Transport company saves $300K on an acquisition with the help of Fogelberg Consulting

HIGHLIGHTS

Challenge

  • The opportunity to buy a competitor’s business and a need to do due diligence to mitigate risk and completely understand the business for sale.

The Partnership

  • Lani and John* worked together, Lani taking a very deep dive into the financials of the potential acquisition, uncovering a much clearer picture of the company's true economic value, liquidity and financial health, and pulling all aspects of the deal together.

Results

  • By fully understanding the financial aspects of the acquisition, John was able to accurately value the business on sale and negotiate a $300,000 reduction in the purchase price.

  • Lani's assistance in loan structuring and financing ensured that John had the necessary financial support to complete the acquisition.

  • The financial knowledge John gained through Lani’s expertise and guidance helped him manage his business finances more effectively post-acquisition.

CASE STUDY

In  2017, with a background in business management, John Smith decided to start his own transport business in the highly competitive Auckland market. Early on in his business journey, he heard about Lani Fogelberg of Fogelberg Consulting through a friend. He called Lani, and they ended up working together. She helped him pull together a proposal for a sizeable contract, his business won it, and subsequently, that contract has gone on to become one of the most significant contracts in his business.

An acquisition had always been part of John’s long-term plans for the business, and so when he heard that a competitor’s business was for sale, he didn’t hesitate to turn to Lani straight away.

*The company owner’s name and other identifying details have been removed from this case study for commercial sensitivity.

THE CHALLENGE

When you’re buying a business, it’s critical to ensure you understand the story the financials are telling you. John needed a deep understanding of the financials to ensure it was a sound investment. 

This opportunity, while exciting, brought significant risks that needed careful management.

Despite his business management background and extensive experience, John knew that having Lani to help navigate the complexities of this high-stakes acquisition was a no-brainer. Without expert guidance, the acquisition could have turned into a costly strategic mistake.

One of Lani Fogelberg’s superpowers is her understanding of numbers and financials, so she was delighted when the opportunity came up to work with John and his team again on the acquisition.

THE PARTNERSHIP

Once Lani came onboard, it was time to dig into the financials for the prospective new acquisition to make sure they had an accurate picture of the state of the business. 

Lani set to work, meticulously reviewing the company’s financials. Her thorough analysis revealed that the company’s financials were not as strong as initially presented - in fact her review of the books uncovered discrepancies that could have been easily overlooked. As John recounts:

“There was a lot around the financials that she really helped me with. The business was showing $X amount of profit, but then when we dug deeper into it and she asked a few questions, it was actually half that amount. And she was the one that figured it out.”

Lani’s deep dive into the financials was instrumental in providing a clear picture of the company's true economic value, liquidity and financial health.

“She has a very good understanding of finance and capacity and understanding company financials. There were a lot of things that she was able to point out that I couldn't pick up on, which was very helpful.”

What’s more, as John explains, what Lani uncovered  “helped us negotiate about $300k off the buying price.”

Lani’s contribution did not end there. She also facilitated the loan process by connecting John with a contact of hers at ANZ, ensuring the financial support needed for the acquisition. This support was crucial in securing the necessary funding and completing the acquisition successfully.

As John puts it: 

“Not only did she help us make financial decisions, but looking at the business planning side of things, she was also able to introduce us to someone that she knew at ANZ who was a good amount of help to us.

I knew she knew people, but I didn't know she'd be able to help me in that capacity. Her contacts made the process 100 times easier for us.”

One final area where Lani was able to share her expertise was in her understanding of accounting foundations.

“She set up our accounting process for the amalgamated business - receivables, payables, Xero, CRA, and preparations. She set all of that up. And she helped organise our own end of year financials in a way where it's properly broken down and properly understood and where we know where the costs are going”. 

THE RESULTS

“There were a lot of things that she was able to point out that I couldn't pick up on, which was very helpful”.

Throughout the process, Lani's guidance was invaluable. She helped John understand complex financial concepts. Her support extended beyond the acquisition, helping John manage costs effectively and set a strong financial foundation for his business.

“I had a basic understanding of financials when I first started the company, but I think we're now at a level where I think I understand it to a very intermediate level and possibly to an advanced level. Lani really helps you break down your financials and really understand the cost of your business in a way that's broken down, that’s easy to translate.”

The acquisition of the competitor’s company marked a significant milestone for John’s business. John’s improved financial understanding and cost management skills have been crucial to the company's continued success. 

John’s summary of his story speaks volumes about the impact of Lani's guidance:

“She's basically there for advice, reassurance, thoughts, second opinions, just back-end management. She's always been very easy to communicate with. And we've got along very well, very well. She's really good at following up with things.

Where she's been the most help for me has been the accounting and the financial side. That's where she's become very valuable to me. 

She's very good at following through and making sure that it gets done. And I think sometimes that's the push you need to get the foundation straight. She's helped us set up the foundation of the finance side of the business very well.”

The metrics of success are clear: a $300,000 reduction in acquisition cost, a seamless loan process, and a stronger financial foundation for this Auckland-based transport business. These outcomes have laid solid foundations for continued growth and success.

We’ll leave the final word to John: 

“She was part of all the major milestones that we’ve achieved until today. She was part of all those major milestones from the start. She just made the thing a lot easier.”