Industrial Automation Company

Location

Rhode Island

Industry

Manufacturing

Business Broker

John Brice

Situation

BayState Business Brokers is a member of NEBBA, New England Business Brokers Association, which is the largest association in New England of business brokers and M&A professionals. BayState is also a member of NEBBA-Plus, the only co-brokerage group for business sales in New England.

A contract manufacturing business, owned by two business partners, a majority owner who was seeking to get out of the business and a minority owner, had been on the market for some time with a broker in the NEBBA Plus network.

BayState had received an inquiry from a prospective buyer through its website expressing interest in acquiring a contract manufacturer with a geography and revenue range specified. BayState Business Broker John Brice carefully reviewed the inbound inquiry, speaking with the interested party and identifying businesses on the market including a review of the listings on NEBBA Plus. During this initial process in working with the prospective buyer, John believed the Rhode Island contract manufacturing business could be a fit for this buyer.

BayState Business Brokers’ Approach

As a buyer’s representative in the business brokerage process, Brice was working to find his buyer the right business at the right price to meet his client’s goals. With a technology background, Brice had the experience and understanding to work closely with his first-time buyer, an MIT-educated professional seeking to acquire a manufacturing business with a solid customer base and attractive cash flow.

The sellers had met with many interested parties and had rejected the interest of many prospective buyers who were viewed to be too young, inexperienced and not deemed ready to acquire and run the business. Brice’s prospective buyer could also have been perceived as being inexperienced as a first-time buyer of a business, but he distinguished himself throughout the process with his preparation and his business acumen.

From an early detailed review of the CIM (Confidential Information Memorandum) to site visits and the due diligence process, Business Broker Brice guided and advised his prospective buyer so buying a business for the first time was not a focus or concern of the two owners. The site visit was an important milestone in the deal moving forward as both owners saw firsthand his intelligence, experience, intent, and seriousness including being well-prepared to secure financing. The site visit was monumental in furthering the conversations and moving the deal forward. Additionally, he was surrounded with a strong team of professional advisors that BayState Business Brokers coordinated, including introducing him to an accountant for tax advice on the transaction.

With a letter of intent in place, Brice quarterbacked the process as the goal line of closing drew closer. Details of the P&S were finalized including the employment terms to attain continuity of leadership with the minority owner remaining on the management team.

As with any such transaction, there seems to always be at least one hiccup and in this case the hurdle was to secure insurance as the policy could not be transferred from the current owners. Underwriting has generally become more complex and expensive over recent years and underwriting this business was no exception. Unfortunately, the underwriting process delayed the closing by several weeks.

Results

Buying a business for the first time can be a daunting undertaking. With business broker John Brice as the buyer’s representative, all phases of the transaction were managed and prepared for in advance. The buyer’s advanced planning including working to secure financing early in the process through Live Oak and securing an experienced business broker in John Brice at BayState Business Brokers was all part of a well thought out and well-executed plan.

The buyer who had found BayState Business Brokers through an online search, achieved his goal of buying a manufacturer with good cash flow and a solid customer base. He acted quickly to start making improvements to attract more customers and grow the business.