The Challenge: What is it Worth?

Our client needed a number. A billion dollar multinational corporation wanted to buy his company, but he had no idea what his business was worth. The buyer told him he’d have to name an asking price or they’d walk from negotiations.

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.

Our Approach: Demonstrate the Value

TELL THE GROWTH STORY

We created a Confidential Information Memorandum that validated the company’s earning potential, outlined the synergies between the two companies, and reinforced the ultimate value to the buyer.

CREATE THE RIGHT PERCEPTIONS

We also proved that our client had clear-cut growth opportunities, even without acquisition. In other words, we let them know we didn’t need to sell.

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.