In January 2020, we met a future customer who was introduced to us by his personal financial planning team. He specialized in IT project implementation and management services for large multilocation companies. After meeting and understanding his personal goals, our immediate action was to identify opportunities to increase value in the business, confirm opportunities to mitigate income and estate taxation, and to understand the ideal partnership for our client.
Two months later we were hired and the project began. We first organized the true adjusted EBITDA of the company. We then offered operational advice around expenses to optimize profits and confirmed revenue recognition policies that accelerated profitability. Upon reconfirming our customer’s personal and business goals, the suggestion was made that we seek a new partner in the business. Our customer agreed with the strategy and we worked closely with the owner’s personal financial plan to reconfirm that the sale would meet his financial goals. We established the market value we expected prior to outreach.
Quest launched the initial outreach in March/beginning of April. We had materials ready to support the offering by June. From June to November, we interviewed partners, held management meetings, solicited and received offers to buy or partner in the business. We identified the preferred partner and signed an LOI in December. Over the course of 6 months, we reached out to 1,540 potential partners from strategic, private equity, and family office groups. Our work included outbound phone calls and outbound and inbound email inquiries. In the end, 122 NDAs signed with 15 interested parties were available to choose from.
Once we began to work with the partner, we pushed for maximum value by adding upside opportunity beyond the initial goal via additional incentives and continued ownership in the new venture. We also confirmed and supported the tax structure necessary to maximize capital gain treatment. In addition, we directed and supported pre-sale ownership structure to provide estate tax benefit to the family.
Our customer now has diversified his portfolio to meet his personal goals, has created future financial opportunity for himself and his team with the new partner, has accomplished his family and estate goals, and is pleased with the outcome.
We contributed millions of dollars of added value during our presale process and added millions more with a competitive process. Furthermore, our plan implemented a proper tax structure that sheltered millions of dollars in estate taxes. We estimate the return on investment in our firm on this engagement at 5 times our fee.
