Nancy’s ears were still ringing from the customer yelling at her on the other end of the phone.
Sales were going to drop next year. They were angry when they called. Now, they had left. As of today, it was too late for them to ship in time for Christmas.
Nancy had been unable to deliver on an order to her best customer. The parts she needed to have made, coming in from China, were still sitting in a container just off the pier in Long Beach. A half mile away from her, a truck was waiting to pick them up. The driver had arrived at his allotted time. The crane was ready, but the port wouldn’t give the ship a place to offload. Even if the container did get off the boat, the extra shipping charges had jumped while it was still out at sea.
They now had unsold inventory, a lost customer, and extra shipping charges to pay. The whole transaction was a bust.
It didn’t matter if it was a porcelain doll’s head, or the laser inside a metal welding machine. Key parts were holding up production (and sales) for manufacturers all over the US. With Christmas just days away, customers were frantic to get the parts they needed.
Nancy knew she had to do something to replace the lost sales. Not in the new year, but right then… if she wanted to save the manufacturing business that her parents had left to her and her brother.
She started calling business brokers, looking for someone in the US, who had a factory that made the kind of parts she needed. It turned out there was a small manufacturer a few hours away that used porcelain in the manufacturing of Christmas Tree ornaments. It was a family business. The couple who owned it didn’t have any children. Without anyone to leave it to and no employees with the resources to buy it, they had planned on closing it in the spring after the Christmas rush.
Nancy knew she could take it over and run it to make her parts. The three got together, along with the business broker, and discussed how to do the deal. The couple wanted all cash for the business as they had hoped to supplement their modest retirement income.
The business broker had met Valerie (our founder at Diamant Carré) months before, at a convention of business brokers. He liked her energy and financial knowledge but didn’t have any deals that were large enough for her.
As it happens, Nancy had grown up in France near where Valerie had attended the university, so he tried to see if she would make an exception and help them find a loan. Valerie agreed to help another expatriée.
Valerie and Nancy met with the broker to talk about how it could be financed. From the meeting, Nancy learned she would have to get together with her CPA to get her financial documents ready. She had been postponing the CPA meeting so she could have time to find the parts she needed. Of course, there were bank and credit card statements plus invoices she had to compile for the CPA to finish his work. It was going to be a long weekend of digging through unfilled paperwork, but she was excited about the deal and agreed to get it done by that Monday.
She also set up an appointment with her business attorney, at Valerie’s suggestion, to review what needed to have either updated or changed. He had some ideas, which also required her time to consider over the weekend.
Nancy was worried she would not get the deal done before the couple received another offer. Valerie was also concerned and agreed to meet her at the factory to strategize what they could do.
While walking in, Valerie noticed an unusual machine on the floor. She hadn’t seen one of them before. Nancy explained it was a laser welding machine that delivered near perfect welds, without requiring a jig to hold the material steady.
When they got to Nancy’s office and closed the door, Valerie asked how her finances were coming.
Nancy said she would have to work all weekend to get them ready. She hadn’t had time to do it, and was getting frustrated. What was really irritating was that she had never borrowed money at her business. Her only debt was a small credit card balance and the mortgage on her home. Valerie asked her about the machine she had walked past, and Nancy proudly told her that they had just made the last payment on the $500,000 price. Valerie smiled. She had an idea.
While Nancy went to get them coffee, she rang up her partner Steve, who did equipment financing. Would he consider an equipment loan on this machine for $400,000 with a personal guarantee? She described how clean the shop floor was, and that they had paid it off ahead of time. Once she described Nancy’s history and credit, he agreed that they could do it.
The next call she made was to Mike, who she used for transactions where the funds had to come quickly. She described using the factory’s real estate for the transaction, and that she needed a 48-hour qualification. Mike told her to send over what they had, and based on her description, told her that it sounded like they could do the deal.
By this time, Nancy was back in the office with two coffees and listening closely to Valerie work. After six calls, Valerie had lined up five different lenders to fund the transaction. All because they trusted Valerie’s ability to sense a good loan.
Two days later, Nancy ended up getting a Christmas gift she wasn’t expecting. A bottle of wine was delivered in a box with two glasses and a note from Valerie that read:
“Merry Christmas! You just bought a company!”
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Photo: Courtesy of Unsplash.com/Riska Hughes