Situation

A highly successful, 10-year-old consulting business with two majority owners and several minority owners was growing at a rapid pace, doubling its size over the past two years, and is on track to top $25 million in revenues in the near future. The founding partner originally approached TobinLeff to explore long-term exit and monetization options, with the goal of maximizing his future payouts while incentivizing and rewarding his fellow partners and employees.

The TobinLeff Solution

After interviewing all the partners, reviewing their financials, and gaining a better understanding of their business, we saw an enterprise that was primed for even greater growth, and encouraged the majority partners to hold off on making any firm decisions about exiting for a few years. Instead, we encouraged them to focus their energies on building the value of their business and putting into place a number of strategic initiatives that would help take the business to the “next level,” thereby putting the practice in an even better position to monetize down the road. To help the partners understand their long-term options, we educated them on the benefits and consequences of selling to a third-party vs. a management buy-out (MBO) vs. an ESOP, with financial models based upon the business’s current and potential future value. In addition, to lock in and further incentivize key employees, we created a phantom stock plan (working with one of our strategic partners). We also facilitated a multi-day strategic planning session, and have introduced them to potential private equity partners. As a result, the client has raised its own performance bar, and is well on its way to making multi-millionaires out of all of the partners.