Turn a Big Company’s Division or Product Line into a Freestanding Business
A $1B+ company with a portfolio of high-tech software and hardware products owned a separate division, which produced older, low-tech products that were determined by the parent company to be non-core. The divisional management included first-class marketing, sales, engineering and production talent. Despite the profitability of the division, it no longer merited the attention, focus and love of the parent company, which decided to sell the division. Convinced that the division would be difficult to sell due to its niche-oriented product line, the parent asked division management to make a proposal to buy it. We assisted management in structuring a sensible offer and securing a senior credit facility. We also provided subordinated debt and most of the equity financing, management taking one-third of the equity. In the first year of operations, we helped to source, interview and hire much of the finance, administration and other support needed to turn this plant into a company that could stand on its own and created a modern financial and management reporting system that was useful to insiders and outsiders. In ensuing years, we added value by negotiating a key foreign patent acquisition, implementing a management stock purchase plan, sourcing and negotiating an acquisition in a related field, assisting in negotiations to acquire two other higher-tech product lines, finding and closing on new senior credit financing, lending additional subordinated debt, and negotiating a joint venture in Canada with the other major competitor of the division’s old product lines.
Transferring the Family Business
The owner of a wire and cable manufacturer was nearing retirement, and wanted to find a way to transition his company to his son who was active in the business. He did not want to burden his son with debt, and he wanted to be able to provide for his other children who were not directly involved in the business. We partnered with the son to purchase the business. We were able to structure the purchase in a way that complimented the owner’s estate planning needs and provided the son with a significant upside potential for his investment in the company going forward. We added value to the company by helping the son to identify strategic acquisition targets and IT strategies that would help top and bottom line growth. We also helped the son build the robust team that would be necessary to take the company to the next level, including the finance and systems staffing.
Growing and Selling a Small Business
A small, fledgling Pittsburgh software firm with plenty of bright ideas sought outside advice in growing up to be a significant player in its market sector. We provided advice on personnel and compensation, strategic alliances, tax and finance, office space, etc., and, after a few years, structured the terms of a lucrative sale to a public company. The founder and CEO of this firm was employed as a senior manager by the buyer for a few years and then returned to Pittsburgh at our suggestion to lead another software company in which Stonewood became a major investor.