How We Help Clients
Cash Flow Analysis Identifies Source of Shortage
The owner of a large automobile dealership was experiencing a cash shortage and suspected employee theft. Instead of an expensive and time-consuming cash audit, Detterbeck Johnson & Monsen recommended a cash flow analysis of the past five years. This would identify where the company was spending cash and would provide a valuable operating expense comparison.
While preparing a cash flow schedule, Detterbeck Johnson & Monsen discovered that the client's current gross profit had decreased from prior years, which resulted in the decrease in available cash. To address this issue, we developed revenue-enhancing strategies and worked with the client to identify areas where costs could be reduced.
Due Diligence Helps Distributor Attain Expected Returns from Recent Deals
A national distributor of health products was interested in acquiring two companies and turned to Detterbeck Johnson & Monsen for due diligence assistance. Both purchases would allow the client to expand its product line, build a larger market presence, and increase distribution capabilities.
Detterbeck Johnson & Monsen completed on-site fieldwork that included the review of company records, verification and testing of specific accounts, analytical procedures, and the observation of inventory. We also prepared letters of intent, estimated the market value of the target companies, and negotiated purchase prices that resulted in a favorable tax situation.
Sale of Business/Valuation
Effective Planning Results in Savings of Almost $900K
The owners of a food processing equipment company felt it was the right time to sell the business. To help them prepare for the sale, Detterbeck Johnson & Monsen performed a valuation using EBIDTA and other methods, such as discounted cash flow and a market based approach, to determine the current market value.
The owners rejected two bids that were presented shortly after the business was offered for sale, but pursued one that followed a few months later that was in the valuation range. The prospective buyer presented a competitive stock deal and the owners countered with revised terms after receiving our feedback on the offer. Our assistance in negotiating and structuring the deal, combined with early tax planning, helped the owners achieve collective tax savings of almost $900K.
Effective Succession Planning Helps Owner Through Difficult Transition
The founder of a 50-year-old manufacturing company wanted to transfer leadership, but continue to be a part of the business. Over the years, he had gifted over half of the company to his two sons. Both sons wished to sell the company at this time and cash out.
Detterbeck Johnson & Monsen worked closely with the company's management team to develop a succession plan that included: 1) a stock acquisition program that was virtually no cost to employees or other shareholders, and 2) a favorable refinancing deal for the buy-out of the sons' shares. Most importantly, our involvement gave the founder the peace of mind that all transition issues would be handled in a way that enhanced business and family relationships.