Case Study of Why Using Focus Advisors to Sell Your Business is a Great Decision

Our client was a large MSO in an attractive top 25 MSA, attractive because of their volume and because of their locations.  The owners were in their 50s and 60s and ready to exit the business.  They started talking with some of the consolidators in 2019 as well as some private equity (PE) firms.  After sharing substantial financial information on their business with a PE firm, they received an offer for about 60% of revenues. While the buyer offered a high multiple of EBITDA their estimate of EBITDA was actually quite low.  The sellers knew their EBITDA was way higher than the estimate. They believed the offer was grossly undervalued and they told the PE firm “No way.” 

Subsequently, they reached out to a firm they believed would be their most likely buyer and offered to sell the business at a significantly higher percentage of revenues.  That prospective buyer told them “No way.” 

Frustrated with the offers and with the piece-meal process, they reached out to Focus Advisors through a common industry acquaintance.  After sharing some of their financial information, we conducted our own more detailed estimate of EBITDA and gave them a proposal with a range of possible values.  Our fees were tied to the improvements in value above the offer they had previously received. 

Initially, we gathered substantial financial and operating information from our client.  We reconstructed their EBITDA which was substantially higher than previously estimated by the PE firm.  We created a 40-page Confidential Information Memorandum and circulated it to 10 prospective buyers – from consolidators to regional MSOs to PE firms.  This phase of the transaction took about 8 weeks. 

We went to market and circulated it to 10 prospective buyers – from consolidators to regional MSOs to private equity firms.  Approximately 6weeks later, we received 4 firm Indications of Interest and 4 Letters of Intent.  

Our client chose the buyer they considered the best fit for themselves and their employees.  A final LOI was negotiated and the parties were set to move forward.  Subsequently however,  the sellers received an alternative bid that was even more compelling.  This one they accepted.   

The buyer’s due diligence and negotiation of a Purchase Agreement proceeded at a rapid pace over the next 7 weeks.  Focus helped the seller find capable attorneys experienced in MSO transactions and coordinated the process including advising on key terms and conditions. Lease extensions and assignments added complexity to the transactions.  With multiple properties and landlords, Focus assisted in negotiating new lease terms, conditions, and assignments. 

Many times the process of sale and integration can be full of misunderstanding and leave a bad taste in the mouths of both buyer and seller. Because a transaction is never fully completed until the new owner has the keys, we assisted both the seller and buyer in preparing the company for the transition and integration into the new owner’s operating systems.   

Results:  Our client was thrilled with the sale and the process that help him exit the business at a premium value.  His former general manager has moved into a true executive role with the buyer.  The insurance clients are happy.  The improvement in value above the original offer was more than 8 times our fee.   


About FOCUS Advisors and David Roberts:

FOCUS Advisors (focusadvisors.com) is a full-service FINRA-registered M&A advisory firm serving collision industry entrepreneurs looking for advice about growth and sale options, representing them in raising capital or selling their businesses. With more than 25 collision industry transactions in the last 6 years including recent sales of large MSOs such as Pride Auto Body, FixAuto USA and Auto Center Auto Body in Southern California, Price’s Collision in Nashville and Herb’s Body and Paint in Dallas, David Roberts is the industry’s leading advisor to MSOs and single shops. As the co-founder, Chairman and Chief Development Officer, he helped Caliber raise more than $120 million in capital and acquire 37 shops before its sale in 2008.

Investment banking and securities offered through Independent Investment Bankers, member SIPC/FINRA.  Focus Advisors and Independent Investment Bankers are not affiliated.

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