Corporate Advisory Firms and How They Assist Melbourne Manufacturers: Case Study In Melbourne

Melbourne Client Profile

This case study examines a Melbourne based manufacturer specialising in boat and ferry manufacturing.

This family-owned business has been operating for over 30 years, founded by two families. One of the original founders retired and exited the business nearly 20 years ago. The company produces a low volume of high-value ferries each year. Known for prudent financial management, they have accumulated substantial retained earnings. The company's primary customers include tourism operators and government organizations in Australia, the Caribbean, Central America, and the Middle East.

Purpose

To provide deal structuring and tax advice for non-standard M&A transactions.

The Corporate Advisory Challenges

The business faced an issue where the cash in the bank exceeded the business value—valued at $8M, but with $9M in the bank. This created a problem for potential buyers, as purchasing the business would mean paying $17M for an $8M business. Additionally, the family structure beneath the two main families was unsuitable for the transaction, and structural and legal issues meant the funds from the M&A transaction would need to be distributed to beneficiaries across the family.

Action Plan

1. • Met with the client to understand the transaction's details from both the buyer's and seller's perspectives, including timing, flexibility, and the meaning of the offer.
   • Conducted a thorough fact-finding process to understand the complex family structure and the shareholders involved.
   • Reviewed tax legislation and explored all available options for the client.

Corporate Advisory Results

The advisory team successfully addressed the challenges within the stipulated timeframe. Key outcomes included:

• Developed a clear financial calculation outlining the income, tax, and timing considerations for the client.
• Provided a strategic plan for when income would need to be declared and taxes paid, ensuring the distribution of funds aligned with the family's structure.
• Proposed three different options for the client to consider, each with varying levels of flexibility, including a suggestion to work with the buyer to improve the situation and implement changes gradually over time.

The proactive involvement of the owner contributed significantly to the seamless execution of the action plan.

Next Steps

The client agreed to collaborate with the buyer on a strategy that would improve the situation and allow gradual implementation, rather than requiring immediate changes.

Impact

The client was able to gain an additional year to manage the complexities of shareholding and money transfers.

Corporate Advisory Services Provided

• Business Valuation
• Tax Advice for Non-Standard M&A Transactions.
• Market Research and Buyer Engagement