Client: Wholesale Food Distributer with some small manufacturing.
Turnover: Turnover of $30m.
Following a strategic review our client decided it wanted to add distribution of brands it had direct ownership and control over. We searched for opportunities to add product variety, volume and extra profit.
Targeted Seller: Small specialty food manufacturer who was selling to similar customer base that the purchaser was supplying.
The target company had built a good brand and quality product, however, the business was owned by a husband and wife who were going through a divorce and could not keep working together in the business.
It was agreed they would sell the business.
The seller had turnover of $1.4m with a gross margin of $550k and an adjusted EBITDA of $195k.
The seller ran its manufacturing via a local contract manufacturer and also ran its own warehouse and office administration facility.
The Purchaser had under utilised manufacturing and packing capacity and it was calculated that it could take on the target company’s volumes with only one additional person.
Sales and administration costs could all be saved and absorbed by the existing business.
It was calculated that by purchasing this company it could add $520k pa to its bottom line. A price of $615k inclusive of stock was paid which showed a return on investment of 84%