Phoenix Capital Resources Completes $16 MM Sale of Direct Mail Provider
Phoenix Nets Sale Price of 6X Trailing 12-Month EBITDA
Phoenix Capital Resources provided:
- Turnaround Management
- Crisis Management
- Operational Assessment
- Financial Forecasting
- Cash Management
- Strategic Advisory
- Sale of Business
- Acquisition Financing
Transaction Value: $16 million
Client
Precision Technology, Inc. (PTI) was a $40 mm family-owned and operated printer/fulfillment services provider to the direct mail industry.
Problem
Precision Technology, Inc. was in a tough situation: an overleveraged position with its lender; a stale operating business style; mature management; and the loss of two key executives who started up a direct competitor. There had been consistent trailing twelve-month losses and EBITDA declines, with no discernable reduction in operating and fixed expenses. The Company’s management was extremely mature, with no definable exit strategy in place. Further, the Company’s lender had shifted from “concerned” to “tired” with regard to the Company’s performance and lack of defined recovery and/or exit plan. The company needed outside help to bring order to chaos.
Solution – The New Transaction
Initially, Phoenix Management Services was engaged to assist the Company with its operating performance, cash forecasting, and bank and vendor communications with the overall intent of stabilizing the business. Phoenix provided order to chaos within the various business areas, making tangible operating changes and restructuring its activities to significantly improve day-to-day operations. The Company’s cash position also improved but, with a significantly overleveraged balance sheet, cash continued to be strained due to existing debt service requirements. The aging state of the Company’s management, the lack of a succession plan and the strained cash position led to a decision to sell the Company.
Phoenix Capital Resources (“PCR”) was engaged to serve as the Company’s exclusive Financial Advisor in executing the sale transaction. The market opportunities for the Company were limited, but PCR secured an interested buyer by positioning the Company as a platform roll-up opportunity. The final sale price of the business was $16MM, and PCR also secured the acquisition financing of $10MM of senior debt and $4MM of mezzanine debt to complete the transaction.
The final results were a sale price of 6X trailing twelve-month EBITDA, significant employment agreements for the sellers, and the most tax-advantaged position possible for the sellers.
Delivering Value to the Bottom Line
Phoenix offers a unique blend of turnaround, crisis and interim management services, capital advisory services and operational due diligence. With extensive experience gained from more than 800 engagements, we understand our clients’ unique business drivers and create specialized solutions to meet their needs in both distressed and growth-oriented situations.
Phoenix specializes in working with middle market companies to enhance and preserve the value of our clients by solving the operational and financial challenges they encounter.
More Information
For more information about Phoenix Capital’s capital advisory services, please contact Jim Fleet, Managing Director and Shareholder, at jfleet@phoenixmanagement.com.
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