CASE STUDIES
Every client brings their own unique circumstances and specific objectives. No matter the situation, DCA leverages its experience and creativity to consistently deliver optimal results for our clients.
Growth Through Acquisition
EFFECTIVELY LEVERAGING CORE COMPETENCIES
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Case Study: Effectively Leveraging Core Competencies
Manufacturer
Situation
As a highly successful manufacturing company, the Client had amassed a strong balance sheet and ample manufacturing capacity and automation expertise. In an effort to maximize their resource utilization, management set the strategic initiative to grow through acquisition—but what to buy?
DCA Value Add
DCA worked with the Client to understand and define their core competencies and leverageable assets related to an acquisition. In partnering with management throughout these discussions, the team determined that the ideal acquisition may not be an extension of their current product lines or services, but rather opportunities in which they could leverage their assets and expertise to streamline manufacturing through robotics, automation, and professionalize sales processes.
Result
DCA identified over 100 potential companies across various industries and geographies. One industry continued to stand out given the strategic synergies and the platform it would create for future growth. DCA engaged in several conversations with key industry players and diligently tracked the industry and built relationships throughout the process. Even after the transaction stalled for an extended period, DCA was able to get the Sellers back to the table as a result of the trust and confidence built through the process. In the end, the Client closed the transaction with their first choice out of over 100 companies reviewed.
CREATIVE DEAL STRUCTURE ALLOWS COMPANY TO BUY STRATEGIC ASSET WITH NO CASH
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Case Study: Creative Deal Structure Allows Company to Buy Strategic Asset with No Cash
Public Company
Situation
DCA’s client was looking to acquire the technology rights to a strategic product line from an R&D Company, but did not have sufficient liquidity.
DCA Value Add
DCA developed a creative deal structure allowing our Client to acquire this strategic technology for a small portion of the asking price in the form of Company’s stock and a royalty on future sales.
Result
The deal was completed and the Company preserved its cash for product marketing and other strategic priorities.
PROFESSIONAL APPROACH YIELDS UNPRECEDENTED SUCCESS
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Case Study: Professional Approach Yields Unprecedented Success
Family-Owned Business
Situation
After years of unbridled growth of both revenue and profits, the Client’s business began to taper off, due in large part to an underlying systemic decline in the size of their market. Unwilling to allow external factors to dictate the potential for their business, they set a strategic goal to grow their business by 40 percent over 2.5 years—mainly through acquisition. Historically they had managed acquisitions internally, with mixed results. They elected to interview several high-quality M&A firms, and ultimately engaged DCA to spearhead their aggressive growth strategy.
DCA Value Add
DCA put together a highly-professional, 16-page position paper on the future of the industry, the challenges it was likely to face, the risks to Owners who continue to operate independently, and the benefits of selling to DCA’s Client. We then selected the few dozen top strategic targets and conducted a highly personalized, multi-faceted outreach program.
Result
DCA’s outreach was so successful that we assembled a sufficient pipeline to meet the Company’s 2.5-year growth target within the first 5 months. The first transaction closed within 7 months of starting the process, with several more queued up to follow in the coming months.
NEXT TIME, PLEASE HIRE US FIRST…
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Case Study: Next time, please hire us first…
Large, closely held business
Situation
The Company had done a series of acquisitions that had not worked out the way they had hoped, and the deals had been structured in a manner that threatened the viability of the underlying businesses. They asked DCA to analyze the deal structures and attempt to renegotiate the transaction terms with the sellers to help make the businesses more viable. DCA agreed to help in hopes that the Company would instead hire us up-front next time to avoid these types of issues.
DCA Value Add
DCA identified a weakness in the Sellers’ position and used this knowledge to secure meaningful concessions.
Result
While DCA considerably improved the terms, the Company still had to make considerable operating improvements to the acquired businesses to reach long-term viability. The moral of this story: it is important to do acquisitions correctly up-front. When done wrong, the repercussions can be expensive, hard to fix, and last a long time.
Selling a Company for Maximum Value
SELLING NON-CORE DIVISION
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Case Study: Selling Non-Core Division
Large Family-Owned Business
Situation
After building a secondary business division that leveraged the Client’s brand and loyal customer base, the Client decided to sell the non-core division in order to focus more resources on its core business strategy. Given the potential for word of a sale directly affecting the Client’s loyal customer base, it was crucial that confidentiality, transaction timing, and buyer outreach be expertly handled. Further, given the fact that this was a carve-out and not a standalone entity—coupled by the fact that the Client envisioned an ongoing relationship with the buyer post-closing—this transaction was certain to be much more complex than most. After several discussions related to optimal approach, deal structure, and strategic value, the Client engaged DCA to spearhead their sales process.
DCA Value Add
DCA worked with the Client to develop a comprehensive pro forma standalone financial model and offering materials, that well positioned the business, its performance and market, and the future opportunity for the buyer to grow the business post-closing. Next, DCA leveraged its proprietary knowledge, resources, and past experiences to select the most strategic potential buyers to approach. Finally, DCA managed the sale process to maintain a brisk pace and a highly competitive bidding environment right through to the end. This combination of ideal company positioning, professional offering materials, top bidder selection, and competitive bidding process helped deliver an excellent outcome for the Client.
Result
DCA’s outreach was so successful that the Client received formal offers from 75 percent of the potential buyers approached. DCA was able to concurrently negotiate definitive purchase agreements with several potential buyers, allowing the Client to select the ultimate buyer with limited post-selection negotiations. The selection of the ultimate buyer was more complex and more critical than most, as the buyer and seller envisioned maintaining an interdependent post-closing relationship. Ultimately, DCA was able to help the Client secure an optimal transaction with a high-quality buyer, an attractive purchase price, and a win-win relationship between the two companies post-closing.
BEST BUYER IS ALSO YOUR MAIN COMPETITOR
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Case Study: Best Buyer Is Also Your Main Competitor
Fruit Processor
Situation
The Company was one of two staunch competitors that served the California market. Suppliers and customers played the two companies off each other, driving up the cost of the raw fruit they purchased and driving down the price of the processed fruit they sold. A private equity firm had pursued the Competitor previously, but failed to close the transaction. Additionally, a large, national processor had expressed interest in coming into the California market.
DCA Value Add
The Company retained DCA as its advisor. DCA prepared marketing materials to ensure buyers knew the Company was serious and prepared to go out to multiple buyers. However, DCA planned to contact the best buyers initially to entice them to make a preemptive offer. DCA went to Private Equity Firm first since we knew the Business was worth the most in combination with the Competitor.
Result
The Competitor did not want the Company to sell to the national processor, so they chose to work with the Private Equity Firm to affect a merger. By working with the Private Equity Firm, the Company was able to withhold confidential information from the Competitor until after due diligence had been completed and the purchase agreement had been negotiated. The Company ultimately received substantially more value due to the potential synergies from the merger.
PRIVATE EQUITY OUTBIDS STRATEGIC BUYERS
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Case Study: Private Equity Outbids Strategic Buyers
Energy Services Company
Situation
The Owners wanted to retire and did not have a succession plan. They had historically been an HVAC mechanical contractor, but had expanded into solar and energy-efficient lighting systems, where they had developed a clear leadership position in an attractive segment.
DCA Value Add
DCA suggested they run a broad auction, which involves extensive outreach to Strategic and Private Equity Buyers. Although Strategic Buyers usually can pay the most due to synergies and strategic value, DCA knew there were certain Private Equity Buyers with expertise in the space that could add to the competitive dynamic of the process.
Result
DCA contacted over 100 potential Buyers and received multiple offers, including one from an international business. DCA negotiated intensively with the Buyers to improve their offers. Despite interest from Strategic Buyers, a Private Equity Buyer provided the most-attractive option. Not only did they pay more cash at close, they also provided upside potential to the Seller with an earnout and equity participation.
PERSEVERANCE PAYS OFF
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Case Study: Perseverance Pays Off
Systems Integrator
Situation
The Owners had been operating the business for over 25 when they decided it was time to sell. The business was very specialized and the Owners didn’t believe there were many buyers; therefore they were concerned they would not attract a strategic buyer and not receive fair market value.
DCA Value Add
DCA identified potential high quality, strategic buyers and built a strong case why this Company was a good strategic fit for each of these buyers; knowing only strategic buyers would understand this business and be willing to pay fair market value. While several strategic buyers expressed interest, only one Buyer was truly strategic and, therefore, truly willing to pay a premium price for the business.
Result
For reasons beyond the Company’s control, the Buyer decided to put the process on hold several times along the way. In all, several years passed between the time the Buyer was initially engaged in the process, and the timing of the eventual close. Most investment bankers would have lost interest in the situation and moved on to other deals. However, DCA remained committed to relentlessly advocating for our Client, and sticking with the deal until it was done, and the check had cleared the bank. As a result of DCA’s determination and perseverance, the deal eventually closed—and the purchase price was DOUBLE what the Sellers had anticipated receiving when the project began.
PREEMPTIVE OFFER PROVIDES EXCEPTIONAL RESULTS
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Case Study: Preemptive Offer Provides Exceptional Results
Private Software and Media Company
Situation
The Owners had decided that the timing was right to sell the Business. They had experienced double-digit growth for several years and, rather than take the risk of a potential downturn, wanted to capitalize on their positive momentum and sell the Business. Their question: would the Business be worth enough to support their desired lifestyle for the rest of their lives?
DCA Value Add
DCA asked the owners their wildest dreams’ number for the business. With this knowledge in hand, DCA approached two “violent competitors” in their industry that DCA believed would have an interest in the Company. DCA informed each of the two Companies that we were talking to their competitor—as well as others in the industry—but that we would be willing to cease all negotiations and terminate the auction process if they would be willing to put forth a compelling preemptive offer.
Result
DCA was able to negotiate a preemptive cash offer that was 20 percent higher than the shareholders’ “wildest dreams” number, with an additional 20 percent earn-out opportunity on top of that. The knowledge that the other competitor was out in the wings also helped to keep the Buyer honest and deal momentum brisk. The Owners have since retired and are enjoying the fruits of their prior labor.
CAN WE DO THIS ON OUR OWN?
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Case Study: Can We Do This on Our Own?
Private Marketing Services and Software Company
Situation
The Client had received an unsolicited call from a private equity-backed Company looking to do an IPO in the next 2 years expressing an interest in buying their Company. The Client had known the principal of “Preemptive Offer Provides Exceptional Results”, and, as a result, called DCA to see if we could help him to deliver a similar outcome for them. There were 3 partners in the business, all of whom had differing interest levels in selling. One of the partners wanted to try to run the M&A process on their own, thinking “after all, THEY called US.” Unfortunately, because the Company was not planning to sell, their internal systems, regulatory compliance, and governance systems were a mess.
DCA Value Add
The Client ultimately engaged DCA, who went to work understanding the unique assets that the Seller provided relative to buyer’s product gap and strategic issues the Buyer needed to solve to have a successful IPO. With this knowledge in hand, DCA aggressively negotiated on behalf of the Sellers to highlight their unique offering and strategic (non-economic) value.
Result
DCA successfully helped get the Seller’s house in order and aggressively negotiated the purchase price with buyer—even though the Buyer knew there was not a competing offer. As a result, the Sellers received a final purchase price 40 percent above the Buyer’s initial offer. Equally important, DCA was able to negotiate highly favorable payment terms and security structures, providing enhanced certainty and security for the selling shareholders.
THE SEVEN-DAY DEAL
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Case Study: The Seven-Day Deal
Private Software Company
Situation
Seeking DCA’s counsel, the Company contacted us one Friday concerned that it was not going to meet payroll the following Friday. They asked DCA if there was anything we could do to help them save the Company.
DCA Value Add
Later that same day, we introduced the Company to a Strategic Acquirer that we thought should be able to leverage the Client’s customer base, technology, and personnel.
Result
Working through the week, the parties were able to negotiate terms of the deal, document the transaction, complete limited due diligence with expanded reps and warranties, and actually closed the following Friday, allowing the Company to fund that day’s payroll. Total elapsed time from introduction to closing…7 days.
STRATEGIC BUYER OFFERS ATTRACTIVE ALTERNATIVES
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Case Study: Strategic Buyer Offers Attractive Alternatives
Private Software Company
Situation
The Company had developed interesting technology, but did not have adequate resources to commercialize the technology.
DCA Value Add
DCA worked to help merge the Company into a Company with pre-existing relationships with the Client’s target customer base.
Result
Client’s software Company has been able to leverage these longstanding relationships to gain market traction and is well on its way to becoming a leader within its niche market.
CREATIVE DEAL STRUCTURE NETS 60% HIGHER VALUE
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Case Study: Creative Deal Structure Nets 60% Higher Value
Diversified Public Company
Situation
Company looking to divest a non-strategic business unit in order to raise cash and focus on core business units. This business held two key assets, but no prospective buyers were interested in both assets.
DCA Value Add
DCA packaged the business as two separate business segments and sold the segment to separate Buyers. DCA also negotiated the terms of joint use of certain shared assets between the two new owners.
Result
Increased purchase value by over 60 percent above maximum purchase price offered by any single offer for the combined business.
Private Equity & Debt Capital
EXPANSION FROM COAST-TO-COAST AND ABROAD
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Case Study: Expansion from Coast-to-Coast and Abroad
IT Services and Project Management Consulting
Use of Funds
Geographic Expansion
Situation
The Company wanted to open operations on both coasts and in Europe.
DCA Value Add
- Provided strategic advice
- Recruited executives to add to the management team
- Assessed acquisition opportunities
- Assisted in the sale of a non-core, under-performing division
- Worked with management to optimize its value at exit
Result
Expanded its reach, focused its operations, and sold to a NASDAQ-listed strategic acquirer at a valuation that was attractive to all stakeholders.
SOLID STRATEGY RESULTS IN ATTRACTIVE VALUATION
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Case Study: Solid Strategy Results in Attractive Valuation
Software
Use of Funds
Growth
Situation
The Company wanted to expand its position as a leading information and analytics platform addressing the environmental, health and safety, and crisis-management sustainability needs of large companies around the globe.
DCA Value Add
- Provided strategic advice
- Assessed acquisition opportunities
- Worked with management to optimize its value at exit
Result
The Company accelerated its growth and sold to an NYSE-listed strategic acquirer at a highly attractive valuation.
FLOURISHING INTO AN INDUSTRY LEADER
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Case Study: Flourishing into an Industry Leader
Healthcare Staffing
Use of Funds
Growth
Situation
The Company had a goal to become one of the nation’s leading providers of comprehensive travel-nurse solutions.
DCA Value Add
Provided strategic advice
Result
Successfully navigated the effect of fundamental and structural changes to the nation’s health care delivery system and raised new financing to buy out DCA Capital.
TRANSFORMATION THROUGH MODERNIZATION
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Case Study: Transformation through Modernization
Publishing
Use of Funds
Acquisitions and New Product Lines
Situation
The Company wanted to expand into new markets by acquiring, as well as starting, new publications.
DCA Value Add
Guided management through repositioning during economic recession.
Result
Migrated from coffee-tabletop publications to online, appliance-independent channels and high-quality virtual tours. DCA Capital sold its investment to a privately owned publisher.
VALUABLE EXITS VIA SUCCESSFUL INVESTMENTS
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Case Study: Valuable Exits via Successful Investments
Vision Insurance
Use of Funds
Recapitalization
Situation
The Company wanted to replace a former strategic partner who had previously invested in the Company, but was no longer providing value.
DCA Value Add
Secured co-investors to fund a transaction that included partial liquidity for management.
Result
After several years of consistently increasing revenues and cash flow, DCA Capital sold its interest in the Company to another, larger private-equity fund—a second recapitalization of the Company—leaving management in place while providing them with additional liquidity in each transaction.
WORLD-CLASS SOPHISTICATION
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Case Study: World-Class Sophistication
Marketing Software and Services
Use of Funds
Growth
Situation
The Company wanted capital to fund growth, enhance product, and enhance its footprint to allow it to serve the world’s most sophisticated online and traditional marketers.
DCA Value Add
- Provided strategic advice
- Improved governance
- Secured bank financings
- Recruited a new CFO
Situation/Result
Expanded its offices to London and Los Angeles and developed web-based software, which drove substantial growth and made the business an attractive target. Sold the business to a strategic buyer at a value that afforded the Owner the opportunity to retire and support his philanthropic interests.
