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Business Owner Exit Strategy: Restructuring a Business to Profitability

DuPage County Business Consultants

Few, if any, law practices of our size have a business advisor on staff, especially someone with the experience that Greg Walstra has. Because of that, we were approached by a local transportation business that has been operating in DuPage County for almost 40 years. After an initial review, it became apparent that like many family-run businesses they were so busy getting through the day that they had little time to look at the big picture, especially the changing landscape of their particular industry. After a more in-depth financial review, Greg identified the business segment that was the problem area and made recommendations that pricing had to be adjusted and some minor operational changes needed to be made as a first step.

At the same time, we needed to approach a larger subject in light of the owner’s desire to retire and pass ownership of the business to their children. That involved a recommendation to sell a segment of their business that had become almost impossible for their smaller business to be competitive in, and use the proceeds to recapitalize the rest of the business. This was the right path so that their children would be positioned for success. The good news was that the owners were receptive to an idea they had previously resisted once the logic of restructuring had been explained by someone who they trusted was in their corner.

Within a matter of several months, Greg was able to secure two different seven-figure offers from larger companies to buy the business segment that was in peril. We worked with the seller’s CPA firm and negotiated every aspect of the transaction, which put the owners at ease. Our Attorney Jae Kwon handled the legal aspect of the sale agreement in-house, which resulted in very fast response times. That was critical because the buyer was on a very tight time frame.

Because the owners asked for help, the end result was that a troubled business was restructured into a profitable sale of a business unit which helped the owner’s fund their retirement. The remaining business is also debt free and recapitalized with ongoing guidance for future success.