Strategic Recasting – making your company more sale-able

Case study: A Northern California textile company – manufacturing and importing. Specializing in fine wool (men’s and women’s suits) and specialty fabrics. 12 years old, family run, $3.2M revenues. 2 woolen mills in Ireland. Steady if not impressive growth. Founder retiring, sons tired of business – will stay on for term. Company has weathered the decline of demand for men’s suits by branching into imported cottons and changing markets from men’s clothing to women’s fashion designers.

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The company is a solid performer in a fairly small niche. In preparation for sale, the company has re-stated its finances, and has paid a consultant to create reports describing the company, what it does best, and some of its future opportunities. (It sees its growth as doing ‘more of the same’ that’s kept it successful – moving to fashion houses and moving into specialty fabrics.)

In other words, this textile company has looked at its past and projected forward in order to talk about a likely future. It’s an Official Future that created by taking a straight-edge to past performance to predict what will happen.

Potential buyers look at the company, they look at the financials, and they try to imagine themselves as the new owners. Those with industry expertise will be able to see past the rose-y optimism of the consultant’s reports and will try to imagine themselves in charge of this company in 4, or 6 or 8 years.

What they need, and what they will value, is a kind of re-casting that talks about the future — or futures — of that company. We call it a “Strategic Recasting” report.

Strategic Recasting is the description of decisions the company should take if the overall business economy changes significantly. Many are broad questions dealing with supply and demand — in the case of this textile company for example, changes in consumer tastes and regulatory environments and changes in production or distribution technology. How will business opportunities change for example, if the US dollar weakens significantly, or if strict regulatory changes increase the cost of fabric-finishing? What happens if dramatic changes in textile production require massive retooling expenses, or if the cost of moving finished goods to market rises three-fold?

As a service, strategic recasting offers a way for a company being offered for sale to differentiate itself from similar ventures. It offers a way for potential buyers to see the long-term wisdom of buying *this* company rather than others.

Bottom line? We believe buyers will pay a premium for companies that offer this information.

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