houston-mergers-and-acquisitions-advisors-manufacturing-case-studyA Houston-based manufacturer of custom precision parts for oil and gas with revenues of nearly $10 million and expectations to grow to $14 million needed to sell immediately due to family emergency.

Challenges

  • Limited marketing process due to condensed time frame
  • Weaknesses in key areas affecting value, including 100 percent customer concentration, management team and lack of due diligence information/documentation
  • $1.3 million machine added to negotiating table after price was already agreed upon

Value Drivers

  • Ability to manufacture incredibly complex parts with critically close tolerances
  • Reputation for quality and service
  • Innovative practices and state-of-the-art machinery

Our Approach

  • Focused on strategic acquirers operating within the sector
  • Conducted very limited marketing process with subset of key players mutually agreed upon with sellers
  • Focus on efficiencies and economies of scale not being leveraged by current owner

Results

  • Went from initial seller meeting to closed deal in just over three months
  • Sold business for 15 percent higher than expected/market value considerably higher than expected under “fire sale”
  • Additional $750,000 negotiated after price was agreed upon since new $1.3 million machine was not yet factor into free cash flow for the business
Securities offered through DCF, LLC. Member FINRA/SIPC. Doeren Mayhew is an independent firm affiliated with Moore Stephens International Limited.