The Case of Expansion to the U.S.
A major technology company wanted to expand into the U.S. without spending a lot of money on the purchase price or professional fees. The client identified a target company in a complementary market that was experiencing financial difficulty. Scarrow Yurman & Co was needed to conduct a financial analysis and be a “second set of eyes” in the buying decision.
Scarrow Yurman & Co visited the target company in California to conduct due diligence and gain the trust of the management team who were needed if the acquisition was to be successful. It soon became clear that the target company would not survive without an infusion of cash. What we found made the decision much easier.
We uncovered some tax losses that could be used in the future operation under our client’s ownership. We also identified costs that would be reduced under an acquisition. The current owners wanted the business to survive, continue serving its customer base, and provide employment to its long-serving employees.
We advised the client that the shares in the company be purchased for $1 along with a small loan to stabilize the bank financing.
So with little time or money spent on professional fees, our client expanded into a complementary market niche This resulted in a broader product offering and cross selling opportunity into an overlapping customer base.