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A New-England Specialty
Paper Manufacturer
has been sold for approximately $15 million to a
Private Investor Group
The undersigned initiated this transaction
and acted as financial advisor
Crallé & Company
The Situation
The owner of a New-England specialty paper
manufacturer, an individual, wanted to sell his
company which, two years before, had been marketed
by a major-bracket New York investment banking firm,
but which transaction had failed to close.
Financial results since had been disappointing and
several key operating mangers had been replaced.
The company was operating at close to 100% capacity,
with large capital expenditures pending.
The Assignment
Crallé & Company received the mandate to re-market
the firm. The field of potential financial
buyers was severely curtailed because many had
already reviewed the opportunity two years earlier
(colloquially, the company had been "shopped
around"). The owner recognized that, with
revenues of only $25 million, the company was too
small to be of interest to a strategic buyer.
The Process
Crallé & Company planned and executed a marketing
program that was carefully focused to assure that
only qualified offerors were approached, and to
protect the company's reputation from further
damage. The information memorandum emphasizing
the relative predictability of cash flows and
capital expenditures. Four qualified financial
buyers were introduced and entered into due
diligence and, about 90 days later, the owner
received two bona fide offers approximately the same
in terms of total net value, although structured
somewhat differently.
The first offer required that the seller warranty
his representations of projected financial
performance by tying about 20% of the total purchase
value to an earn-out arrangement during the first
two years after closing. The remaining 80% of
value was fully committed and ready, with no bank
financing needed nor seller financing requested.
A second offer required substantial bank
financing and allocated about 20% of value to a
seller's note payable in installments beginning
about five years after closing.
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Crallé & Company, Incorporated
Bronxville, New York
914-779-3331
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