The ultimate compliment for a successful entrepreneur? An offer to buy their business. While the temptation to accept the first offer may be strong, it is in the owners’ best interest to consult a financial advisor to ensure they are getting the best deal for the years of hard work they’ve invested.
That’s where Kruggel Lawton’s independent membership in the BDO Alliance USA comes in. It all began in 2014 when our client, Smart, LLC, a kitchen and bath cabinet manufacturer, reached out to Partner Bill Heffelfinger about an unsolicited offer it was considering. Heffelfinger and Senior Manager Margene Zink came back with results of preliminary analysis and strongly advised that Smart pass on the offer. Knowing the many resources available through BDO (the 5th largest accounting network in the world), Heffelfinger recommended they bring in BDO Capital to help facilitate any future offers. What resulted was a price for the business that represented a 50 percent premium to the original offer.
Based on a resurgence in building products deals, the company’s growth trajectory, and a view that better offers were likely available, BDO Capital recommended that Smart’s owners reject the proposal and prepare for a broader sale process in the next 12-18 months. BDO Capital further developed the relationship with Smart by providing industry updates and mergers and acquisitions trends, in addition to guidance on sale process preparation.
Smart ultimately decided to engage BDO Capital in mid-2016 to approach a broader group of potential buyers and conduct a two-step auction. In less than six months, a deal was closed with ACProducts, Inc., a portfolio company of private equity firm American Industrial Partners. Not only was the deal a great strategic fit for Smart, but it represented a greater than 50 percent premium to the original unsolicited offer.
“Smart’s shareholders might have unknowingly accepted a large discount for the business if they neglected to speak with a financial advisor with in-depth industry experience that could advise on deal timing and deal terms,” says Managing Director Kevin Sendlenski, who led the transaction for BDO Capital. “Given the volatility and cyclical nature of the sector, clients need to be kept informed of changing market dynamics to maximize value.” You can read the full Smart, LLC, deal announcement on the website of BDO Capital Advisors.
By supplementing our existing services, BDO Alliance USA brings us additional tools to better serve our clients with greater flexibility, efficiency and cost-effectiveness. We are very well-qualified to meet your assurance, tax, business valuation, and consulting needs. Our relationship with BDO allows us to add value to your organization on other business challenges and opportunities if appropriate.
William D. Heffelfinger, CPA, CGMA - Partner
Phone: 574.289.4011, x243