THE MOTHER OF ALL RECESSIONS
CASE HISTORY OF HOW ONE ASG CLIENT MANAGED TO DOUBLE THEIR SALES PRICE
The severe recession that started with the burst of the housing bubble, followed closely by the demise of Lehman Brothers in 2008, was another instance when we elected to take some existing clients off the market. In one particular instance, this worked out to the advantage of our client.
ASG had successfully negotiated a Term Sheet with a price of $16.1 million between our client, a manufacturer of niche products used in mainly in the petrochemical industry, and a synergistic buyer listed on NASDAQ.
When it became apparent to the Buyer that the recession was going to necessitate some difficult business decisions, including the probability that they would need to lay off employees, they elected to withdraw the Term Sheet to focus totally on their existing businesses.
While this came as a disappointment, our client had one of the few businesses that was not adversely impacted by the recession. In fact, their sales continued to increase worldwide as the exploration for oil continued to ramp up, particularly in other parts of the world.
In 2011, the same Buyer knocked on our door and asked whether we would be prepared to open up discussions again. They were quit chagrinned, but also pleasantly surprised to see that the EBITDA of our client had increased substantially from where it was two years previously.
Long story short, the transaction closed in early 2012 at $31.0 million! So sometimes, things do happen for a reason.
For another case history, please see One Client, Two Buyers.