Facilitating the Sale of the Business Between 2 Partners

Lyons & Sons

Moorestown, New Jersey

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