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SPECIALTY MANUFACTURING AND DISTRIBUTION:
Equity Enhancement |
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Client: |
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High-end
specialty manufacturing and distribution private company with revenues
of $150 million and EBITDA of $10 million. With a sophisticated sales
force and margins at twice the industry average, this company had
experienced extraordinary growth over the last eight years. |
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Problem: |
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Company
had aspirations to be a major player in their business but needed
to triple their size to accomplish this. They lacked a comprehensive
strategy as well as the resources, funding and expertise to secure
additional capital. Traditional sources of bank capital were not available.
In addition, they were looking to reduce their risk of having all
of their wealth tied up in the business. Finally, the owners were
not clear if their children would eventually take over the business.
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Approach: |
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Tunnell first discussed with the owners their specific, customized
needs, goals and objectives. A complete series of alternatives was
presented, including specific financing options, that would meet the
owners' goals and objectives. Tunnell arranged specific meetings with
select, screened financial and private equity organizations and advised
on the negotiations. |
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Results: |
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Tunnell
identified a partner who met the owner's objectives in the following
manner:
Purchased 1/3 of the company for $50 million, allowing the owners
to take some risk off the table and provide them with more liquidity
Eliminated the owners' personal liability since the new partner
is one of the premier financial institutions in the country
Provided an attractive salary and benefits package for the owners
Provided a pool of money for acquisition suitable to double the
company size within one year
At the end of five years, owners have the right to buy back the
1/3 share or sell additional ownership shares, providing them with
the flexibility in their succession plans. If they sell total ownership
to the partner, expected total payout will be approximately $150
- 200 million
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