Marine Equipment Manufacturer

The business focused on marine deck equipment engineering, servicing, and manufacturing, including tugboat winches. The owner started the business over 20 years ago and was well-known in the industry. The major mechanical components were made in Korea and assembled in the US; the business had 4 employees, including the owner, who was the main engineer and only sales rep., so he traveled constantly around the world.   Early in the engagement, It was evident that this business required specialized skills, and our best chance of selling would be a  strategic buyer. We worked with our client to get a list of competitors and started calling the highest level we could reach at the companies. Within the first two months, we had an LOI from a large marine deck manufacturer in Houston. However, it became apparent as the deal progressed that the seller’s culture was not going to mesh with the buyer’s culture. So, the deal was called off. We found another buyer in the industry that was recently sold to a Private Equity firm. We initially refused their first offer; they came back a month later with the final offer, which was accepted. The deal had some sticky points, specifically with working capital (earned AR vs. new orders deposits) and how to transfer government contracts due to the CAGE codes, which may or may not be transferred to a new legal entity (long-term Navy contracts), so it ended up being a stock sale.  We were able to overcome the issues and close the deal.