Janitorial Products Distributor.
Preserving Personal Wealth Through Strategic Sale
Facing financial turmoil jeopardizing retirement and credit, the sale of the company to the industry’s largest competitor safeguarded the client’s personal net worth.
The Challenge
Our client owned a company in the janitorial products distribution industry. He competed with national public companies in a price-sensitive industry, and as a result, he borrowed money for working capital that was ultimately used to fund the business’s losses.
Our client was burning his personal net worth and digging into his retirement accounts to keep the business going. He found himself having trouble buying from his suppliers because his credit was overextended, which in turn impacted his ability to service his customers.
There wasn’t enough working capital to reinvest into any growth initiatives to improve the top line. He began to lose key employees. There came the point where the bank wanted to get out. He hired Next Point to help him frame the current situation and where the break-even points need to be so that he can turn the business around to a cash-neutral position, determine how much capital and time that would take, and execute the action plan.
Our Solution
Next, Point focused on the owner and quickly framed the issues, options, and gaps and what he personally had at risk. It was quickly determined that continuing to invest in the business personally was no longer a viable option.
Next Point worked with the owner to develop and evaluate several options, including bankruptcy, winding down the company and liquidating its assets, or finding an outside strategic buyer.
Our client determined his best option was to find a buyer, but Next Point needed time to execute that process. While working through the divestiture process on an expedited time frame, Next Point simultaneously liaised with the company’s bank, vendors, customers, and other stakeholders to negotiate acceptable terms for keeping the business running so that it could be sold as a going concern. The company quickly received five letters of intent from strategic consolidators to evaluate.
The Turning Point
The Company was sold to the largest public company in the industry, which happened to have additional capacity and was already delivering different products to the same customers as our client. The business owner was able to preserve his personal net worth.
Services Performed
