Deal From Heaven: Worth the Wait

portrait of doug robbinsDoug Robbins is an internationally renowned Canadian Business Intermediary and Business Broker. He is a seasoned businessman having completed more than 1,000 assignments relating to advising clients on Mergers and Acquisitions (M&A); valuations; transferring businesses to the next generation; partnership resolutions; refinancing; along with numerous other consulting activities. He has completed more than 400 business sales; and invested in 32 businesses. Doug is a licensed Real Estate & Business Broker in the Province of Ontario. Doug has always actively supported the M&A profession through investing significant time and energy by way of memberships, lecturing, and presenting workshops in numerous M&A organizations.

Fact Pattern

Industry: Distribution, cleaning products

Size by Revenue: started at 3,000,000 wound up at 6,000,000

Price/Terms: initial offer 6,000,000 final offer 14.5 million

Problematic Characteristics: Poor distribution  & Family interference

What Happened?

A client came to us with revenues of $3 million, EBITDA of $500,000 wanting to sell due to family interference. Our comprehensive business assessment (COSATA®) indicated that while the company had a proprietary patented product that was consumable, it was poorly organized to sell its product. It’s product was being sold in a market radius of less than 300 miles. We recommended methods of dealing with the family issues and encouraged him to set up a distribution network of at least 600 mile radius. Two years later, he called say he had unsolicited offer for $6 million. During the 2-year interval, he had followed our advise and revenue had doubled, and profits tripled.

We then research the unsolicited purchaser and determined that he was selling similar products in a market area of about 1,000 miles. We identified his competitors and learned there was a competitor that sold similar products to similar customers in a world market.  We approach that competitor indicating that we had a company for sale with a patented product line.  Their opening offer was $12.5M  While interviewing the larger purchaser, we learned that they believed that they could sell $25 million for this product per year within 18 months of acquisition through their existing distribution network.  The final price was $14.5 million cash.  It was an easy transaction from start to finish with a requirement for our client to stay with the purchaser for a couple of years with significant bonuses.

What Was The Takeaway?

Take the time to understand everything, I mean — literally everything about a client: his issues, problems, desires, wants, needs, opportunities, impediments to a sale, value enhancement opportunities, etc., and then do the same with buyers.

We need your stories too! 

So – successful deal or failed deal – we need your story.

All you need to do is complete the Deal From Hell form (without any client identifying information) and email it to Communications Committee Chair Kathlene Thiel. We will set up a call for background and issue a final version for your approval.