A family-owned risk management holding company, Lowers Risk Group, LLC (LRG), was looking for assistance in evaluating strategic options for the organization. The key LRG owners were seeking a way to monetize some or all of the businesses under the holding company while at the same time providing a career path for the next generation of family members. A critical foundational point beyond the normal transaction economics was finding a partner that aligned with the values of LRG and its principal members.
LRG engaged the professionals at Baker Tilly US, LLP (Baker Tilly) to perform a pre-sale analysis of the business lines. LRG and Baker Tilly focused on the key business subsidiary, Wholesale Screening Solutions, LLC (WSS) as the most attractive business unit for presentation to the market. The market position of WSS (one of the largest providers in its industry), financial metrics, long-term customer relationships, technology enabled solutions and solid growth prospects were identified as key attributes that potential buyers were seeking. Management of LRG believed that a key first step in transaction preparation was to perform a carve-out and execute a sell-side quality of earnings analysis (Q of E). The analysis focused on traditional Q of E work along with a thorough analysis of parent level shared services and costs that were directly or indirectly attributable to WSS. The resulting Q of E provided management with independent foundational information as they entered the WSS sale marketing process.
Baker Tilly referred LRG to Baker Tilly Capital, LLC (Baker Tilly Capital) to market WSS. The combination of the sell-side Q of E and LRG finance executives, along with Baker Tilly Capital, created a collaborative team and a starting point for the process. Baker Tilly Capital developed a robust sale process with solid financial metrics of the carved-out business. At the request of LRG, Baker Tilly Capital was able to market WSS to a discreet group of targeted buyers in several phases. In the end, LRG was seeking a buyer with solid economics with low financing risk, aligned values and vision, and a perspective of long-term support of important WSS employee and client relationships. Baker Tilly Capital worked diligently to present a variety of potential suitors to LRG. The creation of a strong prospective buyer pool aided LRG in finding the right transaction partner to achieve its multiple transaction objectives.
LRG found the right partner in Gallant Capital Partners, LLC (Gallant), which had been active in acquiring tech-enabled businesses across the U.S. The Baker Tilly Capital team used its robust evaluation process and market knowledge to present an industry-focused private equity firm to LRG. Ultimately, the parties completed a transaction in late 2021. Gallant is very supportive of WSS’s vision for growth and advancement of technology. To that end, Gallant executed a concurrent acquisition of SJV Data Solutions, and the combined companies will provide WSS’s employees, customers and stakeholders with more resources and opportunities.
To learn more about how Baker Tilly can help your organization with its transaction needs, contact our M&A team.
Baker Tilly Capital professionals have completed hundreds of middle market transactions for public and private companies in various industries.
