Wise Coaches Acquired By National Express

Industry: Motor Coach and School Bus
Location: Nashville, Tennessee
Tenney Group Role: Advisor to Seller

What were the seller’s motivations in deciding to pursue an exit?
He was approached by a possible buyer (not the buyer he ultimately sold to). Aside from that, the seller had creatively leveraged the bus company to launch another passion – his real estate development company. Due to explosive growth with his real estate development company, the seller desired to redeploy the capital from his bus business sale to another investment vehicle that represented a much better long-term return on investment.

What challenges were unique to the seller as they entered the marketplace?
The company from an EBITDA/Sales ratio was one of the top performers in the industry. In order to fully get credit for his performance, we needed to increase the quality and speed of the current financial reporting system. Another challenge occurred in due diligence, where the company took an unexpected dip an earnings, a mere few months before closing. Finally, the company had significant growth opportunities, however, to achieve those would require significant capital expenditures.

How did Tenney Group maneuver around the challenges?
Our team worked directly with the seller’s team to ensure the financial reporting was ready for primetime and that we would be equipped to move through due diligence efficiently. Addressing the dip, we helped engineer a structure that protected the overall total consideration, while acknowledging the new questions around the business. Finally, we created a calculation that would allow the seller to participate in the upside of delivering a few new accounts post-transaction. The calculation took into account the additional capital expenditures required for the buyers. This contribution helped both the buyer and seller become totally aligned as they worked to maximize post-transaction success.

Key Takeaways for Other Business Owners:
The business was an excellent performing business, but the state of the financial reporting at the onset of the transaction could’ve materially jeopardized a successful exit, or at least one that would’ve capitalized on the high-performance of the business. Additionally, the seller had other passions and interests; he felt confident in his timing and wanted to focus on other aspects of his life. Although there were fluctuations in the business during the course of the transaction, Tenney Group was able to successfully address those in a fashion that didn’t affect the overall total consideration.

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