Case Study: OHARCO + Lutz M&A

Case Study: OHARCO + Lutz M&A

 

LUTZ BUSINESS INSIGHTS

 

CASE STUDY

OHARCO

BACKGROUND

Our client, Omaha Hardwood Lumber Company, dba OHARCO, was interested in selling their wholesale distribution business. They wanted to ensure they received a fair purchase price for the company, so they looked to Lutz M&A to get a better understanding of the sale process.

Cheryl Rue, Treasurer at OHARCO, already had familiarity with Lutz, working with us for over 30 years on their business’s accounting needs. Her Lutz Accounting representative referred her to Bill Kenedy, Lutz Consulting & M&A Shareholder to get assistance with the sale. Bill met with Cheryl to get an understanding of the business and provided a strategic transaction plan that would solve her needs.

LUTZ DIFFERENTIATORS

  • Over 20 years of combined experience providing successful transaction outcomes.
  • Unique market-driven, competitive process.
  • Strong, certified internal team.
  • Sole focus on merger and acquisition work.
  • Multiple services lines, tapping into a breadth of specialized skills and knowledge.

OUTCOME

Our Lutz M&A team assisted Cheryl through the entire sale process. From initial negotiation, to signing the letter of intent (LOI) and completion of the transaction, Lutz M&A served as a trusted advisor providing valuable advice and recommendations. In the end, our team was able to help Cheryl successfully sell her business.

WORDS from THE Client

Did working with Lutz M&A provide value/prove helpful?

“Early on in our search process, a longtime business mentor with corporate acquisition experience stressed how he has seen too many business owners attempt to negotiate by themselves all the details of the sale of their own enterprise. He emphasized how personal emotions will cloud the negotiations and urged us to utilize an independent party in order to formalize a sound plan for the sale of our company to the right party. We found that in Bill Kenedy.” – Bill Sauter, OHARCO

How did Lutz M&A meet or exceed your expectations?  

“As an accountant and business owner with 20+ years of experience, I questioned the need for outside assistance in selling the business. I quickly learned that M&A is its own world, and having the outside (independent) direction, advice and support of Bill Kenedy was necessary. It was extremely valuable to have someone I trusted to guide us through the process and decisions. He provided the necessary background and outside information that we did not have. Trying to do this without his support would have been a mistake. Since we can only sell the business once, we needed to get it right the first time, and Bill was key in helping us do that.” – Cheryl Rau, OHARCO

Do you have any recommendations for someone who is considering partnering with Lutz M&A?

Obviously, call Lutz. The earlier the better. Lutz can be a strategic partner as you prepare your business for sale… 3-5 years or 5-10 years before you plan to sell. Get your house in order. Then when the time to negotiate nears, they can help plan a strategy & support you throughout the process.” – Cheryl Rau, OHARCO

Do you have any additional comments?

“Deyna was right, as usual. She said to call Bill, and I did. So glad I did. What I said in my thank you note holds true as well. I thought you were nuts in December when you said that you never know what the future will hold, and the deal is not done until cash changes hands. Three months later, Covid shut down the economy, and every day, I am relieved that I listened to you and agreed to close the sale in early February. I would not have wanted this hanging over our heads longer or getting stopped & having to start all over again. One simple decision affected so many things.” – Cheryl Rau, OHARCO

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5.5.21 | Am I Ready to Sell My Business? | Webinar

5.5.21 | Am I Ready to Sell My Business? | Webinar

 

LUTZ BUSINESS INSIGHTS

 

AM I READY TO SELL MY BUSINESS?

Am I Ready to Sell My Business?

5.5.21 | 11:30AM – 12:30PM | Webinar

When is the right time to exit your business? Unfortunately, there is never a clear answer to this question. Whether you are considering a business sale or not, it’s important to understand your options, so you are prepared when the time comes. In this webinar, Consulting Director, Ryan McGregor, and Financial Analyst, Mark Otte, of Lutz M&A will provide tips for a successful business sale strategy.

Key Takeaways:

  • Business Sale Options/Process Overview
  • Tips For A Successful Business Sale
  • Benefits Of Working With An M&A Advisor

Who Should Attend: Business Owners

Seminar Level: Intermediate

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Quarter Four Middle Market M&A Report 2020

Quarter Four Middle Market M&A Report 2020

 

LUTZ BUSINESS INSIGHTS

 

QUARTER FOUR MIDDLE MARKET M&A REPORT 2020

Quarter Four Middle Market M&A Report 2020

Deal volume in the lower middle market continued its strong rebound in Q4-2020 with deal count for the quarter reaching 10-year highs. The total value of lower middle market deals (transaction value less than $1 billion) announced in Q4 was $80.5 billion – 8.4% above Q3. Deal count also increased 25.5% q/q to 3,466, and was up 8.5% from the same period in 2019. Private equity firms capitalized on the disruption and added to their existing platforms. Corporations within the same sector identified attractive consolidation opportunities and uses M&A to increase scale.

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Quarter Three Middle Market M&A Report 2020

Quarter Three Middle Market M&A Report 2020

 

LUTZ BUSINESS INSIGHTS

 

QUARTER THREE MIDDLE MARKET M&A REPORT 2020

Quarter Three Middle Market M&A Report 2020

The lower middle market deals in Q3-2020 rebounded from the steep decline realized in Q2 when the spread of COVID-19 triggered global lockdowns and brought businesses to a standstill. The critical phase of uncertainty seems to be over, resulting in increased willingness to engage in transactions. The total value of lower middle market deals (transaction value less than $1 billion) announced in Q3 was $74.3 billion – 213.2% above Q2. Transaction volume also increased 18.0% q/q to 2,761, but was still down 12.0% y/y.

While not reflective of a full recovery, the uptick in M&A activity in Q3 highlights the sellers and buyers’ renewed interest for deal-making. Corporations and financial sponsors turned back to the M&A market mid-summer to either revisit deals left on hold at the height of the coronavirus pandemic or to pursue new opportunities mostly focused on COVID resilient sectors such as technology, industrial services or healthcare. Additionally, value investors sought to capitalize on distressed M&A and drive post-COVID-19 growth.

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Lutz adds Holzworth and McKeon to Omaha Office

Lutz adds Holzworth and McKeon to Omaha Office

 

LUTZ BUSINESS INSIGHTS

 

Lutz adds Holzworth and McKeon to Omaha Office

Lutz, a Nebraska-based business solutions firm, welcomes Sydney Holzworth and Joe McKeon to its Omaha office.

Sydney joins the firm as a Recruiting Coordinator. As a member of Lutz’s Human Resources team, Sydney will be involved in coordinating campus recruiting programs as well as recruiting internal employees. Holzworth received her Bachelor’s degree in public relations and communication from the University of Nebraska-Lincoln.

Joe joins Lutz’s M&A division as a Financial Analyst. He specializes in merger and acquisition advisory services and business valuation. Graduating from the University of Notre Dame, McKeon received his Master’s degree in business administration.

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2021 – Is This the Year to Sell Your Business?

2021 – Is This the Year to Sell Your Business?

 

LUTZ BUSINESS INSIGHTS

 

2021 – IS THIS THE YEAR YOU SHOULD SELL YOUR BUSINESS?

2021 – Is this the year to sell your business?

bill kenedy, LUTZ consulting and m&a shareholder

 

Lower, middle-market business owners faced a number of challenges navigating through the pandemic in 2020. Many that were in the process of selling their business had plans put on hold or deals derailed by Covid-19. With the vaccine starting to become available and the likelihood of the crisis settling down in 2021, those owners will likely attempt to restart their sale processes. For those considering a sale transaction, what does the world of mergers and acquisitions look like?

 

Uncertainty Surround Us

There are many uncertainties: Have valuation multiples changed? How will buyers view the business if it has not returned to pre-Covid profitability? If the business improved during Covid, will buyers assume that success will continue? While these questions are important, the most significant factor to consider in the near term is: what will happen to tax rates?

 

Proposed Tax Rates

With a Democratic President, House, and Senate, there is a reasonably good chance that some, if not all, of President Biden’s tax proposals will be implemented. The most important item for business owners considering a sale of their business relates to the proposed higher maximum rate on long-term capital gains. 

Under current law, the maximum Federal tax rate on capital gains is 23.8%. Under the Biden plan, net long-term gains for those with taxable income above $1 million would be taxed at ordinary rates. Biden proposes to raise the highest ordinary rate back to 39.6%. That, along with the 3.8% net investment income tax, would result in a Federal tax rate on the capital gain from the sale of a business of 43.4% (assuming the owner has gain/income over $1M). That is an 82% increase in Federal tax on the capital gain from the sale of a business. It is too early to know if this proposal will pass, and if it does, when it would become effective.

 

Contact Lutz M&A

Clearly, this is a critical looming issue for business owners. It seems illogical that a new administration would implement this with an economy struggling to recover from a pandemic. But we have witnessed quite a few things we didn’t think would happen in the last year or so, haven’t we! If you would like to discuss your business and these issues with Lutz M&A, please contact us.

ABOUT THE AUTHOR

bill kenedy

402.492.2132

bkenedy@lutz.us

BILL KENEDY + LUTZ CONSULTING AND M&A SHAREHOLDER

Bill Kenedy is a Lutz Consulting and M&A Shareholder at Lutz. He specializes in business valuation, litigation support, and merger and acquisition advisory services.

AREAS OF FOCUS
AFFILIATIONS AND CREDENTIALS
  • American Institute of Certified Public Accountants, Member
  • Nebraska Society of Certified Public Accountants, Member
  • Certified Public Accountant
  • Accredited in Business Valuation
  • Certified in Financial Forensic
  • Certified Exit Planning Advisor
EDUCATIONAL BACKGROUND
  • BSBA in Accounting, St. John’s University, Collegeville, MN
COMMUNITY SERVICE
  • Construction Financial Management Association, Past Treasurer, Board Member
  • A Time to Heal (non-profit focused on cancer patients), Past Board Member
THOUGHT LEADERSHIP

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