Case Study: Custom Frameless Shower Door and Mirror Installation Company
Motivation and Priorities
Our client wanted to respond to an unsolicited offer to purchase the company he owns and manages. Based on detailed discussions with the client and preliminary due diligence, Meridian identified conflicting seller motivations and early warning signs in the prospective buyer’s proposed transaction. The goal of the project then became to generate a set of strategic alternatives taking into account the fundamentals of the business as well as the owner’s financial, professional and personal priorities.
Approach
In order to clarify our client’s priorities, Meridian first performed a conjoint (“forced trade-off”) analysis that assigned a relative weighting to each of the client’s objectives. This allowed our team to create a scorecard for evaluating diverse transaction types ranging from licensing and revenue sharing agreements to joint ventures and sale of the company.
At the same time, Meridian worked closely with the client to develop a basic financial and operating model for the business. This model incorporated a variety of historical data and related inputs:
- Revenue
- Project volume
- Materials costs
- Time estimates
- Market labor rates
- Overhead expenses
- Margin targets
Finally, Meridian outlined a set of risks associated with each course of action and suggested measures for managing them.
Outcome
For the first time, our client was able to understand the company’s fundamentals and visualize how future revenue growth and profitability would respond to different planning assumptions. The client could also estimate current project capacity and anticipate the additional investments in staff and equipment that would be necessary to grow beyond it. Most important, this new perspective on the company’s performance and potential helped our client evaluate strategic options more effectively and move forward with confidence.
