MorrisAnderson Led Metals Company Acquisition Efforts
1B
Annual Sales
200M
in Debt
Alter Trading, St. Louis Missouri
Challenge
Metal processing/scrap industry. $ 1+ billion revenue. $200 million debt.
- Seeking growth opportunities in an uncertain economy
- Buy-side advisory work for a middle market transaction
- 100 + year old privately-held company seeking growth through acquisitions
- Acquisition target company was identified, however target was potentially on the verge of severe financial distress
- Seller stipulated a definitive for the transaction to close–which was in less than 60 days
- Buyer wanted independent advisor to assess target company and provide due diligence support; timely and cost effectively
Solution
- MorrisAnderson was engaged to assist in assessing the structure of the acquisition and valuation, develop a measurable working capital component embedded in the offered purchase price, and lead the negotiations and due diligence process to a timely close
- Estimated valuation by assessing historical performance, non-recurring events, performance enhancement opportunities, environmental risks, estimated synergies, and real & personal property appraisals
- Determined impact on working capital between annual GAAP financial statements and interim non-GAAP financial statements
- Evaluate Seller’s proposed structure of Working Capital measurement and escrow amounts
- Identify and assess debt obligations, including capital leases and any third-parties where Seller was guarantor
- Monitor Seller’s borrowing base reporting and loan compliance with its credit facility
Results
- Successfully led the transaction process to close on the target within the targeted price range
- Successfully completed the transaction within 60 days
- Negotiated a working capital methodology favorable to maximizing cash realization within 90 days after closing
- Quantified amounts and terms of multi-tiered escrow as indemnification for working capital, environmental, and other reps/warranties
- Ensured sale proceeds would be sufficient to pay-off Seller’s debt obligations with a remaining balance sufficient for escrow and satisfactory to Seller’s expectations in closing the transaction
