Making the Parts Worth Twice the Whole

(Valuations) – A diversified energy company was being defrauded by customers and threatened with foreclosure by its lender. The owner wanted to sell the business as a unit, which only fetched offers of up to $8 million, well below the amount owed to the lender. Janas convinced the lender to support a new strategy of selling the business off in pieces. We argued that each piece individually could get a premium price from local competitors–but as a whole, there was no major company in the area who would pay a premium value for all of the pieces. Janas sold six of the seven pieces, holding back the most promising division. In total, the six transactions generated more than $14 million, paying the bank off in full. Janas’ approach resulted in a 75% higher price and allowed the owner to retain the portion of the business he valued most.

 

 


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