Smarter Debt With Instant Cash Flow

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Smarter Debt With Instant Cash Flow

The Situation

The owner of a sheet metal fabrication company experienced significant growth with some of his large customers. He knew that he needed to invest in two new lasers to keep up with the growing demand on that equipment. The new equipment would require space, and the employees would need training, yet his facility and labor force was already approaching capacity. The new investment would also create a new line of debt, and while the debt itself was not appealing to the owner, he realized that purchasing the equipment alone would not solve his problems.

The owner considered acquiring an existing sheet metal operation with updated laser equipment, trained employees, and additional space.

The Process

Next Point met with the owner to help develop a detailed specification for the successful acquisition target. The ideal target would operate the updated laser equipment that our client’s customers’ required for their projects. It would be within a 150-mile radius of the company and would have engineering capabilities and a well-trained labor force. We utilized our proprietary metal manufacturing database and narrowed the acquisition candidates based on their service offering and equipment, size, and location. We needed a larger candidate pool to identify targets with the required equipment.

Next, we targeted high-potential candidates and contacted the owner’s directly to ask if they would consider a sale and to evaluate them for a strategic fit with our client’s company. We encouraged interested sellers to set up meetings with our client to gauge compatibility and to help both parties to determine their level of interest in moving forward.

Our client evaluated several opportunities and selected the most attractive option that could move forward and close quickly.

The Turning Point

Next Point worked with our client to craft a letter of intent that provided an initial offer and deal structure to entice the seller while remaining within their anticipated structure. Once the letter of intent was accepted, Next assisted our client’s CPA in the due diligence process and their attorney in negotiating a contract for the proposed purchase, through to the definitive agreement.

Through the acquisition, the company acquired new capabilities and new customers and is now able to cross-sell different services to both their existing and new customer base.

Services Performed

  • Acquisition Services
Sheet Metal Fabrication - Next Point LLC