Success Story
5 min read

Paving the Way to Entrepreneurial Freedom: A Transition to Business Ownership in 7 Months

Explore how we guided a client through the full acquisition of a longstanding paving and sealing company, achieving a 3.1x earnings multiple. This case study delves into our strategic approach to identifying and correcting financial discrepancies, realigning deal valuations, and navigating operational due diligence to secure a deal that fulfilled our client's dream of business ownership and autonomy.

Written by
Will Pouncey
Published on
October 16, 2023

Overview

This journey unfolds with our client, who sought a transition from a corporate role in Florida to entrepreneurial freedom in Tennessee. Their goal: to acquire a business allowing them to build equity, face new challenges, and enjoy the liberty of ownership. We zeroed in on a suitable target, a decades-old paving and sealing company poised for a transition due to the owner's retirement. Over seven months, we untangled financial complexities, reassessed valuations, and forged a path to a successful acquisition.

Key Deal Metrics

  • Advised the: Buyer
  • Type of Deal: Full Acquisition
  • Timeline: 7 months
  • Earnings Multiple: 3.1x

Objectives & Reasons for the Deal

Buyer's Objective

Leaving the corporate world behind, our client was intent on purchasing a business that offered not just financial stability, but the freedom to steer a company according to their vision. The goal was to build equity and embrace new entrepreneurial challenges.

Seller's Objective

The seller, ready to step back after years of active business, was looking to hand over their company's reins to someone committed to preserving its legacy while injecting fresh energy and perspective.

What Went Right

Uncovering Financial Discrepancies

Our meticulous review of the company's financials revealed significant inconsistencies in reported cash flows. By identifying these early, we recalibrated the company's valuation, preventing potential financing rejections, and avoiding a foreseeable negative cash flow situation for our client.

Efficient Revaluation

Realignment of the company's worth was not just about numbers—it required strategic negotiation to ensure both parties felt confident and valued. This realignment was pivotal in setting the stage for a deal agreeable to both buyer and seller.

What Went Wrong

Extended Due Diligence

The operational due diligence and closing stages were more time-consuming than anticipated, underscoring the need for more streamlined communication, stricter deadlines, and earlier initiation of data gathering.

About the Company

The acquired business has a rich history in Tennessee, offering paving and sealing services primarily to retail customers, with a substantial portfolio of B2B accounts. With a seven-strong workforce and a 5,000 square-foot operational base, the company prides itself on a familial ethos and a reputation for excellent customer service, cultivated over decades.

Deal Partners

Our partnership with 44 Business Capital, a division of Berkshire Bank specializing in SBA lending, proved indispensable. Their expertise in diligence, particularly in affirming enterprise and asset values, coupled with their role in facilitating the closing process, was crucial to the deal's success.

Conclusion

This acquisition underscores our commitment to navigating complex buy-side transactions, emphasizing our proficiency in uncovering financial discrepancies, negotiating fair valuations, and managing extensive due diligence processes. Our approach goes beyond transactions; we're about fulfilling entrepreneurial dreams, ensuring legacies, and paving the way for business ownership transitions that resonate on a personal level. If you're eyeing the freedom and challenge of owning a business or seeking to hand over your life's work to capable hands, our expertise, integrity, and resources are at your service to make that transition seamless and rewarding.

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