Our Client: Semke Forensic, Inc. (“Semke” or the “Company”) is a Midwest-based forensic engineering firm with operations in St. Louis, Kansas City, Chicago, and Omaha.
Situation: Founded and owned by Fred and Patricia Semke (the “Shareholders”), the Company had grown to become one of the largest and most respected independent forensic engineering firms in the Midwest. As the Shareholders began their estate planning, they developed plans to reduce their involvement in the business and set goals for retirement. Through this planning exercise, they realized they needed to pursue a sale of the Company to ensure its continued success and provide financial security for future generations of their family.
Challenge: The time and resources necessary to grow the business and manage day-to-day operations had limited the Company’s ability to prepare for transition. The Company had outgrown its accounting and financial management systems, which resulted in an incomplete picture of its financial results and understated the value of the business. Additionally, the Company was unable to proactively identify the full range of prospective buyers, which limited its options to a small number of unsolicited offers. This situation discouraged the Shareholders from pursuing a sale and delayed their transition planning efforts.
The Solution: In preparing the Company for sale, The Fortune Group focused on improving the Company’s financial and operational reporting. Using a hands-on approach, The Fortune Group immersed themselves in the Company’s systems and developed operational reports and pro-forma financial statements that accurately reflected the Company’s strong financial results and operational acumen. Armed with this information, The Fortune Group validated the Company’s position in the industry as a leading provider of highly complex forensic engineering services that consistently generated high operating margins. The Fortune Group targeted a select group of qualified buyers, including both private equity and strategic buyers, who evaluated the Company as an add-on and/or a new division that complemented their existing service offerings.
The Results: The Fortune Group’s carefully managed sale process generated numerous attractive offers from private equity groups and strategic buyers. From these offers, Semke Forensic selected a growth-minded strategic buyer backed by a business-services-focused private equity partner. The transaction was an all-cash deal that limited the Shareholders’ post-closing obligations and gave them the opportunity to reinvest a portion of their proceeds to share in the financial upside of the buyer’s future growth on a tax-efficient basis.
