Acquisitions and Dispositions

From a conceptual financial modeling perspective, acquiring a company is no different from acquiring a single asset, but it requires a much larger and more sophisticated model. From a tax perspective, however, acquisitions of entire companies can present some interesting challenges.

From time to time, we encounter clients who think they might want to add manufacturing to their retail business, or add a retail outlet to the manufacturing business, or grow their own grapes for their winery operation, etc.

In one case our client wanted to buy a retail operation. We developed a financial model demonstrating that the acquisition would be too much of a drain on the capital needed for the manufacturing operation. The yield simply wasn’t there. The client was accustomed to 50-percent gross margins; the retailer’s margin was only 10 percent.  It was time to focus on growing the manufacturing operation.

At Wyndelts & Co., we build models used in acquisitions. Some of these took place in manufacturing facilities in North Carolina and southern California, as well with a retailer in California.

We have worked with legal counsel and management to complete the sale of a large group of automotive dealers to a publicly traded company. The owners were sophisticated on the financial side so our focus here was on the numerous tax issues and indemnities, etc.

Analysis of asset acquisitions is relatively simple. We enjoy working in this area and our clients seem to be pleased with the results.

If we can help, contact us at your convenience.