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VEER Supports Several Successful 2017 Business Transitions

Management Buy-ins, Partner Buy-outs and Outright Exits

2017 has been a busy year for VEER and our clients.  While several other engagements continue, on track to achieve the transition objectives of our business owner clients, we thought we would share a few happy stories from the first six months of 2017:

We met “Jack”, owner of a Fraser Valley horticulture company, at a conference in June 2016.  Jack was interested in selling a division of his company, while continuing to run the rest of the company for a few more years.  We completed a Value Enhancement and Exit Readiness Assessment, which included our estimate of how purchasers would value the division, an analysis of exit options and our recommended actions to achieve his objectives.  Once Jack and his business were ready to proceed, we introduced him to three potential M & A advisors, worked with them to ensure they fully understood the situation, and invited them to make proposals to Jack.  One advisor was the perfect match, started marketing the business in January 2017 and successfully completed a sale of the business on May 31 (less than a year after we first met Jack), at a price consistent with our initial estimate. After the closing, Jack told us, “Your work with me was really invaluable in a number of ways.  You allowed me to move forward with conviction and an assurance I was on the right track.  Your valuation provided a check on the business value calculation provided by our advisor, so that provided some extra confidence.  I think you provide a valuable service, and you are in the right business for the times.”

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“Steve” and “Mike” own a successful, second-generation construction contracting company, and had tried for three years to bring the next generation of managers into the ownership group, to ensure the business legacy survived their eventual exit.  They retained VEER in May 2016 to work with them and a group of three managers to make it happen. VEER prepared a business valuation that both groups supported, and proposed a phased-in, tax-efficient structure that made the managers 50% owners of the business over four years.  We introduced a financial institution to fund the initial share purchase, drafted a Letter of Intent that worked for all parties, and spent hours with the new management team helping them understand all aspects of the transition.  We worked with lawyers and accountants representing both groups, and were delighted to attend the deal closing on June 30.  VEER will continue to work with the ownership team to support the transition of roles within the business, so that the objectives of each owner is achieved.  According to Steve, “this deal would never have happened without VEER”.

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“Andrew” started a niche consumer products distribution business in 2009, with the financial support of a silent partner familiar with the industry.  Based on their initial equity contributions, Andrew owned just 20% of the company, but after 8 years in the business, he felt the time was right to buy out his partner and grow the business on his own.  Andrew retained VEER in May 2016, but based on our initial analysis, we advised Andrew that there was work to do first.  We worked with Andrew to improve financial reporting and business processes, which dramatically improved the balance sheet of the company.  By early 2017, the time to approach Andrew’s partner was much better.  VEER prepared a business valuation that both parties could support, negotiated a structure for a buy-out and drafted a Letter of Intent that was executed by both parties.  We worked with Andrew’s bank to structure a new operating line, and worked with lawyers from both parties to finalize a share purchase agreement.  The deal closed in July 2017, and VEER continues to work with the business to improve their financial and operational processes.

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“Ashley”, “Amber” and “Amy” are the owners of a very successful and fast-growing manufacturer of business image products.  When we met them in November 2016, they told us that two of the shareholders were interested in selling their shares right away, while the other was prepared to stay on for a few years, while taking a few “chips off the table” now.  They retained VEER to provide a Value Enhancement and Exit Readiness Assessment, which included a comprehensive review of their objectives, a “purchaser-perspective” business valuation, an analysis of potential purchasers, a review of their optimal pre-sale tax structure, and recommended actions to enhance the company’s value and sellability.  Once the owners were ready to proceed, we introduced them to three potential M & A advisors, worked with them to ensure they fully understood the situation, and invited them to make proposals.  Due to the complexities of the business, we spent several hours with each advisor, explaining our view on the factors impacting value and sellability.  In May 2017, the owners selected their advisor, who will be introducing the business to a targeted selection of potential private equity and strategic acquirers in the coming weeks.  We will continue to work with the business and its advisors, and anticipate a transaction at a price even higher than our original value estimate.

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“Curtis” owned a successful and growing franchiser of business services.  In 2015 we worked with Curtis to buy out his retired business partner, allowing him to successfully grow the business.  However, in early 2017 Curtis decided the time had come for him to retire, and asked us to help facilitate a sale to the owner of his largest franchise.  VEER prepared a business valuation and assembled a Confidential Information Memorandum that gave the franchisee enough information to evaluate the opportunity and agree with the value.  VEER negotiated the terms of the transaction and drafted a Letter of Intent that was executed by both parties.  We assisted the purchaser with due diligence and worked with legal advisors of both parties to complete a share purchase agreement.  Both parties were thrilled when the sale closed on June 30, 2017.  According to Curtis: “I could not have completed the deals with my partner last year and our franshisee this year without your assistance. For this my family and I are very grateful. I tell everyone I know who are considering buying/selling business to contact you.”

 

Every week, we are introduced to business owners contemplating an exit from their business.  In almost every case, they do not know the value of their business, their exit options or the first step to take towards a successful transition. When we look further, many are not properly structured to minimize income taxes on a sale, and most can take steps to enhance value and sellability.  The successful transitions of our past clients energize us towards creating happy stories for our current and future clients.  It is very rewarding to know that we make a positive difference in the lives of our clients.

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