West Michigan Manufacturing Company Successful Sale – Case Study

Cash flow of the Client Company at the time of sale: $233,157.

Negative attribute: one customer made up 65%+ of sales, which caused many buyers to pass.

Results after 3 months of confidentially marketing the business:

• 77 buyers expressed interest in reviewing the business.
• 63 returned confidentiality agreements and received detailed information.
• 18 went to see the business/meet the owners.
• 5 offers submitted.

Offers received:

• $300,000
• $600,000
• $750,000
• $800,000 with earn out up to $925,000
• $875,000

Our client accepted the $925,000 proposal and sold their building on land contract.

The earnings multiple (metric of valuation) for this sale was $925,000 / 233,157 = 3.96, which is strong for business with less than $500,000 cash flow and significant customer concentration.

The entire sale process, from engagement to closing, took 6 months.

The purpose of this case study is to demonstrate that a correctly-run limited auction-style sale process will generally yield the best possible result. When buyers compete, the best proposal rises to the top and the seller receives the best price and terms. This is the process that Calder Capital follows with all clients.

Please contact Max L. Friar, max@caldergr.com, 616-439-1456, if you have any questions about buying or selling a company. Or feel free to fill out the form below to get in touch confidentially with Calder Capital:

 

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