Case Studies
Atlantic Aviation: Building Value Before a Sale
Atlantic Aviation is a leading provider of fixed base operations (FBO) to the corporate jet sector. The Company’s shareholders were uncertain about whether to expand the business through acquisitions or exit through a sale. We worked with the Company to determine what types of acquisitions were available, approach specific targets, and execute transactions. After completing two acquisitions, the Company entered discussions with a large target that would provide the Company with the size needed for an IPO and began discussions with investment banks about going public. Simultaneously, we began discussions with three potential buyers. As a result of the clear cut acquisition strategy and the successful integration of its past acquisitions, the buyers viewed the Company as a highly viable platform for growth and accorded it a higher multiple than it would have achieved without the acquisition growth strategy in place. Within a year of the first acquisition, the Company was sold for an equity value approximately 40% above initial expectations.
Truckload Carrier Case Study: Going Against the Conventional Wisdom
Shortly after the financial crisis hit in 2008, transportation valuations plunged. “Asset based” competitors (e.g., airlines, truckload carriers, warehouse owners, container shippers, and LTL carriers) were perceived as being particularly exposed to the severe drop in freight demand. We were hired by a private equity group who was building a position in the distressed debt of a highly leveraged major truckload carrier. In our valuation work, we evaluated a range of financial projections based on various economic and market forecasts. We also incorporated a dynamic strategic framework in which we analyzed the truckload carrier’s ability to reduce costs in various scenarios. A key judgment in our work was that truckload carriers, despite being the epitome of the “asset-based” classification, could actually shed costs very rapidly due to the discretionary nature of spending on new fleet and flexible labor forces. As a result, the carrier was able to maintain a much higher level of profitability than generally predicted. Our client was thus comfortable taking an aggressive approach to buying the very inexpensive debt of this carrier and was able to subsequently sell it at more than face value.
