Rex Electric and Technologies CEO Dominic M. Sergi was ready to retire. He was the third generation to run his family’s Chicago-based company, where he had worked since he was ten under the tutelage of his uncle, learning everything about being an electrician. He successfully grew the company, adding employees, adding new businesses, and professionalizing services. It was 2013. Dom was ready to sell.
Master Craftsmen: Find Underlying Value
After reviewing the company’s performance, Ravinia Capital concluded that Rex’s margins were hurt by inefficiencies and it lacked a track record of sufficient profitability, suppressing EBITDA, which in turn would compress the sales price. Ravinia partnered with Rex to identify a series of strategic initiatives to find the underlying value in the enterprise. Rex implemented the strategies and two years later, Ravinia Capital was engaged to manage the sale.
A Tailored Approach
The Ravinia team brought a fire in the belly to the deal. It completed a significant sell-side due-diligence process and then reached out to an exhaustive list of buyers that included corporate strategic competitors in and out of the Chicago market, private equity firms with telecommunications components, and family offices. A comprehensive CIM that was a collaboration between management and the owner was developed as well as a sell side due diligence quality of earnings analysis. A widely attended webinar resulted in several offers. One stood out.
The Heart of the Enterprise
Selling a 95-year-old family business means finding a buyer with values that are shared by the seller. There is a good business reason for it. Companies with similar corporate cultures will usually be more successful when they integrate. Striving to achieve the best result, the Ravinia team focused on identifying a wide group of potential buyers who would respect Rex’s values and would be committed to continuing the legacy and reputation that Rex had built in the marketplace. The standout was Chugach Alaska Corp., the owner of a diverse group of businesses that was established in 1972 under the Alaska Native Claims Settlement Act (ANCSA). (link). As a company it promises to promote and protect the cultural values of its shareholders while fulfilling its vision to remain financially sound. The Ravinia team saw a match.
Completing the Deal
The four-month diligence period was intensive as Chugach wanted to make sure that the integration would be smooth and that Rex would fit its 10-year strategic objective. Over the months of due diligence, every Chugach board member met with the Rex team to ensure the economic and emotional success of the transaction. When a hiccup surfaced – in this case a billing inaccuracy -- Ravinia demonstrated that this was an isolated issue that was quickly and efficiently resolved. A week later, the transaction closed.