Minority owners seek independent valuation to leverage negotiations with majority owner

SITUATION

The senior management team of a majority bank owned commercial equipment leasing and finance company was negotiating with a bank who wanted to acquire the remaining stake in the company owned by the senior management minority owners. The senior management team and their advisor were seeking an independent third-party valuation for the company so they would be in a position of strength during their negotiations with the bank to purchase from them the remaining share of the business.

SOLUTION

The Alta Group worked closely with the senior management team to fully understand the business operations, origination history and projections, historical and projected financial performance, and other factors which differentiated the business from its competition. Alta provided a thorough analysis and narrative identifying and outlining the financial adjustments required to the financial statements to “normalize’ them for items that were specific to being majority owned by the bank. Armed with the adjusted financial statements, Alta reviewed recent sale comparisons for equipment finance and leasing companies of similar size, quality, and financial performance to determine a narrow range of value for the company. Alta delivered a detailed valuation report to the senior management team members who were then able to negotiate the terms of the sale of the remaining stake of the business with the bank from a position of strength. The senior management team was able to reach agreement on the sale terms with the bank and all parties involved were pleased with the sale price.