Corporate Restructuring and Sale of a Family Business

The client was a family industrial company, second generation, with a turnover of €12M and a solid market position in its niche. The company had received an unsolicited acquisition offer from a strategic competitor for €8.5M. The problem was that the two generations of shareholders had very different positions: the founders wanted to sell and retire; their children, who were running the company, wanted to continue.

LFGD was engaged to mediate between the two positions and find a solution that maximised value for all parties. The initial offer of €8.5M was, in our opinion, significantly below the real value of the company: the competitor was trying to take advantage of the succession conflict to acquire the asset at a discount.

The additional challenge was that the company had never been valued professionally, had no audited accounts for the last three years and had a complex corporate structure with several inactive subsidiaries that complicated any due diligence process.

The first step was to commission an independent professional valuation of the company. The result was a value range of €13.5M to €16M, significantly above the initial offer of €8.5M. This valuation became the basis for all subsequent negotiations.

In parallel, we worked on the corporate restructuring: dissolution of inactive subsidiaries, regularisation of accounting and preparation of audited accounts for the last three years. This process, which took four months, was essential to make the company attractive to serious buyers.

With the restructuring complete, we ran a competitive sale process with four strategic buyers: two direct competitors, a private equity fund specialising in industrial companies and an international strategic buyer. The competitive process generated three binding offers, with a maximum of €14.8M.

The solution that satisfied both generations was a partial sale: the founders sold 100% of their stake (60% of the company) to the winning buyer, while the children retained 40% and signed a management agreement for five years. This allowed the founders to liquidate their investment and the children to continue running the company with a new strategic partner.

The transaction closed at €14.8M for 60% of the company, implying a total valuation of €24.7M. The founders received €14.8M for their stake, 74% above the initial offer of €8.5M for 100% of the company.

The children retained 40% of the company and signed a five-year management agreement with the new owner, with performance-linked incentives. The new owner brought capital and commercial network to accelerate the company's growth.

Two years after the transaction, the company had grown its turnover from €12M to €18M, driven by the new owner's commercial network. The children's retained stake had increased in value by more than 40%.