TMG – Summary of Several Past Deals

• We were approached by a partner in a private equity group who asked if he could recommend us to broker the sale of a friend's business. He was approached by his friend to buy the business but while he appreciated the opportunity and was impressed with the business it simply was not in the direction that his fund was focused. When talking with the owner he mentioned fielding many approaches from his competitors, even an actual proposal from one whose offer he considered acceptable. However, he was wise in admitting that selling a business was something in which he had no experience and because his friend highly recommend The Montana Group he concluded it prudent to select us to represent him. After adjusting the financial data and assembling the company information in the necessary format we marketed his company to a few logical buyers. But our client was ecstatic because after several rounds of negotiations we were successful in selling his business for 60% more than the original offer in an all cash transaction ...to the same buyer!!
• We began working on selling this business in 1999 however during the later stages of the sale process the major stockholder / CEO died. This understandably caused the transaction to be terminated. As the new manager / stockholder was someone without experience in running the company The Montana Group continued to stay in touch while this new CEO developed the company. We continued our dialog and offered our recommendations for increasing the company's desirability for an eventual buyer. In 2002 it was time to again market the company. We located a private equity buyer who had an investment within our client's industry and they made an offer which was approved by our clients. However, due to the difficulties of their own investment within the industry this offer was subsequently rescinded. The Montana Group continued to stay in touch with management and discussed the best time to again start the sale price. In 2006 we again recast the financial information and assembled the necessary data to take the company back to the market once again. We are proud to report a successful sale was concluded much to our client's excitement because the transaction price was several times greater than their original expectations. Remember we are not paid until the sale is complete so we worked on selling this business for almost 8 years before getting paid anything!!
• There are many examples where a few years ago the business owner elected not to sell the business because the business was doing very well and no downturn was in sight. However, because businesses generally sell on a multiple of cash flow when the revenue and cash flow trends are upward it is easier to get the buyer to increase their price because the value is increasing during the due diligence phase. However, when cash flow decreases, as is the case throughout the recent recession, there is a multiplier effect on the overall business valuation. Plus, when the trends are sliding there is an overall concern with whether downward is actually a trend or is permanent. Therefore, the time to sell a business is when its trends are good in a robust economy so there is an opportunity for all involved to gain. Now those formally wavering business owners are ready. They just need to have their company on a sustained uptick.