This case study highlights the success of an M&A transaction involving selling a company with a co-owner . The transaction was facilitated by our team at Walden, and provides useful insights for business owners who are selling the business with two desired outcomes.
Selling a manufacturing company is an intensive process that includes a lot of unknowns. Add in the nuance of the company being family or founder-owned, and you have a potential dynamic far more delicate than a business transaction.
If you are the owner of a family or founder-owned manufacturing business, you may resonate with the transaction and story of Lisa Wisnecki.
Lisa was the owner-operator of a manufacturing business with a silent co-ownership partner. The two had very different sales goals.
The Seller
Artisan Custom Closets has found great success since its inception in 2011, spawning from a small metro Atlanta startup, into achieving a sprawling footprint across the Southeastern U.S., serving more than 20,000 homeowners.
The Georgia-based closet and cabinet manufacturer and installer’s workforce had grown to include nearly 100 employees and a satellite location in Tennessee, and unlike many manufacturing businesses, maintained operations through the COVID-19 pandemic.
As operations expanded, Lisa decided she wanted to remove herself from day-to-day oversight and take on a new business development role within the company. Bringing in a new owner would free the seller to pursue growth by acquiring other manufacturing businesses through her industry knowledge and connections.
The privately owned company also had a second owner, a silent partner who was not actively involved in running the business. This meant the transaction needed to satisfy the needs of both owners and their individual aspirations. Walden has experience working across many industries and with businesses with multiple owners. The firm’s principals worked with both of the owners to achieve their desired outcome.
Marketing the Transaction & Sales Goals
Walden principals Dean McDonald and Sara Burden worked closely with Lisa and her partner to prepare them for the transaction and began marketing the business to suitable buyers.
“I had previously sold manufacturing companies,” says McDonald, “so I had a strong understanding of the preparations needed to ensure the transaction would be successful.”
Dean McDonald, Principal, Walden Businesses, Inc.
Each owner had a specific goal the sale would have to satisfy.
Lisa’s plan was to continue at the company in a new leadership role. That meant her prospective buyers weren’t just purchasing a business; they were entering into a new partnership requiring alignment on a long-term vision.
The sale would also need to generate a substantial profit for the silent partner’s exit.
“We needed to secure a sufficient purchase price for the company to make it profitable for the silent partner to sell his interest,” says McDonald. “During the planning phase, we helped the company organize its accounting information to leave no doubt the company was thriving and growing. It would allow us to maximize the purchase price.”
McDonald and Burden were unwavering in their commitment to defend the value of the business.
“The company was growing rapidly, so we valued the business based on its financial history and financial projections for the coming months,” says McDonald. “Some of the buyers didn’t agree to the price, and that was okay. We kept looking.”
The Buyer
Georgia Oak Partners, a private equity group Walden principals had worked with in previous transactions, proved to be the most promising buyer.
“We found a really good private equity group [who] understood our client’s market space, and they were committed to growing in that space,” says McDonald. “They felt the price was something they could work with.”
Walden’s principals met with the buyer repeatedly to make sure they were a good match and verified the buyer was willing to make the transaction under the conditions of retaining the active partner.
The involvement proved fortuitous. Because the buyer was new to the space, they were committed to relying on the active owner’s knowledge to keep the company operating smoothly during the transition. They also recognized that scaling the business would require her industry expertise to further that growth.
McDonald also oversaw meetings and negotiations between the companies during due diligence. The M&A process can take months or even years. It’s important to find buyers who are truly committed to acquiring the company and are willing to work through the inevitable challenges that arise during a transaction.
“Unexpected delays occurred which were outside anyone’s control. That happens sometimes during the M&A process,” says McDonald. “But both parties were deeply committed to completing the sale. That’s why it was so important we found the right buyer.”
Closing the Sale
After a six-month deal process with Walden, every stakeholder got what they wanted out of the transaction.
The active partner continued to lead Artisan Custom Closets for a few months after the sale was finalized. She transitioned to her new advisory role after her replacement was hired and onboarded.
The silent partner exited the business with favorable profit, and the new owners are thriving in their new market space.
“The buyer has purchased another company in the industry since the sale,” says McDonald. “The active partner helped facilitate that process in her new role with the company.”
What Our Clients Had to Say
| SELLER Statement | Artisan Custom Closets | Lisa Wisneski “Working with Walden Businesses was definitely the right choice for Artisan Custom Closets. Dean was responsive, informative, and encouraging when things seemed impossible. I highly recommend Dean and Sara to anyone thinking of selling their business.” | BUYER Statement | Georgia Oak Partners | Michael Lonergan “Dean and the Walden team were enjoyable counterparts in the Artisan transaction. They were thoughtful and commercial in their approach every step of the way. The communication between our collective teams was excellent, and I believe it helped their client meet their objectives. We look forward to working with the Walden team again.” |
Do you have a question about selling your manufacturing business? Connect personally with Dean McDonald or Sara Burden, or complete the form below.
