Real Estate Value > Enterprise Value

The Situation

Through an appraisal, our client learned that his business’ real estate was very valuable. He asked Next Point to complete a value estimate of his company’s enterprise value if it were to be sold as a going concern.

He learned that the real estate would be worth more to a buyer in another use and that it did not add any value to the company or its customers. We determined that in order to maximize value, the company should be consolidated into another operation and the real estate should be sold through separate transactions. Next Point conducted a search for a buyer who would see value in the company without the real estate.

The Process

Next Point looked for local strategic buyers with the operating capacity to absorb our client’s business without requiring extra space. The right strategic buyer would be able to achieve economies to scale through the acquisition. Our research resulted in about 100 regional industry players that were of sufficient size to make such a transaction. Our process resulted in 18 interested buyers reviewing information on the company.

The Turning Point

Our client received three letters of intent and none of them included the real estate. The owner selected the most appealing offer and sold the business, which was consolidated into another local operation. Our client then auctioned off the remaining equipment, furniture, and fixtures in preparation for putting the real estate on the market for sale.

The real estate sold quickly for asking price and the sum received for all the company’s pieces was far greater than what could have been achieved selling the business as a whole.

Services Performed

  • Divestiture Services
Real estate Metal Manufacturing - Next Point LLC