needed significant improvements to its ERP system and financial reporting processes. It was operating blind as financial reporting was 60-90 days behind. We implemented at 10 day close and built a detailed 36 month forecast that included expense reductions and a path back to profitability. The forecast was partnered with a plan of restructure that included revamping the compensation structure for management and the sales team, as well as measurable accountability across the board for the existing employees.

The family was in complete agreement regarding the need to restructure the business but could not agree on implementation. There were 7 equity holders in the company, and there was significant disagreement over responsibility for bringing the company back to profitability. Ultimately, it was determined that the best path forward was to market the business to a third-party acquirer, who could then execute the restructure.

Outcome:

Turning Point updated the financial model and created the confidential information memorandum (“CIM”). We then implemented those aspects of the restructure that were agreed upon, including significant expense reductions. We then sourced 2 local buyers who were interested in acquiring the company and ultimately sold the business to one of those buyers.

Key Takeaway:

The Company was profitable the two months prior to the close of the sale. During the acquisition process, Turning Point led the due diligence and assisted legal counsel with the definitive documentation.