The Selling Company: Heaven Sent Naturals, Puri-Clean and Covert Labs are three related companies in the nutritional supplement industry. The company’s products are sold in numerous independent and chain health food stores across the country. The Puri-Clean and Covert Labs cleansing products are the leading supplements in the industry and its Heaven Sent line covers a broad spectrum of nutritional and vitamin products.
Why the company was sold: The shareholders had built the company from a start-up to its present size over a 15-year period. They recognized the need for additional expertise to take the company to the next level and wanted to reduce their risk concentration while continuing to grow the business. The shareholders wanted to remain active in the business to continue to grow the company’s revenues and earnings.
Capital Alliance’s Performance: Capital Alliance took a breakeven company and found add-backs to end up with a 50% EBITDA. We then brought three LOIs to the table that produced a sales price that was over a 6x multiple, for a company with essentially no assets.
Terms of the Transaction: The owners received proceeds of 66% of the cash at closing and 33% cash payout over five years, while retaining a 49% interest in the new company.
The Acquiring Company: Red Oak Capital Private Equity is a Dallas-based investment company that has made a wide range of investments over the past years and focuses on profitable companies with scalable business models.