How Rogerson Business Services Sold a Lower Middle Market Manufacturer Worth $36 million

How Rogerson Business Services Sold A Lower Middle Market Manufacturing Business For $36 Million

Get To Know The Seller

The business offered in this case was a lower middle market manufacturing company with a good number of employees in California. The manufacturer and distributor were in the construction industry specializing in the manufacturing of roofing materials and other precision parts. 

 

One of the owners started in this industry in 1986 and like many entrepreneurs, successfully tried different things. In the early 2000s, he took back the business having previously sold it, and made a series of decisions that created a steady stream of growth for the business. With some of his children joining the business, it brought new and strong skill sets that allowed the company to offer additional services to its core business, and each of these decisions so the company to grow and become more successful.

 

The owner of the business, based in San Jose, California, said: "There were so many things to get in place before we could decide if we wanted to accept the buyer's offer, how many times the deal came to a stop but was able to be revived, the importance of having the right advisors that were part of our team and how it took four attempts to close and I didn't think we were going to make it."

Many Challenges To Overcome


The challenge of selling any company is finding both qualified and motivated buyers. In this case, the sale of the business came with many unique challenges.

 

One of the challenges was that the owners of the business were approached by a company in southern California that wished to grow by acquiring a northern California location. This was challenging as one of the sellers did not wish to sell while one did and the other did not mind either way.

 

A second challenge was COVID-19 and knowing what the immediate future would bring and if this was the right time to do a deal. Coupled with COVID-19 was interest rates at an all-time low but also a steady rise in commodity prices.

 

A third challenge that created a large amount of tension in the deal was that the buyers initially came with cash to make the acquisition but this fell away fairly early in the negotiations and meant the buyers had to get finance in place from two lenders. These lenders were slow to make decisions and added tension to the transaction.

 

One of the sellers was quoted as saying: "It was draining with how many meetings it took over an 8-month + period, the emotional ups and downs and the constant need to get a piece of the puzzle in place before the next decision could be considered and made."

 

There were more than 4 challenges but the final challenge was trying to close escrow. The deal was scheduled to close in late August 2021 but was delayed a week, and then delayed a third time and finally closed the fourth attempt. If the deal didn't close the fourth time it would probably have never closed.


The Acquirer

The transaction was incredibly complex from a legal perspective. The sellers had a very experienced M&A attorney and the buyers had six or seven different attorneys representing different parties in the transaction.


Probably one of the pluses of having so many attorneys in the transaction was that they were all quite experienced and knew what needed to be done to organize the legal documents so if the seller and buyer wanted to do the deal, the legal agreements protected each party as best as possible.


The buyer had an acquisition expansion plan where the opportunity to expand operations covering northern California was a strategy that motivated closing the deal after several attempts. 


The closing was also complex due to the acquiring party including a CEO and the Chairman of the Board plus key upper management as well as the sellers being a family of three and also with some senior upper management that was staying on as one of the conditions of the purchase of the business.

The Seller

Despite the many challenges mentioned in this case study, the seller's team including Andrew Rogerson of Rogerson Business Services was able to close the deal successfully.

 

As was mentioned before, the escrow or closing process was very difficult as there were four attempts to close the sale with one week in between each attempt. Emotions were high from negotiations that started in early November 2020 and peaked with the sale of the business closing in mid-September, 2021.

 

“I think three important pieces are: One, be prepared for the unexpected, and two, learn from your advisors as they have the experience of having done this before, and three., make the best decisions you can with what you know.” Sell-side advisor, Andrew Rogerson said.

 

“It was an emotional roller coaster. Not to be repeated in a hurry." Said one of the sellers.

 

Also adding: "We were lucky to be organized at the beginning. This gave us the ability to make changes as necessary."

THE SELLING PROCESS

NEGOTIATIONS SNIPPET


This transaction was one of the most challenging and biggest in terms of the deal value. The deal value is worth $36 million and the seller started with the idea of selling a portion of the business but ended up selling the whole business.  


“The offer we received was unsolicited.  We had started to sell one of the divisions and then things just happened.  We were fortunate to have a team in place and could adapt on the fly.”


"I don't think there is anything you could avoid as we had a business broker advising us, attorneys advising us, a CPA, a bank, and more and the buyer had a Board, 6 or 7 attorneys, CPAs, and Private Equity Groups. two lenders, two appraisers, and more." Andrew Rogerson, M&A Advisor working with the seller, explains. 


"I didn't expect much, really, very little.  We started on what we thought would be a short journey in July 2020 during COVID-19 and finally closed the sale in mid-September, 2021." The manufacturer owner stated. 

DEFINITIVE AGREEMENT


The sale of the manufacturing business was a purchase and sale of assets. "If the deal makes sense including your personal and financial goals, accept the offer so you can pursue the many other things you can do in life." Said the seller.


Overall, the deal took eight months to complete, and more than twelve professionals that make up the deal team worked solidly to reach the definitive agreement. 


A definitive Agreement may appear to be a simple process, but to seasoned M&A Advisors like Andrew Rogerson in California, these transactions have a multitude of issues that must be resolved.


Keeping the deal confidential and away from employees is one challenge, and informing key employees is another. An experienced sell-side advisor has the ability to navigate and overcome the deal pitfalls to reach a final purchase agreement that is definitive. 


One way he accomplished this was to take conference calls somewhere away from the office so he wouldn’t be overheard discussing the sale. 


This is fairly common practice: news of a sale can result in disruptions to business, key employees leaving, and can even impact vendors and customers.

ESCROW IS A PLACE WHERE THE DEAL FLOWS


As was mentioned before, the escrow or closing process was very difficult as there were four attempts to close the sale with one week in between each attempt. 


 Emotions were high from negotiations that started in early November 2020 and peaked with the sale of the business closing in mid-September, 2021.


The closing was also complex due to the buyers including a CEO and the Chairman of the Board plus key upper management as well as the sellers being a family of three and also with some senior upper management that was staying on as one of the conditions of the purchase of the business.


Despite all these challenges, the deal was successfully closed with the help of Andrew Rogerson of Rogerson Business Services (RBS).  RBS works in the Lower Middle Market business-for-sale industry segment working with Baby Boomer business owners and other motivated sellers to reach a deal on their terms. 


Do You Want Results Like These?

Considering valuing and selling your business in California now or in the next 6 months, we're here to help you walk through the pitfalls of selling a business. Fill the form to get started!

Proper Business Valuation

Get your documents ready for a proper business valuation.

Best Selling Price

You have worked hard building your business. Now it is time to get the best value for your hard work.

Certified M&A Advisors

Get an M&A Advisor to help you navigate through the sell-side process.

Sell Quickly

It takes on average one year to close a deal on a business for sale. RBS Advisors does it quicker.

Value & Sell My Business

To cut down on your waiting time, simply fill out this short form

Landscaping Case Study | Sell My Business From |

Share by: