SITUATIONAL BUYOUTS
For companies desiring to divest themselves of “difficult-to-sell” business units or subsidiaries, Stone Advisors is a convenient, quick, and proven solution.
Under a Situational Buyout transaction, Stone Advisors considers itself a strategic business partner with a seller of a “difficult-to-sell” business with a goal to achieve a greater net present value recovery for that business than if the sellers pursued traditional strategies to sell the business or liquidate the business assets.
Most difficult-to-sell businesses are non-core businesses to the Sellers and are often troubled businesses. A Situational Buyout transaction with Stone allows a seller to quickly dispose of a difficult-to-sell business with minimal deal negotiation issues and minimal disposition costs, while receiving purchase price proceeds greater than liquidation value.
Most sellers who need to sell a difficult-to-sell business want to focus their strategic efforts on building their core businesses to achieve the highest economic returns for shareholders. For sellers who find Stone’s Situational Buyout Model attractive as an alternative disposition strategy, lost opportunity costs from keeping a difficult-to-sell non-core business are as important as purely economic considerations.
A PROVEN TRACK RECORD
Stone has a successful track record of acquiring non-core troubled businesses and creating business value greater than liquidation value by:
- Putting in place a new governance structure, including effective risk management practices;
- Reducing unnecessary administrative overhead expenses;
- Resolving contingent liabilities;
- Making management changes, when needed;
- Improving employee morale and corporate culture;
- Innovating new products/services and expanding into new markets;
- Growing revenues and increasing EBITDA;
- Rightsizing the balance sheet;
- Improving financial and operating process efficiencies; and
- Positioning the business for eventual sale to a strategic buyer.
PROFILES OF SITUATIONAL BUYOUT COMPANIES
- Often are troubled business subsidiaries or divisions within a larger group of businesses (i.e., holding company organization), and may include non-core businesses that have been acquired as part of a bulk purchase of both core and non-core businesses;
- Businesses that are considered non-core to the Seller and will likely be sold or liquidated at liquidation values because of high disposition costs and complexities (e.g., businesses with declining revenues, operating losses, material contingent liabilities, and difficult people issues);
- Sellers have compelling reasons to dispose of the business quickly with minimal disposition costs and complexities (i.e. sale transaction needs to happen quickly for legal, public employee morale, public relations reasons, etc.).
- In exchange for (i) receiving a purchase price greater than liquidation value, and (ii) closing a transaction quickly with minimal seller reps and warranties, sellers are willing to seller-finance the deal.