Case Study: Buyout of Passive Ownership

We have worked with companies to achieve many business objectives and favorable outcomes for company owners.

Objective

The CEO of a manufacturing business was in a legal dispute with a passive shareholder regarding the strategic direction of the business. The CEO faced an extremely tight timeframe within which to produce a non-conditional, fully-financed bid to buy out the passive shareholder.

Solution

Ironwood worked with the CEO to develop and validate the pro forma profitability of the business. Pro forma earnings were sufficient to support a level of borrowing sufficient to finance the buyout. Ironwood worked with the company’s legal and accounting professionals to structure the buyout, as well as with the senior lender to ensure that intercreditor issues would not stand in the way of a transaction. Within a forty-five day time period, Ironwood produced a binding commitment to invest, resulting in minimal dilution and a mechanism to redeem Ironwood’s investment. The transaction closed within sixty days.

Outcome

The recapitalized company achieved phenomenal growth. Through free cash flow and increased senior debt borrowing capacity, the company refinanced Ironwood’s subordinated debt and warrant position.