Valuation and negotiation advice on the sale of a metal fabrication company
Summary
ST strategy valued the company and advised the shareholders in the negotiation with a potential buyer.
The metal industry is mostly made up of small and medium-sized family businesses, many of which face generational succession or integration into larger groups in the same sector.
MetalWorks* is an industrial company specialised in prototyping, maintenance and the production of metal parts of different sizes, with a consolidated base of industrial clients.
ST strategy valued the company and advised the shareholders in the negotiation of its sale.
Metal industry
Valuation and negotiation
Sale of the company
The full story
Opportunity
A sector player submitted an offer to acquire the company. The shareholders needed to know the real value of the business and have solid arguments to negotiate.
The initial offer was based on reported results, which did not reflect the company’s real cash-generation capacity.
Recommendations
Based on the analysis carried out by ST strategy, we worked on:
- Normalisation of results: Adjustment of historical results to reflect the recurring profitability of the business and reclassification of debt.
- Business plan and valuation: Preparation of a five-year business plan and an approximation of the company’s value using several methods.
- Deal structure: Proposed price structure with a fixed component, deferred payments and an earn-out linked to retaining the client portfolio.
- Negotiation: Guidance for the negotiation with the buyer and preparation of the counter-proposal letter of intent, which set a reference value well above the initial offer.
* The confidentiality of our clients is a priority of the company. Although we have changed their names, the information is real.