North America

Success Story

Stagnant market research business with falling sales

Lack of owner interest was reflected in this stagnating business. During the year of the sale the company experienced a loss of $150k for the first time in its history. ROCG stepped in to create an alternative to closing the business and staged it for a strategic buyer… the results were incredible! 

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The Business Was

  • Specialized in executing marketing research contracts for Governmental agencies.
  • Despite having an excellent reputation for quality, business was stagnant because the owner had withdrawn from the business.
  • Operating as the only significant tenant in a small building personally owned.

Problem

  • Owner had lost interest in business and decided that he wanted to sell the company
  • During the year of the sale, the company was experiencing a loss of $150k and this was the first time that the company had ever lost money

Solution

  • Prepared a calculation of business value for the owner in order to ensure that his expectations were in line with the market.
  • Ensured business continuity by creating retention bonuses for key employees
  • Prepared a Sales Memorandum as a marketing oriented document which would emphasize both the unique market niche and the substantial barriers of entry in the Quebec Governmental Market Research industry
  • Therefore, marketed the company to a major market research player operating elsewhere in the country with no business in the Quebec market, and no experience or expertise in the governmental market research niche
  • Structured and negotiated the sale with owner financing over 3 years with very conservative earn out targets, a one year favorable consulting agreement for the exiting owner, a 2 year company lease for the occupied premises guaranteeing the owner rental income and the ability to sell the building independently at a later date

Results

  • The business was sold to a strategic  industry player who agreed to pay $1,450,000 in value to owner over a 3 year period (almost 10x previous year EBITDA)
  • The building was subsequently sold for over $700k

Summary