Case Study: Value Unknown
The company was a business development firm based in Moscow. Its primary function was to help U.S. manufacturers do business in the Russian rail market. The company had a 10 year history, 12 employees, and strong revenues.
The client knew that by acquiring his company the buyer would accelerate market entry and stifle other manufacturers’ ability to compete. He had a number in mind he thought would be fair, and planned to ask for double that and negotiate down. Thankfully, he called Cornerstone first.
We convinced him that naming a price was not in his best interest as it would either A) set a ceiling on the acquisition price, or B) be so aggressive as to chase the buyer away. Instead, we set out to identify the synergies and negotiate accordingly.
NEGOTIATE UP, NOT DOWN
Because we refused to name an asking price, we were able to negotiate up from the buyer’s offer, not down from any given price. The buyer’s initial offer came in just above what would have been the client’s “aggressive” asking price. Negotiating from there, we brought in an additional 50% in total consideration (a 30+ multiple of EBITDA), with a financial structure our client believed in.
RESULTS: LASTING SUCCESS
Today, the acquisition remains successful for both parties. The buyer and its subsidies are having strong success and our client continues to have a significant impact on the Russian rail market.