Negotiating from a Position of Strength
Last week, Essco, a Boston-based equipment calibration company, sold itself to Transcat, a publicly traded company. We represented Essco in that transaction.
It is somewhat unusual for Oaklyn Consulting to represent companies being acquired by publicly traded firms, though it does happen from time to time. It is also notable because the size of the deal, which is public, was approximately eighty-five million dollars. That is larger than the typical engagements we take on, as our focus is usually on providing investment banking services to clients who otherwise cannot access them.
In most cases, a company of that size would have access to traditional investment banking services. But this situation was different.
A Boston investment banking boutique referred us to a wealth advisor who was working with the owner of Essco.
The owner had a very specific requirement. He said, “I don’t need an investment banker to find a buyer. I don’t need someone to charge a percentage of the deal. I only want an hourly advisory approach, and I have not been able to find that anywhere.”
He had received multiple proposals from other investment banking firms, but could not access the structure he was looking for. His attorney had advised him to have an investment banker on the team, but the traditional model did not align with what he needed.
Our hourly approach was the right fit, and ultimately, we were hired because there was no other option available that matched those requirements.
It is worth noting that we do not compete with other investment bankers.
We serve as a resource when clients need investment banking support but cannot access it in a way that fits their situation.
So what did we actually do, given that we were not responsible for sourcing a buyer?
We worked alongside the legal team to help negotiate the final terms of the Letter of Intent. While the attorneys focused on legal language, we focused on the business terms.
After the Letter of Intent was signed, we guided the financial and operational due diligence process. We supported the company’s executives and owners, many of whom had never been through a transaction before, in preparing for post-merger integration.
There were numerous details that were critical to employees and leadership, areas that were unfamiliar to them but well within our experience.
We also led the negotiation of the business and financial terms within the final legal agreements.
These agreements are complex and highly detailed. While it is easy to assume that attorneys handle everything, their role is more specific. Lawyers typically communicate with opposing counsel on legal matters. They do not negotiate financial or business terms directly with the other side’s decision-makers.
That responsibility falls to the deal team, either the principals if they have extensive transaction experience, or the investment banker.
Understanding that distinction is critical. Legal and financial negotiations require different expertise, and they must be handled by the appropriate people.
Throughout the process, all parties worked closely together. The CPA, the legal team, and the investment banker each played a distinct role, but operated as a unified team.
We were responsible for leading the business and financial negotiations through to completion.
The outcome speaks for itself.
The deal closed successfully and was publicly announced. Just as importantly, it did not fall apart between the Letter of Intent and closing, which is where many transactions encounter issues.
The owner, who had built and operated the business for many years, was able to move through what was likely his only transaction with confidence. He had guidance at every step and a clear understanding of what was happening and what would come next.
That is the value we brought to the transaction.
We provided practical, experienced investment banking advice at a time when that type of support was not otherwise available to this client, despite the size of the company.