Middle Market Business Sale

A successful middle market business had been owned by a family for over 20 years. The business served over 2,400 customers in 19 locations throughout its state of operation. Since inception it had been led by a non-family member as CEO. For many years multiple potential strategic acquirers had been in regular contact with the family that owned the business, making clear their interest in gaining ownership of this well managed business located in a prime market for expansion.

In the course of evaluating their plans for the future, family leadership made a determination to sell the business and reallocate the capital to other family investment opportunities. An investment banker was hired and the sale process was commenced. Advising family leadership early in the sale process, I described the likely course that negotiations would follow. I explained how the existing favorable tax structure of the business (into which it had been previously restructured based upon another tax planning engagement) would be highly desirable to the prospective buyers.

Following the advice provided in these early sale process discussions, the seller was able to negotiate the maximum achievable sales price with the business operations executives representing the buyer. Subsequently, as I had predicted, the buyer’s tax advisor was brought into the process and requested a modification to the terms of the deal that would greatly benefit the buyer (i.e., securing for the buyer millions of dollars of tax benefits). Acting upon my coaching advice, the seller was able to display suitable outrage at this last minute “recut” of the deal and successfully negotiate to share in the tax benefits to be achieved by the buyer based upon the request of its tax advisor. Having achieved a significant increase in the final sales price, the selling family received payment of several million dollars for this Oscar winning performance.