After decades of running a prosperous and growing business, the founder seeks retirement. The founder's first choice was to pass the baton and organisation leadership to the second generation and keep the business within the family. The second generation, however, have had other vision for the future and declined to take the responsibility to lead on the family business.
The founder decided to maximise the returns of the investment made through the years in setting up a successful brand, a profitable business and a loyal network of customers, partners, suppliers and employees. The founder asked us to support in exploring potential exit strategies, means to maximising the returns and protect the continuity of brand image, employees welfare and social responsibilities.
CONTEGRA Services Team ran a due diligence on the company business model, governance, legal and human resources. The services included the development of a Discounted Cash Flow model of the company earnings and credible projection. During the process, the Services Team was able to identify various improvement areas. The deployment of which should impact the bottom line of the immediate fiscal year and accordingly can influence the Discounted Cash Flow valuation to a higher level.
Several workshops conducted with the Founder and his Top Executives evaluated the spin off through Private Placement and Initial Public Offering. Workshops elaborated on the quick-wins areas of improvements. The workshops which ran in complete transparency resulted in agreement on the exit strategy to pursue, the ownership and timeline to work on the quick-win improvement areas as well as the communication strategy to deploy both internally and externally.
Methodology
In valuing a business, there are two perspectives of value: Equity Value (which represents the value attributable to the owner after paying debts and Enterprise Value (which represents the value of all capital invested in the business) .
Review Equity Value Trailing/ Leading Multiples to facilitate comparison against other companies in same industry and country. Seek sources of projections such as Bloomberg, FirstCall , Multex or Investex. This should enable the owner to find the company relative value.
Based on cash flow generation potential of business Discounted Cash Flow (DCF) analysis; project future free cash flows and terminal value and discount to a present value using the weighted average cost of capital. This should enable the owner to find the intrinsic company value
Review the company vision, strategies adopted and annual business plan
Identify areas of improvement and run sensitivity impact on the valuation model.
Evaluate, compare and select the exit strategy to adopt
Formulate the Communication Strategy and Plan
Value Delivered
Re-shaped path of private equity investment.
Engaged top executive in the exit strategy.
Identified quick-wins improvement areas that strategically boost the company earnings and value.
Maximized buy-in by the employees engaged in the transformation process.
Cash out for the best yet fair price.
