Exiting the Family Business
At 65 years old, J.B. Jones decided he was ready to exit the business his grandfather founded in the 1930s during the Great Depression.
The native Houstonian and third-generation owner of Jones Oil, a fuel and lubricant distribution company, had always worked in the family business, starting with window washing before he ventured off to university and returned to join the sales team. Eventually, he took over when his father retired, and under his leadership, the business grew substantially.
The company, which supplied branded and unbranded motor oil, fuel and additives to car dealerships and lubricant service centers in Houston, as well as to industrial manufacturing companies, possessed a sizable share of the total available market.
A 15-year Doeren Mayhew assurance and tax client, Jones turned to the firm’s investment banking professionals at Doeren Mayhew Capital Advisors to help him increase his business value and subsequently retire.
Challenges, Challenges and Challenges
Doeren Mayhew Capital Advisors took the fuel and lubricants distribution company to market, first preparing an information memorandum that told the company’s story with supporting financials and then engaging with about a dozen highly targeted prospective buyers.
“We received several offers within a comparable range and were able to identify two potential buyers that stood to benefit the most from absorbing a key competitor, said Doeren Mayhew Capital Advisors’ Vice President Will Rosell.
But, from signing of the Letter of Intent to closing, the deal dragged on for a long, difficult year.
“The deal derailed several times over some mutual discontent. We had to keep reviving it,” recalled Rosell.
One major challenge: the condition of the financial reporting. Since Jones had relied on its controller to handle the books, and had never graduated to having a CFO, the CPAs at Doeren Mayhew team jumped in to serve in the vital CFO role, investing many hours at the client site to provide advisory services capable of withstanding the scrutiny of due diligence.
Ultimately, Jones Oil was acquired by JAM Distributing Company, a portfolio company of Ridgemont Equity Partners. JAM was the company’s largest direct competitor and had the most to gain, expanding its customer base before selling the combined entity to Brenntag, the largest chemical distributor in the world.
J.B. worked for a year following the sale on a consulting basis, but retained his real estate and leased the property back to the buyer. Now, he is fully enjoying his retirement traveling and spending more time with his children and grandchildren. The Jones family still relies on Doeren Mayhew for CPA advisory services.