Manufacturing Company Transforms M&A Plan

Company Description: CNC Manufacturing Company

Markets Served: Military, optical, aerospace and medical

Ownership: Private-single owner

In Business: 25 years

Business Engagement Initiative:
The PEN Group, LLC. Was engagement in 2012 with the task of preparing the company for sale.

The initial strategy was to follow a traditional approach to position the company for sale to potential strategic buyers. The company had a history of growth and profitability. However, a disproportionate volume of sales was to the military market. A sudden change in the application of emerging technology in the military market adversely affected the company sales and profitability over the period of two sequential years. Faced with a major sales rebuilding challenge, the owner decided to test the market to potentially sell the company. The Pen Group securing two Letters of Intent. However, the net proceeds did not meet the owner’s expectations.

Working closely with the owner to achieve his goal to sell the company, the PEN Group Chose a uniquely different approach. The new plan was to identify a manager/buyer who was interested in acquiring the company over a period of years. The buyer would assume the operational management responsibility and work closely with owner to learn the business. The new owner would also assist in the rebranding and development of new markets to replace the company’s heavy reliance on the military market. A qualified buyer was located and a mutually agreeable transition structure was established.

The owner is now enjoying a comfortable exit strategy that meets his needs and ensures the on-going success of the company.

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