“You were an incredibly, persistent advocate. Not only did you deliver an outstanding all-cash deal, you were unflagging in your determination to protect our interest right up to closing.”
Tim Callahan, Partner
Data Control Systems, Inc.
Persistence and Strategic Prospecting Pays Off
Data Control Systems, Inc., an IT Systems Integrator and Integrated software/hardware technology Solutions Company specializing in the logistics and fulfillment area for manufacturing and distribution companies ERP and e-commerce systems was interested in locating a strategic buyer to promote expansion both nationally and internationally. The owners also needed an exit strategy for their angel investor and wanted to take a substantial amount of cash off the table to lock in value while still having upside financial potential following a sale. Its owners first wanted consultation and later wanted representation in potential merger and acquisition transactions. Lyons Solutions was retained as the company Mergers & Acquisitions advisor.
Due to the differing interests of the four equal partners it was important to work with them in refining goals that could be achieved for the individuals and for the group as a whole. Also at issue was the fact that the financial performance for the company was down in the two prior years.
Lyons Solutions initially worked with the owners to review all aspects leading to the changes in profitability and it suggested strategies for improving profitability and buyer interest in the market. After the changes appeared to be working, Lyons Solutions Mergers & Acquisitions approached some 200 buyers and was successful in developing serious discussions with a number of firms. Unfortunately, a number of unforeseen circumstances led to the company missing their projections for the year by a significant amount. Consequently it was decided not to pursue discussions with buyers until a later date when there would not be downward pressure on valuations.
Lyons Solutions again consulted with the owners on strategies to put things back on track. Once it was determined that financial results were back on track, Lyons Solutions went out to a group of almost 300 potential buyers. Over 40 potential buyers signed confidentiality agreements to review the company profile. Although discussions and meetings were held with a number of suitors, one company stood out as the best cultural and strategic fit because it allowed for synergies and international expansion opportunities.
Lyons Solutions pursued this option while keeping other options open. With patience and persistence, the buyer ultimately made an offer. Initial agreement on a deal was reached but internal changes within our client necessitated renegotiating the offer in favor of an all-cash transaction with options for potential upside. Our client gained access to additional web-enabling and wireless technology and has a vehicle for domestic and international expansion with a company willing to invest in their growth. The angel investor cashed out and the operating partners have attractive salary, bonus and option packages going forward.