We represent a client in the medical industry that is owned by a private equity group focused on conserving cash and increasing EBITDA. A company sale is possible within the next 36 months.
In 2008 our client executed a 10 year lease. We negotiated a termination right in 2015 with a notice date in 2014. In mid-2014 we engaged our client with a strategy to use the upcoming termination right to generate EBITDA focused savings. Combined, the termination right and alternative available spaces within the market allowed us to create leverage with the Landlord. We considered terminating the lease and/or relocating. Eventually, we agreed to a renewal with a new termination option. The renewal lease terms offer significant rental abatement and a lower effective rent generating an annual EBITDA savings of $167,000.
Using a 10x EBITDA benchmark for company valuation, our real estate strategy will generate $1.6 million in additional sale proceeds.
“I would like to thank you for identifying this opportunity and pushing me to get moving on it. It has been a pleasure working with you.” CFO – confidential client