Founded in 1979, AF Machine fabricates precision metal parts for the aerospace and defense industries. The company has direct relationships with Raytheon, Boeing, Northrop, Nasa, and SpaceX and is ITAR registered. The sellers had inherited the business when their father passed away. The sellers were approaching retirement age and were not sure what to do with the business. Prior to meeting Kevin, the sellers had the perception that most metal fabrication shops shut down when sellers retire as these are difficult businesses to sell and only attract a limited buyer pool. Kevin developed a relationship with the sellers and has advised them on various ways they could improve the business to ultimately sell it a premium valuation.
Goals and Strategy
Kinected stayed in touch with the sellers over the next couple years and found that they had acted on Kinected’s advice, significantly increasing business value. The probable valuation was now at a point where it would likely command a premium valuation. As such, Kinected was engaged and proceeded to prepare the business for sale, augmenting the team with a fractional CFO and corporate M&A attorney. Kinected crafted a custom marketing strategy that targeted strategic buyers, private equity buyers and individual buyers with experience in the Aerospace & Defense industry. Kinected believed that the business might be a strong candidate for SBA financing and worked with three preferred SBA lenders to have the business pre-approved.
Within three weeks of going to market, Kinected had secured 85 signed NDAs from buyers. Within five weeks, 11 full price offers had been submitted. By the 6th week, the sellers had executed a Letter of Intent from the ideal buyer, a former President of a similar aerospace parts manufacturing firm. The deal was closed in under five months from the time Kinected went to market, which included the time required for the buyer to secure a fixed rate SBA loan. The sellers achieved their desired valuation and terms and sold to great buyer who will protect the family legacy. The buyer is now running his ideal business, paid a fair price, secured a fixed-rate SBA loan, and has experienced a very high return on his investment.