Purchase of Assets out of Chapter 11 Bankruptcy

Situation:

The owner of a chain of retail/wholesale auto parts stores wanted to acquire the assets and stores of another retail auto parts chain that was in a Chapter 11 bankruptcy. Management had little acquisition experience and no experience in acquiring distressed assets.

Task/Action:

LMG was retained to lead an acquisition team of both internal management and outside counsel. LMG met with both management and wholesale customers of the target entity. LMG then developed and oversaw a due diligence plan, advised management on developing a valuation model for bidding and directly negotiated the acquisition with representatives of the target company in bankruptcy.

Result:

Our client was the winning bidder at the bankruptcy auction. The acquisition resulted in a doubling of revenue for our client and within four years from the acquisition EBITDA was running at close to 9% of sales.

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