Case Study: Corporate Finance

Divestiture

Independent Pump Co.

The Project 

Independent Pump Co. was a privately held company in Estevan, Saskatchewan, that manufactured and serviced downhole pumps for the oil and gas industry. Launched in 2007, the company tripled the number of employees within five years, doubled the size of its facility and saw its revenues climb to $18 million from $2 million during the same timeframe.

The independent operation started to receive takeover offers from major oilfield services corporations and decided the time was right to look more seriously into the bids. The management team approached MNP to lead them through the process and help Independent Pump determine which offer would maximize their investment. They had worked with MNP since launching the company and trusted the accounting and consulting firm’s advice.

The Challenge

The founders had received several offers over the years and realized that while they were successful at running the business, they needed to work with a team knowledgeable and experienced in divestitures. Independent Pump Co. wanted to make sure their goals for the sale were understood and met, that the team had a broad network of leads to draw from and would negotiate the best deal and terms. Focused on the customer service side rather than solely financial results, a stickling point for the founders was making sure a buyer would retain and market their signature downhole pump.

Their MNP accountant and business advisor helped Independent Pump Co. prepare for a possible sale by reorganizing the company ownership structure, among other things, and connected them with the Corporate Finance team.

MNP’s Approach

Being knowledgeable of the client and the oilfield services industry, MNP brought an unbiased, realistic view to the table when taking on the engagement. Corporate Finance crafted a customized plan that facilitated the process, from preparing the founders for meetings with potential buyers and conducting a thorough due diligence of Independent Pump Co., through executing the transaction and helping with transition.

Strategy Development – MNP helped Independent Pump Co. establish their personal and business goals, then developed a strategic plan consistent with their needs and all aspects of the transaction.

Purchaser Identification – Corporate Finance tapped into its regional, national and global networks to identify, screen and target potential buyers.

Transaction Management – The team managed every aspect of the divesture, including determining the current market value of the business, structuring and negotiating the deal, conducting due diligence – on both ends - and delivering effective tax and financing strategies.

Closing and Post-Deal Support – Independent Pump Co. received detailed help to ensure the closing was completed to their satisfaction, including negotiating terms of employment with the new entity, and post-transaction management.

Outcome

As MNP prepared Independent Pump Co. for all stages of the process, there were no surprises for the founders, who ultimately sold their company to the best bid. From helping determine they were ready to start the divestiture process to signing the contract, MNP and the Corporate Finance group worked closely with Independent Pump Co. to ensure their goals were met, including post-divestiture employment terms.

For more information, contact:

Brett Franklin, President, Corporate Finance, at 204.336.6190 or [email protected]

David Hammermeister, Oil and Gas, CPA, CA, at 306.634.2603 or [email protected]