Leveraging Value of a Product Line by Identifying Missed Opportunities
CHALLENGE: An upper Midwest Sporting Goods Manufacturer had a widely successful & profitable archery product that was growing rapidly. Founder wanted to sell the popular and branded product line in order to pay-off his former partner, obtain cash to expand his other product lines and develop new products. The challenge in selling this division was to represent stand- alone costs and margins of the product line when there was no separate accounting in place to accurately reflect the overhead burden associated with the brand. To make the financial due diligence of the product line even more difficult, the seller would not share any of the company’s financials as he wanted to keep that information confidential.
APPROACH: Lakes Business Group worked closely with the seller and the Company’s accounting firm to produce reliable and accurate financial information on the product line being sold. Even more importantly, Lakes Business Group identified several ways the revenues of the product line could be grown rapidly through different sales channels and marketing techniques. Lakes Business Group also identified several ways the cost of the product line could be reduced making a very profitable product even more profitable.
RESULT: Lakes Business Group leveraged their expertise in online Marketing and were able to get the opportunity in front of thousands of qualified buyers including the Boston based Private Equity Group that eventually acquired the product line because they saw how quickly they could grow the revenues. Upon the advice of the client’s CPA and Attorney, the seller’s expectations for a sale price were between $12-$15 million dollars. Lakes Business Group procured a buyer that paid $28.8 million for the product line.