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Private Equity

Pre-Purchase Due Diligence 

Situation

While performing due diligence on a prospective purchase, a private equity company engaged WWM to review its options for the leasing of the company’s primary manufacturing space. The seller was contemplating a sale leaseback transaction which was scheduled to occur after the sale of the business to the private equity company.

 

 

Challenges

WWM performed a market analysis and determined that the seller’s quoted lease rate was nearly double the current market rate for similar buildings.

 

 

Results

WWM helped negotiate a lease closer to market rate, with a savings differential that amounted to nearly $1 million per year. The savings from the lease negotiations created an estimated $5 million to $7 million in enterprise value.