Sale of Manufacturing Company + Real Estate with Environmental Liability - Orange-County-Business-Broker

Sale of Manufacturing Company + Real Estate with Environmental Liability

Bill Grunau
April 17 ,2017

This 37 year old manufacturing company had seen its profits decline in recent years and the founder-owner was ready to retire do to health problems. The sellers owned the building, however, there was a potential environmental liability from a nearby Superfund cleanup site. The company engaged our firm as Business Brokers to represent them in the sale of the business and the commercial real estate.

Situation & Challenges

  • Sales and profitability had severely declined making the company all but unsellable on its own.
  • The company had good equipment and an excellent facility that was under utilized.
  • The seller also owned the building.
  • The building was located near an EPA superfund site. Groundwater contamination was migrating toward this location putting a cloud on the phase one environmental report and making a loan on the building impossible.
  • The seller did not want to carry a note and bank financing did not seem possible.

Solution

  • We found an environmental insurance policy that would cover the potential future liability of the groundwater contamination. With this policy the bank would lend on the building.
  • We marketed the business to industry buyers that would need the same facility and equipment.
  • We worked closely with several banks to obtain financing for both the building and the business.

Results

  • We found a buyer that owned a similar manufacturing business which had outgrown his current facility and his facility and equipment needs were that same as the sellers.
  • As a result of the synergy of the two businesses, the buyer’s experience, and the combined financial strength of the two companies we were able to arrange favorable financing for both the business acquisition and the real estate.
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