One of the principals of The Fuller Trident Group was introduced to a business owner of an aircraft maintenance company located in Southern California. This company had been in business for the fourteen years and, while it had been successful, management was unable to effectively continue the growth. The owners, both skilled in aircraft maintenance and operations, realized their shortcomings and decided to sell the company. The FTG principal determined that the company had great upside potential for the near and long-term future. The principal knew of other companies in a similar market space that might be interested in partnering with the Fuller Trident principal in the personal acquisition of the company.

Solution:

A partnership was formed and acquisition consummated within five (5) months of the original conversation with the owners, who were retained in an ownership position as well as in their previous management positions. The new investors brought with them a skill set capable of taking the company to the next level and beyond. In addition, they were capable of investing the capital required to effect a transformation of personnel and regional market expansion. By the end of the first year, revenue of the company had tripled with continued rapid growth expected as it expanded geographically and as its services expanded at each of the stations. The original founders are pleased with the growth opportunities and their part in it. It has been a win-win for all parties; an event we at FTG try to create on each transaction.

Two entrepreneurs discussed with their banker, the difficulty of structuring a buy out of a local precision machined parts company. Based upon a referral from their banker, the individuals contacted The Fuller Trident Group for assistance. While the original acquisition did not materialize, the assigned principal identified another company more suited to their purposes. After an initial review of the books, records and the sale memorandum, a deal was structured and offered that was at a reasonable price for both parties. As part of due diligence, it was determined that the company was about to receive a contract revision that would significantly increase the value of the company in the near future. A Purchase and Sale Agreement was quickly drafted and negotiated; it took only 90 days to complete the transactions from the initial submission of a letter of intent. During the process, the Fuller Trident principal worked with two banks to arrange financing of an anticipated cash shortfall, while structuring a non-compete and a Seller’s carry-back note. The new owners were able to immediate make process changes which further ensured profitability during the first and subsequent years of operation

Mid Term Results:

The FTG principal was asked to become a part of the company’s BOD and continue to seek other acquisitions. Shortly after the first company was purchased, another company was acquired that broadened the scope of the company’s market offerings. This acquisition was followed shortly thereafter with another acquisition in an industrial HUB Zone which gave the company additional marketing tools relating to government contracts. During the five year acquisition period, two additional contract manufacturers were acquired that further broadened the company.

Long Term Strategy:

With a background in commercial real estate, the FTG principal negotiated the purchase of two parcels of industrial land and worked with the company on financing, and construction/development strategy. Today the investments in land and buildings are a vital part of the owner’s retirement program. The various companies have been integrated within a common accounting and management system, providing excellent cash flow and operating results. These companies continue to grow with solid, multi-year backlogs and increasing margins, The FTG principal continues to be an integral part of the advisory management team and Board of Directors, assisting the owners in managing both near- term issues and providing input that strengthens the future.

A fifty year old industrial distribution company with approximately $14 million in annual sales suffered from chronically poor to marginal profitability. As a requirement of bank re-financing, the company was required by their banker to retain a business advisor. The company selected Fuller Trident on a long term retainer basis to assist the Board of Directors and the CEO in refocusing the company with the primary intent of improving profitability and resolving problems between the ownership group

Solution:

The FTG principal focused initially on working with the Board and the CEO to develop a business plan that called for increased gross margins and more involvement by the subordinate management team in the day-to-day executive management of the company. Early on it was determined that the lack of a Shareholders Agreement and Buy-Sell agreement were causing ownership friction that was diluting management focus on the business. Accordingly, the FTG principal worked with the two primary owners to develop the elements needed for a shareholders and buy-sell agreement which was subsequently drafted by (new) corporate counsel. Careful analysis of pricing practices and motivation of the outside sales force was used to institute pricing changes which, coupled with aggressive purchasing cost controls, resulting in a significant increase in the gross margin. By the end of the first full fiscal year the net profitability (before tax) had risen to the point where it was comparable to the “high profit” peers in the company’s industry grouping. The company’s positive cash flow allowed it to locate more expansive facilities and pay for leasehold improvements out of operating profits while increasing its bank line of credit. The company is now being considered for sale/merger to a strategic partner; a transaction which will be managed by Fuller Trident.

An Aerospace precision machine parts manufacturing company was in severe financial distress and had violated the majority of the loan covenants with its lender. The stresses associated with undercapitalization and very tight cash flow were causing the owners a great deal of anxiety and rendered them ineffective in their regular functions at the company. They were unable to adequately address sales and productions problems due to bank interference and associated requirements for documentation, etc.

Short Term Solution:

The assigned Fuller Trident principal initially worked with the bank on a weekly basis, keeping them informed of the previous week’s progress and current week’s projections. This allowed the owners to focus on company operations and regain momentum in production and generation of new sales (and cash flow). The process was successful and they were able to renegotiate covenants and avoid default with their lender.

Long Term Solution:

Once the company was stabilized, FTG re-capitalized the company by bringing in outside financial investors who purchased 70% of the company, leaving the original owners and FTG each with a 10% interest. The new owners operated the company over a 15 month period and then sold it to an offshore, public company for an 11 multiplier of trailing 12 months EBITDA. The result was a satisfactory ending for the original owners as they avoided bankruptcy, retained their positions at the company, and eventually sold their interests in the company for a substantial profit.