The Challenge
The Company had an eight-year history of steadily growing sales and profits. It was facing growing competitive pressures in a consolidating industry from national businesses offering a broader range of sales and services. The shareholders were reluctant to make the significant additional capital investment required to remain competitive.
True North’s Role
A principal of True North worked with the founder to develop a strategy to help expand the business, while allowing the owners to both obtain liquidity and retain an interest in the future growth of the business. After screening a number of potential suitors, the owners elected to sell the Company to an investment group, where the acquisition closed contemporaneously with the purchase of eight similarly situated companies and the public offering of the consolidator’s stock. The transaction enabled the Company to increase its competitive edge by being part of a larger national company, offer a broader range of products and increased services, and get access to better terms for purchasing and financing. Selling as part of the roll-up IPO enabled the three owners to obtain a large portion of the purchase price in cash, participate in future growth through ownership of a significant amount of stock in a NASDAQ-listed company, and receive long term employment contracts.