Grinnell Systems Corporation, based in San Jose , California , a wholly owned subsidiary of Gulton Industries, Inc., a NYSE listed company, is a developer and manufacturer of image processing systems. Its systems are primarily used in graphical workstations and video teleconferencing systems.
3M Corporation a NYSE listed publicly traded company based in Minneapolis , Minnesota , provides solutions for a wide range of electronics applications. Its Image Processing subsidiary, based in Pasadena , California , is a developer and manufacturer of image processing systems.
OEM Capital was engaged to assist Gulton Industries, Inc. in finding a buyer for Grinnell Systems Corporation. The business, which had been acquired a few years before, had missed a timely introduction of its next generation of products and was experiencing a rapid decline in revenues with a significant negative cash flow. With our advice, the business was restructured to best accommodate a sale and we initiated a competitive sale process.
OEM Capital’s presentation of the company’s value and our knowledge of the industry secured several interested parties.
However, time being of the essence, it was necessary to structure a transaction that would permit a closing within a very short period. This was accomplished by devising purchase orders for the buyer to secure the assets and avoid liability exposure rather than negotiate a purchase and sale agreement. Gulton Industries, Inc. received a price that permitted it to reverse a substantial portion of its reserve for discontinued operations.
Our success with Grinnell Systems Corporation illustrates that, whether a business is healthy or distressed, superior valuations can be realized for the selling shareholders by a well executed approach to a sale or divestiture by merger and acquisition professionals who are knowledgeable about the industry and the intentions of its participants.