Case Study: Business Value Enhancement
Owner contemplated selling food service apparel manufacturing firm. Pursant determined the business’s potential market value and created a roadmap designed to boost it by as much as 30%.
A business owner contemplating selling his business was in an enviable position. Over nearly thirty years, as CEO, he had grown the manufacturer of chef and food service apparel into the market leader. Now, seeking retirement and lliquidity for himself and his family, he was uncertain what the company was worth to an acquirer. He tapped Pursant to advise.
After conducting a Deep Dive and financial analysis in partnership with the owner, Pursant’s team developed a Value Enhancement Profile® (VEP) for the manufacturing firm. This comprehensive report, proprietary to Pursant, considers the business from the perspective of a potential buyer, including an assessment of its quality, risk profile and its potential current market value. Pursant determined the company’s quality score to be high (86) and with a very low risk profile (14), indicating a strong overall position operationally, but found room for improvement in areas concerning personnel and customers. Based on this position and risk-adjusted expected future cash flow, Pursant estimated a potential market value of 6X-7X Adjusted LTM EBITDA. However, Pursant opined that the firm could increase enterprise value by 13%-30% or more by implementing meaningful changes to the business.
The VEP Pursant created for the owner included a roadmap to optimize the value of the business when ultimately acquired. Prioritized by urgency and potential impact, Pursant’s recommendations included reducing dependency on the owner through strategic additions to the leadership team; developing a product differentiation strategy to minimize risk of defending a low cost position; and product innovation to reduce customer churn. The owner executed these changes and has begun the process of engaging potential buyers, confident that he has put himself in the best position to profitably exit.