Wholesale Manufacturer Food Products - May 2017

Edwin Small

Location: Newark, NJ
Industry:Beef and Poultry Distributor in greater New Jersey Area
Revenue: $18 million to $26 million
Line of Credit: $2.5 million Credit Facility
Collateral: A/R Factoring + Inventory

The American Dream
The American Dream Sterling was contacted by a business consultant out of the midwest with an opportunity to finance an exiting owner who was looking to sell the company to his general manager of 15-years. The seller had become passive in the day to day business and was looking for an exit strategy at 87 years old.

Sterling's initial proposal was to over the $500,000 down payment on inventory to acquire the assets and inventory of the company and to provide a $2million dollar A/R credit facility for new sales and immediate working capital for the NEWCO.

After the proposal was executed Sterling sent third party field examiners in to visit the company and validate the collateral by testing the books and records as well as the inventory. After 2-days the Examiner determined the books and records to be archaic and the examiner was overwhelmed with the number of audit procedures that were failing standard ABL requirements for a multi-million dollar line of credit.

After talking with the field examiner the Sterling Underwriter (Emily A. Smith) and CEO (W. Edwin Small) agreed to visit the company and see first hand if the accounting controls and books and records were truly as bad as described by the field examiner. The Sterling team visited with the consultants and the buyer and walked through the expectations to pass a future field exam. All parties agreed to make the adjustments and a new field examiner was scheduled for 45-days out.

Sterling closed the deal in early May and has since completed a follow up field exam. Much of the issues or shortcomings from the initial field exam have been addressed as the buyer hired a new experience CFO for Hire. The company in three short months has generated over $4million in sales and over $350,000 in profitability. The American Dream for this general manager has come true with not only the funding from Sterling and the initial deposit but also the consultative approach to the purchase and sales agreement that was tweaked with SCC CEO leading the negotiations.

Dinah Carter
Director of Sales