Crallé & Company

A New-England Specialty Paper Manufacturer
has been sold for approximately $15 million to a
Private Investor Group
The undersigned initiated this transaction
and acted as financial advisor

Crallé & Company

The Situation     The owner of a New-England specialty paper manufacturer, an individual, wanted to sell his company which, two years before, had been marketed by a major-bracket New York investment banking firm, but which transaction had failed to close.  Financial results since had been disappointing and several key operating mangers had been replaced.  The company was operating at close to 100% capacity, with large capital expenditures pending.

The Assignment     Crallé & Company received the mandate to re-market the firm.  The field of potential financial buyers was severely curtailed because many had already reviewed the opportunity two years earlier (colloquially, the company had been "shopped around").  The owner recognized that, with revenues of only $25 million, the company was too small to be of interest to a strategic buyer.

The Process     Crallé & Company planned and executed a marketing program that was carefully focused to assure that only qualified offerors were approached, and to protect the company's reputation from further damage.  The information memorandum emphasizing the relative predictability of cash flows and capital expenditures.  Four qualified financial buyers were introduced and entered into due diligence and, about 90 days later, the owner received two bona fide offers approximately the same in terms of total net value, although structured somewhat differently.

The first offer required that the seller warranty his representations of projected financial performance by tying about 20% of the total purchase value to an earn-out arrangement during the first two years after closing.  The remaining 80% of value was fully committed and ready, with no bank financing needed nor seller financing requested.

A second offer required substantial bank financing and allocated about 20% of value to a seller's note payable in installments beginning about five years after closing.

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Crallé & Company, Incorporated
Bronxville, New York