How a financial plan meant the £27m sales price for pharmaceutical wholesale was a lot more than originally expected
As a business owner, the dream of retiring comfortably and selling your company at a premium price is always there. But what happens when the goal seems within reach, but there’s a crucial missing piece that could make or break the deal?
That’s exactly the challenge faced by a pharmaceutical logistics company owner.
He had a clear goal in mind: sell the business for £27m and retire comfortably.
The problem was, his corporate finance advisor, who was guiding the sale, told him that without a clear financial projection showing future profit and cash flow for the next three years, no buyer would touch the deal.
Both the company’s internal and external accountants were not capable of producing these projections. This left the owner in a difficult spot.
Fortunately, there was a solution.
We were asked to step in and create a robust financial projection to fill that gap.
The Plan: A simple, yet powerful, financial strategy
The first thing we did was to get crystal clear on what the owner’s plan actually looked like in numbers. The business owner’s goal was to maintain the size of the fleet but increase sales and profitability by raising the ‘revenue per mile.’
However, there was a huge problem: he had no idea what the current revenue per mile was, or how much it could realistically be increased by.
Here’s how we solved it step-by-step…
Step 1: Understand the Key Numbers
We began by calculating the core metrics driving the business – namely, the ‘revenue per mile’ and fleet utilization.
Without these, we couldn’t even begin to create a projection.
Step 2: Create a clear business model
Once we had the numbers, we built a financial model that clearly showed how the business could grow over the next three years.
This wasn’t just a static document – it was a flexible, dynamic model that allowed us to run “what if” scenarios. For instance, if we increased the number of pharmaceutical customers in Europe, how would that impact profitability, especially with more backhauls?
Step 3: Refine and present the projection
With this clear financial projection, we had the detailed numbers that the buyer needed to see. It wasn’t just theory – it was a roadmap showing the path to increased revenue and profitability.
The Results – A £27m sale and a happy retirement!
The financial projection was exactly what the buyer needed to move forward with the sale.
The business owner was able to sell his company for the £27m he had hoped for.
More importantly, the whole process gave him a solid, stress-free path to retirement. Instead of worrying about whether the deal would go through, he was confident in the numbers and knew exactly what his next steps would be.
What’s next for you?
If you want to grow your business but the financials aren’t adding up, we can help you create a clear financial plan to boost your profitability and cash flow.
To get in touch you can drop us an email to [email protected] or call one of the team on 0161 410 0020.
Disclaimer
You must take professional advice before making any decisions based on the information that you have learnt here. While every effort has been made, to make sure it is accurate it cannot be precisely tailored to your personal circumstances. This article is for general information only and no action should be taken, or refrained from, as a result of this information. Professional advice should be taken based on specific circumstances in each individual case. Whilst we endeavor to ensure that the information contained in the article is correct, no liability will be accepted by Krystal Clear Accounting which is a trading name of Kim Marlor Associates Ltd or damages of any kind arising from the contents of this communication, or for any action, inaction or decision taken as a result of using any such information.
