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By Telling Strategic Stories

Success Stories

Sold to Paul Mamane & Marshall Acquisition Corp.

What made the business attractive to buyers?

  • Niche specialty products within the tube industry, including
    • Size of Tube
    • Labeled Product
  • Quick shipping of product
  • Ability to custom design solutions for customers

Challenges:

  • Market and product are mature
  • Business had significant investment in inventory (more than they likely needed for normal operations)
  • Owner wanted the real estate to be sold along with the business sale. While property was in a great location, real estate was older and not efficiently laid out for modern manufacturing.

 

Background:

The Company is a regional leader in the manufacturing and distribution of spiral and convolute paper tubes.  They are the only manufacturer in New England with the ability to manufacture tubes up to 42” ID and 1” thick.  Most tubes are used in industrial application, however there was a nice demand for tubes with custom exteriors typically used in packaging and marketing applications. 

A few years earlier, the Company hired senior managers for a second facility to possess institutional knowledge a buyer would benefit from when the owner left.  This proved important in getting the buyer’s financing arranged.

Why did the owner want to sell?

The owner took over the business from his father-in-law who sold the business to both our client and the founders son.  After several years, our client bought out the founder’s son, owning the business 100%. 

As the owner approached retirement, he worked to sell the business himself.  When he thought he had a deal with a buyer, his wife physically moved across country to be closer to their grandchildren, leaving the owner in an apartment. She told him to sell the business and join her when he could. With limited personal equity to invest, the buyer found the financing difficult to raise.  The buyer and seller worked together for six months in a futile attempt to hold the deal together.  Ultimately the buyer proved not to have sufficient equity to buy the business, the seller grew frustrated and the deal collapsed.  

Beacon’s Role and Results

Beacon was brought in to tell the business’ story.  We created:

  • a full profile on the business for buyers and their advisors to better understand the industry, the customers, its steady history, and the consistency of the investment opportunity. 
  • A professionally shot and edited video of the plant production in order to demonstrate to those unfamiliar with the tube industry how a tube is manufactured.
  • Created a multi-tabbed excel file presenting financial, employee and customer data in a way that protected confidentiality but enlightened those interested in proceeding deeper into the process.

The biggest challenge was finding a buyer who wanted to buy the business and this specific piece of property given its age and awkward layout.

The Process

Beacon began the process by approaching several competitors.  Each made either low offers or offers to purchase only the specific customers of the business they desired.  We then approached Private Equity and entrepreneurial buyers.  Many loved the business, but were not excited about owning the real estate.  Several made offers for the business without the real estate desiring the flexibility to be able to merge both production plants into one larger facility within a few years.  The owner passed on the opportunity to sell to those qualified buyers.

After seven months, Beacon identified a buyer who made an interesting offer for both assets.  The parties negotiated over 10 days to arrive at a mutually agreeable set of terms.

Beacon then kept due diligence, legal and banking process on track to bring about a timely closing.

During the due diligence process, a potential environmental challenge was uncovered on the property.  Beacon advised the parties to bifurcate the deal into two transaction to keep the process moving while additional environmental testing was performed.

The closing on the sale of the business occurred 90 days after the offer agreement was signed.  Shortly thereafter the environmental testing was completed without a finding and the parties proceeded to close on the real estate 60 days later.

One story of note, two weeks before the closing, New England had a spring snowstorm that produced a significant amount of snow.  When the air warmed and the snow turned to rain, the snow that had previously landed on the roof acted as a sponge.  The roof of the newer facility then backed up and water seeped through the roof flooded the facility.  Water in any plant is not good. Water in a plant filled with paper products can get ugly.  The team worked hard to get the plant operational quickly and the advisors worked diligently to adjust the agreement to acknowledge the insurance claims and adjustments necessary to close on time.