The Valere Group


The Valere Group - What We Do
There are several real-world examples of how the philosophy and approach of The Valēre Group have helped ensure successful results for business owners:


For Manufacturing Company, Cashing In Does Not Necessarily Mean Selling Out

Problem
Wally, the 56-year-old owner of a manufacturing business in Cincinnati, was convinced that he would end up selling his company to one of two of his largest competitors, who had already approached him at industry conferences and trade shows. Like many entrepreneurs, he knew his business was not performing at maximum potential, but he was not comfortable with how to approach remedying these issues.

Solution
In the process of working with the owner to plan the transition of his business, it became obvious to Don Matso, the founder of The Valēre Group, that Wally was still very emotionally attached to the 27-year-old business he had founded, though he was frustrated by the day-to-day issues of dealing with an organization that had grown in size over the past 10 years. Wally revealed that he felt he was not good at recruiting, hiring and training, or in dealing with the existing non performing managers, some of whom had been with him from the beginning. His operations had outgrown the skills of many of his personnel, particularly in key areas of production and administration, especially after he lost a key employee. Don counseled him on how to outsource these skills to handle some of the non-performers and to recruit managers and new talent in key areas. Eventually the successful new hires galvanized his entire team and had immediate positive effects on the organization and performance.

Results
By hiring the right employees, the business was revitalized. The owner was able to focus on what he enjoyed the most – client relationships and enhancing the manufacturing processes. In time, he realized that he could phase out of day-to-day business activities and spend more time with family and his outside interests and continue in his role as Owner and Chairman; he was able to reap the benefits of ownership without having to devote his time to the day-to-day operations. His business became far more valuable and he was able to implement a leveraged re-capitalization with the bank, consisting of a new loan to the company with a negotiated agreement allowing for a dividend payment to Wally. As a result, he was able to increase his retirement account and feel secure for the future, validating that owners do not have to sell out to cash in. At some point, Wally will most likely sell his business, which is now better positioned and has appeal to more than just his two larger competitors.

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CEO Builds Long Term-Value and Security for Family, Managers

Problem
When Don Matso was introduced by an investment financial advisor to Mark, the Founder and majority shareholder of a thriving, national service business, Mark had already interviewed several advisors and investment bankers. Mark was considering implementing an Employee Stock Option Plan, even though the ESOP raised some concerns and did not resolve all of his objectives.

Solution
In his initial meeting with Don, Mark defined three specific objectives:
  1. Mark, who was in his mid-60’s and who had expressed an intent to continue to work while he had the energy and health, wanted to provide more security and comfort for his wife and family.

  2. The business needed considerable additional working capital to take advantage of acquisition opportunities for further expansion, and Mark felt that the banks he had negotiated with were insisting on terms that were too severe.

  3. Mark wanted to provide a means to reward his senior management staff who had helped him grow this profitable business.

With this better understanding of the CEO and his business, Don pointed out to him that, although the ESOP solved some of his objectives, it was only a partial solution. Don recommended a private market re-capitalization – a sale of a portion of his business to a targeted private investment group. When Mark reacted negatively to the thought of taking on a “partner,” Don and his team prepared an analysis and reconvened with him, his wife, and the shareholders in the business. They presented the outcome of each type of potential transaction and discussed the pros and cons of each with a model describing the potential outcomes.

Results
Mark ended up selling 70% of his business to a private investment group and derived tens of million of dollars more from the transaction than he had anticipated. The following year, the company implemented an IPO. Mark has been able to meet all of the objectives that he and Don originally defined – creating a transition on his terms – and he is still the Chairman and active on a day-to-day basis in the business he founded.

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Joseph Dowling recommends Don Matso

"True Value" Generates a Premium Price for Service Business

Problem
Judy and Bill, husband and wife, were also business partners in a service business that Judy had originally founded. When they initially met with Don Matso, Judy and Bill had determined they wanted to be positioned for a sale in three to five years. Given their substantial growth opportunities, they wanted to be assured they were doing everything possible to continue to enhance the business’ eventual market value as they approached decisions about where to invest their resources for growth.

Their concerns about how to determine how much to invest in growth came from a recent experience – Judy had previously started and owned another business which she eventually had to sell under duress due to losses arising out of what she called “unplanned growth for growth’s sake.”

Their main dilemma was whether or not to branch out to another market by providing additional services or to grow by providing existing services in new geographic markets. Both strategies would require about the same investment of resources, and both had appeal to them, though they had already decided they could not afford to implement both at the same time.


Solution
Bill, a very successful sales manager for a division of Kodak, had taken early retirement from his employer when Judy’s business had begun to thrive and undergo substantial growth. While Judy remained the visionary, the inspiration and CEO of the business, Bill had a real talent for recruitment and training of new personnel. Don’s recommendation to them was to focus on providing their existing services, as they had been able to establish competitive advantages, and to expand geographically, leveraging their existing infrastructure. Don realized that since Bill had become active, he had managed the recruitment and training of personnel to open two new branch offices. And, a very significant fact was that both new locations had become cash-flow positive within a year. While Judy continued to focus on client and supplier relationships, Bill managed the process of recruitment, training and oversight of new branches.

Results
Less than four years later, at a time when two large, national firms were very actively making acquisitions in their industry, they were approached by both. Judy and Bill eventually sold their business for a multiple well beyond that typically being paid for a business like theirs at the time. The buyer stated, after the close of the transaction, their reason for justifying the price they paid (the “True Value”) was the “tribal knowledge” of how to successfully open new remote offices and achieve positive cash flow so quickly, something the larger corporation had never been able to accomplish with consistency.

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Business Owner Positions for Value Early, Sells Well Later

Problem
Robert, the 51-year old owner of a business in the Midwest that manufactured and distributed school supplies, was approached by one of his larger competitors about a possible acquisition. Although he said that he had no interest in selling, as he enjoyed his position and the income he derived from it, Robert was curious about the market value of his business. He had been hired in an accounting position twelve years earlier, promoted to CFO, and as the founder was nearing retirement, he bought the business over a five-year period.

Solution
When Don Matso first became involved with Robert, Robert and his wife were 100% owners and the value of their business was estimated to be in the $5 to $7 million range. One of Don’s main recommendations was that they bolster their marketing efforts because their product line had not changed much over several years, and they recently had lost some key distributors to a competitor. Robert was not oriented to sales and marketing and none of his sales people were of senior management caliber, so Don suggested he hire an experienced marketing manager and assisted Robert with the process.

Results
Several years later, a significant wave of consolidation began to occur in the industry. As an example, their main competitor was acquired by a large, national firm, and in relatively short order most of Robert’s major competitors were divisions of large, national corporations with considerable resources.

By this time, the new marketing manager’s positive impact on the business had resulted in increased revenues and profits. Though Robert was very comfortable with how the business was operating, Don recommended that Robert consider selling during this consolidation when both the external and internal forces were positive and on the upswing, and due to the fact that his main competitors were now part of much larger businesses.

The business was acquired the following year by a national firm that had just gone public for slightly over $14 million in cash, plus a consulting contract for the owner. Robert was very pleased that he had initiated the process of positioning his business for a transaction several years earlier, even though at that time he had no intention of selling in the short term.


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The Valēre Group, Inc. Manhattan Beach, CA 90266
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