Case Study

Sale of Manufacturing company to overseas competitor maximising business value for owner

Background

Manufacturing company with turnover of $6 - $7M exporting 90% of product to USA, China, Europe and UE.

Business owner approached The Rufus Partnership (TRP) in June 2011 regarding selling the business due to his age, lifestyle aims and his family members not interested in taking over the business. TRP assessment of the value of the business was substantially less than the owners expectation.

Owner re-engaged with TRP in April 2012 following:

  • A slump in sales and profitability
  • Resignation of Key Management

Client Issues

  • Business Valuation
  • Business and Marketing Plan
  • Business Performance
  • Financial Management
  • Exit Strategy
  • Earn Out

Outcomes

Three international companies undertook extensive due diligence and two firm offers were received.

TRP managed the due diligence process and the finalisation of the Asset Sale Agreement. 

The final agreed sales price was substantially higher than expectation.

Strategy

TRP worked with new CEO to restructure company, prepare detailed Business and Marketing plans and improve the company culture

A detailed Business Valuation was prepared highlighting the risk and value drivers impacting on the business and a detailed strategy was implemented to address the key issues.  The business owner now had full buy-in into the business valuation process and now had a realistic expectation of the value.

A staff incentive program was introduced to lock in key staff.

A detailed analysis of the ongoing investment required to return company to previous sales levels and profitability was prepared.

TRP took over the cashflow management of the company and negotiated improved trading terms with major suppliers in conjunction with CEO.

As key factor impacting reduction in sales was the impact of the rising $A  TRP negotiated improved trading terms with major customers to reduce this impact.

Michael Bugelly of the TRP became a member of the Advisory Board.

TRP assisted with the R & D claim and was able to secure funding from Enterprise Connect.

TRP in conjunction with the business owner and CEO identified potential acquirers of the business and TRP prepared an Information Memorandum and commenced a strategic sale program with the identified parties.

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