Our client was in the steel and tool steel distribution industry in its second generation of ownership. The company, led by two brothers, had grown geographically by adding three new locations with one in Canada. Over time, their industry had changed, steel mill production had moved off shore and they found themselves in the position of having to purchase large containers with long lead times increasing capital requirements for maintaining inventories.
There was also a consolidation of tool steel suppliers in the industry worldwide, including domestically, creating competitive price pressures from these large competitors. Manufacturing as a whole in the northeast United States was flat and declining. But despite all of these pressures, our client remained profitable through their geographic growth strategy of adding satellite distribution centers.
The time came when the two brothers decided that to move to the next step in growing the company it would require more risk than they could tolerate, and additionally they were at a retirement age and together decided it was time to sell the business.
The brothers hired Next Point to run our divestiture process and find them a strategic buyer for the company. Next Point built a confidential business summary for introduction to potential buyers. Our business summary is built to present an honest portrait of the company.
Next Point conducted research on the industry and determined who the major players were consolidating steel companies. The list included both domestic and international players and private equity firms. We took our client to the market using our direct approach with the goal of soliciting as many offers as possible for our clients to consider.
In this case, we received eight letters of intent from strategic competitors to be compared and evaluated.
The Turning Point
The Company was sold to a publicly held company based in Vienna, Austria. Both brothers worked for the buyer for a transition period. Today they are both retired and enjoying the fruits of their labor.