Facilitating the Sale of the Business Between 2 Partners

Challenge

$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

Solution

  • 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

Results

  • 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

Joe Compitello

Joe Compitello is a Senior Director at MorrisAnderson. As CRO/CEO of a private, distressed mid-market industrial equipment manufacturer, Joe refinanced senior and sub debt as well as senior and equity funding; implemented organizational restructuring and long term strategic planning; restructured dealer network, manufacturing and support functions; and negotiated the sale of the business to a… Read More