$3 million Cocoa Warehousing Operation. $9 million debt. The Company is 50% owner of a cocoa melting processor company. Company invested in the expansion of the Melting Business to Provide Cocoa Deodorizing Process. Partner initiated the process to buyout Lyons & Sons in Cocoa Services. MorrisAnderson hired to represent the Company’s interest in the negotiations.
- Annual revenue was $2.5 million with EBITDA of $.5 million and current Debt of $9 million to secured lender and $7 million to ownership
- New Deodorizing Business was intended to increase sales and profits dramatically to cover debt service
- Company was in the process to refinancing when the partner requested the buyout
- Negotiations contentious as partners don’t trust each other
- Company’s new operations only 3 months old so difficult to project full impact of new business
- Heavy Debt Load, made valuation difficult
- Partner only willing to negotiate through attorney
- Valued the company based on growth of new business.
- Able to realize Large Profits due to high Gross Margins of new business
- Client willing to buy or sell ownership position, while partner only wanted to own. An advantage in the negotiations
- Used the rules of the Partner’s Operating Agreement to our advantage in the negotiations, allowing us to always be one step ahead
- Increased the original offer of $1.8 million to $5 million
- Worked with current lender as deal dragged on for 6 months before finally closing and bank being paid in full