Improve Access to Capital / Divestiture
Challenge: A Parent Company that primarily focused on the PC resale and integration business needed to free up capital in order to focus on its core businesses. The Parent Company’s balance sheet was highly leveraged, primarily as a result of its wholly owned leasing subsidiary. The Parent Company had to decide which business it was going to concentrate on to move forward.
Solution: Leaders at Big Change assisted the Parent Company in evaluating various models for ROE, ROA, cash flow, and debt analysis, and ultimately making the strategic decision to sell its leasing business.
Plan: From there, we contacted banking partners both within and beyond our extensive network who were looking to grow their portfolios with an emphasis on small- and mid-market transactions. Together, we were able to identify a number of potential buyers for the business and create a competitive environment.
Deal structure: After carefully selecting a buyer, Big Change leaders structured a deal that reduced debt on the seller’s balance sheet, and facilitated a multi-year joint-remarketing agreement that gave the buyer first right of refusal on future business. The deal made the sale transparent to the seller’s customers and employees, and retained the seller’s ability to market the financial offering when necessary.
Results: Using the strategy developed by Big Change leaders, the Parent Company realized immediate balance sheet improvement and reduced its interest-bearing debt by over $40 million, and was able to continue marketing its financial offering as if nothing had changed. The buyer was able to establish a relationship with the Parent Company and buy market share at a reasonable valuation.