The headline price is only where the comparison starts.
Graham and Elise Whitlock spent thirty years building Whitlock Fluid Power, an industrial distributor with 82 employees and $3.8 million in annual earnings. This fall, two letters of intent arrived within a week of each other. Ashgrove Equity Partners offered $24.7 million and wanted Graham to stay as CEO and reinvest a quarter of the price. Corvane Industrial offered $28.0 million and wanted to fold the company into its own. Graham was leaning toward the bigger number. Elise kept asking what would happen to the team. Their advisor set a review with the couple’s CPA and transaction attorney for the following week, then opened a session with both letters attached.
1. “Make an interactive visualization that puts the two offer letters side by side and show me what actually lands for them at closing.” Helmsted walked each headline down to the wire. Ashgrove keeps $6.2 million as a rollover and $1.2 million as a seller note. Corvane holds back $2.0 million in escrow for 18 months, pays $2.5 million in locked-up shares and makes $5.5 million depend on an earnout. After deal costs and tax, Corvane puts $12.1 million in their account and Ashgrove $12.2 million.
2. “Run the tax both ways.” Ashgrove’s deal is treated as an asset sale, so $2.1 million of past depreciation comes back as ordinary income, about $357,000 more tax than a stock sale. The rollover isn’t taxed until Ashgrove sells. Corvane’s stock sale is all capital gain, the earnout is taxed only if it pays, and the shares are taxed at closing even though they can’t be sold for a year.
3. “Show me the downside, base and upside for everything they don’t control.” Rollover, seller note, earnout, shares and escrow, each with its own range. In today’s dollars the base case favors Ashgrove by about $650,000. In the downside Corvane comes out $1.9 million ahead; in the upside Ashgrove finishes $3.0 million ahead. The building, which one buyer leases and the other buys, came out as its own decision.
4. “Build something the Whitlocks, their CPA and their attorney can all work from.” A presentation in the firm’s brand that the couple can work through themselves, switching outcomes as they go, with what each offer asks of Graham and the team. The advisor ran the review from it: the CPA took the tax treatment and how the price is allocated, the attorney took the escrow, earnout and non-compete terms, and the banker got five asks the whole team agreed on, starting with replacing Corvane’s escrow with an insurance policy: $1.9 million more at closing.
The advisor leads the room
For most owners, selling the business is the largest financial decision they will ever make, and the offers rarely arrive in a form they can compare. The advisor’s job is to translate structure into outcomes, what arrives when, what depends on someone else and what the family is giving up or keeping, and to lead the people around the owners: the CPA on tax, the attorney on terms, the banker on negotiation. Helmsted builds that translation in one session, from the letters themselves, so the whole team starts from the same page instead of four spreadsheets.
Getting creative with materials with Helmsted
Pull out the decisions that aren’t really the deal. The building looked like part of Corvane’s offer. Treated on its own, keeping and leasing it was worth about $800,000 more, and it can be negotiated with either buyer. Let the clients move the outcomes. A downside, base and upside switch answers “what if the earnout doesn’t pay?” before it is asked. Put the family’s question on the page. Elise’s question about the team gets its own section, next to the numbers, not after them. Write it for the whole room. The same presentation works for the owners, their CPA and their attorney, and the method notes at the end give the professionals every assumption to check.
One thing makes all of it work: context. Helmsted needs both letters of intent, the owners’ tax basis, the entity type, the depreciation schedule, who owns the real estate and its appraisal, and what the owners want from the sale besides the price.