Category Archives: Case Studies

Custom Poultry Processing

The Company

Custom Poultry Processing

A poultry processor in Charles City, IA.

The Challenge

A family of growers decided to construct a poultry processing facility to slaughter and package their own birds and those of local growers. When the plant opened in December 2010, it was 4 months behind schedule, had cost far more than projected, and was not complete. The company ran out of cash in the third week of January and unsecured creditors filed an involuntary Chapter 7 which was converted to a Chapter 11.

The Process

Equity Partners was retained to find capital to get the facility back up and running.  The debtor’s plan was to try and reorganize.  We agreed to try and support this effort but recognized that a sale was highly likely.  We conducted a broad and aggressive marketing and sales campaign, leading to 53 parties from throughout the U.S., Korea, Canada and Mexico executing Confidentiality Agreements and 10 groups conducting site visits.

The Solution

Because the company had no customer base and the plant had never been fully operational, there was no interest in reorganizing, resulting in a 363 auction. Five bidders qualified for the auction, including the first-position secured who wanted to ensure it could credit bid and a firm from Mexico and Canada.  There were multiple rounds of bidding which started at about $500,000 and rose to $2,275,000. A closing was scheduled and the company restarted operations.


Cytogen Corporation

The Company

Cytogen Corporation   

A publicly-traded, Princeton-based biopharmaceutical company.

The Challenge

Cytogen had a non-performing contract manufacturing/test division and their stock was slipping. They were hoping to maintain use of the facility to produce proprietary products, but had a lease they couldn’t break. So, while it needed to stop the losses, there was no easy exit strategy. Plus, the hard assets in the facility were worth only a fraction of what Cytogen had spent to get USDA approved there.

The Process

Equity Partners was retained and through our process generated initial offers in the $1 – $2 million range which and a resolution to the lease issue. Equity Partners continued negotiations, illustrating the opportunity cost prospective buyers would face while they tried to get their own facilities USDA approved and accumulate highly trained people.

The Solution

Equity Partners was able to quickly negotiate two $4 million cash offers for the contract manufacturing / test division. Both provided partnerships with Cytogen that allowed for favorable agreements to continue manufacturing their proprietary products, retained management and employees, and resolved the lease obligations.  Equity Partners negotiated a long-term lease between the buyer/partner and Cytogen’s landlord, allowing a transaction to close with Purdue Pharma. Cytogen’s stock price reacted very favorably.


DAE

The Company

DAE

Profitable San Francisco based full-service advertising agency founded in 1990, with a unique niche serving the growing Asian-American communities.

The Challenge

In 2000, the company was acquired by a web development company, who was then acquired by a large software company, which was going through the process of divesting of all its assets.  The liquidating trust hired Equity Partners in late 2016 with the directive to facilitate a sale prior to the end of the year, as DAE was the last asset on the books.  A heavy reliance on one large customer, with no certainty of contract renewal, had made it hard for the company to sell itself, especially since it was only interested in all cash offers with no earn-out.

The Process

Equity Partners ran an international marketing campaign to identify buyers for the company that could conduct their due diligence and close quickly. Equity Partners received expressions of interest from several groups, however initial offers included some form of payout over time, which would not allow the parent company’s liquidating trust to close out their books by year end.

The Solution

Through continued negotiations, by year end, a cash sale of the company’s stock closed with a U.S. subsidiary of a Stockholm based marketing company. All DAE management and employees were retained and the trustee received an all cash price in time to close the books on the trust.

Darby Printing Company

The Company

Darby Printing Company

Atlanta-based, full service printer specializing in books, manuals, catalogues, and directories.

The Challenge

Sales had begun to decline and the business was losing money rapidly. The owner had been looking for an exit strategy for a few years and decided it was time to sell. Overhead was substantial and without adequate sales to support the fixed costs, the viability of the company was in doubt.

The Process

Equity Partners quickly completed a 45 day marketing process and generated 3 going concern offers that paid off all creditors and either provided substantial money for the owner at closing or a long term tenant for the building he owned.

The Solution

After several rounds of negotiations, an entirety offer was selected which allowed the owner to sell all of the assets free and clear, satisfy all liabilities, and provide him a seven figure cash sum at closing. The business continues to operate under new ownership without a single day of interruption for clients or employees.

Diverse Label Printing LLC

The Company

Diverse Label Printing LLC

Diverse Label Printing provides label products and support to premier food manufacturers including Frito-Lay, Kroger Foods and a number of other well-known customers.

The Challenge

The owner found himself in a racketeering law suit connected to another company that he owned. In an effort to protect Diverse Label Printing, the company filed for Chapter 11 protection. Sales immediately dropped from over $40mm to less than $25mm and the value of the business declined rapidly.

The Process

Equity Partners was engaged by DLP to sell the business and was quickly court approved to do so. Within 60 days of court approval, Equity Partners attracted 85 buyers to sign confidentiality agreements and review the information on DLP.

The Solution

With EP generating significant interest in the company, a final auction of going concern bidders was conducted. Bidding by four different going concern buyers resulted in Register Tapes Unlimited, Inc. (RTUI) making the highest and best offer. Nearly all employees were retained, and the plant continues to operate.

Dixie-Southern Arkansas, LLC

The Company

Dixie-Southern Arkansas, LLC

An industry leading, custom steel-fabricator of large and heavy ASME code vessels, tanks, pipe and other mechanical components for all industrial processes.

The Challenge

The parent company in Florida had purchased the assets in Arkansas as a way to expand operations and provide a more centrally located facility to ship from. After a successful first year, the second year was riddled with production issues that resulted in a significant loss and ultimately impacted the viability of the Florida operation. Ownership decided to divest the Arkansas facility.

The Process

Equity Partners was retained to market the assets as a going concern and generated significant interest in the company within 60 days.

The Solution

Equity Partners conducted an auction among multiple qualified bidders and after 22 rounds of competitive bidding, an entirety offer was selected that paid off the secured debt in full and allowed operations in Florida to continue.

Dongar, Inc.

The Company

Dongar, Inc.

A New Jersey-based contract cosmetics packaging company filed Chapter 11 after the loss of several key accounts.

The Challenge

The company had unsuccessfully attempted to confirm a sale to Harmon Associates two previous times while under Chapter 11 protection.

The Process

The trustee hired Equity Partners to run an extensive campaign to uncover all interested parties. Our process uncovered over ten additional prospective buyers who conducted site visits and evaluated the financials.

The Solution

Two offers were generated by Equity Partners with the sale closing to Harmon Associates. Our process generated an offer that was all cash, had no contingencies, and had a 28% higher purchase price than had been previously considered. When the sale closed, Dongar continued operations and was able to retain its employees, including the former owner.

Duratek Precast Technologies, Inc.

The Company

Duratek Precast Technologies, Inc.

A precast concrete company operating in Chapter 11 for 4 months when Equity Partners was retained.

The Challenge

The business had seen revenues decline drastically over the past 3 years and with no plans to exit bankruptcy, the secured creditors were pushing for a liquidation.

The Process

The secured creditors agreed to give Equity Partners 60 days to obtain alternative options to a liquidation. Equity Partners quickly generated over 65 interested prospects and 2 going concern bidders.

The Solution

After a lively auction, the business was sold, far exceeding any liquidation estimates, to a buyer familiar with the company.  The sale was approved and operations continued with minimal disruption.

Emission Solutions, Inc.

The Company

Emission Solutions, Inc.

Texas-based, developer, converter and marketer of OEM, medium-heavy duty CNG (compressed natural gas) engines.

The Challenge

ESI was one of only two companies converting diesel engines to natural gas engines, certified for EPA and CARB Emission Standards. After the loss of a major customer, the company was put into an involuntary Chapter 11 and heading to a Chapter 7 conversion and liquidation when Equity Partners was retained.

The Process

Equity Partners quickly completed a 30 day marketing process and generated 4 potential stalking horse offers. The bankruptcy court approved one and scheduled an auction a few weeks later.

The Solution

Equity Partners conducted an auction of the assets with 3 going concern bidders and after 13 rounds of bidding, the winner was selected. Closing occurred 7 days later and the new owner began reconstituting the business immediately.

ES Steel

The Company

ES Steel

This Maryland-based metals distributor and steel fabricator was consistently losing money and was in default on its loans because of the weak economy.

The Challenge

One of the owners was the president of the company and he desperately wanted to retain his management position and secure an opportunity to rebuild the company.  We put together a plan whereby we would test the market for an equity infusion, refinancing, joint venture or a sale in the entirety and demonstrate to the bank which option was best.  When we explained our plan to the bank, they agreed to forgo any further action until they saw the results of our process.

The Process

Equity Partners was retained and ran our marketing and sales process, resulting in 44 parties executing confidentiality agreements and evaluating the company.  We uncovered an equity partner who agreed to infuse cash into the company.

The Solution

By turning over every stone, communicating weekly with the bank so they could follow the process, building trust in the company,  and finding an equity partner, we were able to demonstrate that  restructuring was a viable option. The bank agreed to restructure, the company had access to much needed cash, giving the owners a chance to rebuild the company and strengthening the credit significantly.