DCA Partners - Case Studies

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Below are select examples of how we have confronted difficult situations and delivered optimal results for our clients.

The 7–Day Deal

Client Profile
Private Software Company

Situation: Seeking DCA’s counsel, the Company contacted our Firm one Friday concerned that it was not going to meet payroll the following Friday. They asked DCA if there was anything we could do to help them save the Company.

Solution: Later that same day, we introduced the Company to a strategic acquiror that we thought should be able to leverage the client’s customer base, technology and personnel.

Result
Working through the week, the parties were able to negotiate terms of the deal, document the transaction, complete limited due diligence with expanded reps and warranties, and actually closed the deal the following Friday, allowing the Company to fund that day’s payroll. Total elapsed time from introduction to closing… 7 days.

Strategic Buyer Offers Attractive Alternatives

Client Profile
Private Software Company

Situation
The Company had developed interesting technology, but did not have adequate resources to commercialize the technology.

Solution
DCA worked to help merge the Company into a Company with pre–existing relationships with the client’s target customer base.

Result
Client’s software company has been able to leverage these longstanding relationships to gain market traction and is well on its way to becoming a leader within its niche market.

ESOP Provides Ideal Liquidity Strategy

Client Profile
Private Company with minority shareholders

Situation
Several minority shareholders were looking to get liquidity from their ownership position. Unfortunately, neither the Company nor the majority shareholder had the cash resources to buy out these older shareholders and the majority shareholder did not want to sell the business.

Solution
DCA recommended that the Company consider forming an ESOP in order to: (i) fulfill management’s commitment to share the Company’s success with the employees, (ii) generate a non–cash deduction from the contribution of Company Stock to the ESOP each year, and (iii) use these tax savings to buy back the "maturing" shareholders’ interests largely with "Uncle Sam’s" dollars.

Result
The Company has put in place a multi–step plan to position the Company for a tax–advantaged ESOP buyout within the next two years. This plan will meet all shareholders’ objectives, including the majority shareholder who will enjoy a smooth transition into retirement, gradually taking some "money off the table" while receiving favorable tax treatment and remaining in control of the Company the entire time.

In Negotiations: Knowledge is Power

Client Profile
Minority Shareholder of Closely–Held Business

Situation
The Majority Shareholder approached the client to buy out his minority position. The Minority Shareholder wanted to get a sense for what a fair value for his portion of the business might be.

Solution
DCA conducted a comprehensive, yet cost–effective valuation summary and provided this information to the client, who then used this information to successfully negotiate with the Majority Shareholder from a position of strength.

Result
The client was able to objectively respond to the buyout offer and avoided selling out at an unfair valuation.

Strategic Acquiror Saves Troubled Company

Client Profile
Private Manufacturing Company

Situation
The Company was reasonably successful, growing 100% per year for each of the past 3 years, but had recently made several poor—and expensive—decisions. As a result, they were insolvent and faced losing their Workers’ Comp insurance within 2 weeks. They also had a sizable Payroll Tax Deposit to make at the same time. The owner contacted DCA at this point.

Solution
DCA put together a Business Opportunity Summary and coached the CEO on what to do in order to attract and select a strategic acquirer.

Result
The CEO was able to identify an ideal strategic acquiror who purchased 51% of the business, relieved the former owner of all personal guarantees on the Company’s obligations, and provided an ideal platform for future growth. The Company continues to grow nicely, and the CEO remains active in the business.