New M&A Case Study On YouTube Gives Insight Into Selling a Business for a High Valuation

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Russ Rutledge sold his oilfield services business, Fiberod, for ten times EBIT, more than twice the industry standard. View Rutledge's interview on YouTube.

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I get to help people like Russ Rutledge realize their dreams from a financial standpoint. We changed a lot of lives on the day that transaction closed.

In a new YouTube video, Russ Rutledge, Founder and Former CEO of Fiberod, tells the story of how he sold his oilfield services business for a valuation that was more than twice the industry standard.

According to Eric Kern, Vice President of Allegiance Capital, the firm that represented Fiberod, "Positioning is key to your company’s valuation, but don’t ignore the importance of finding the right acquirers to approach."

"This is where an investment bank makes a huge difference," he adds.

Fiberod's owners received cash at closing equivalent to ten times EBIT plus an additional earn out.

"We accomplished a higher valuation by identifying several aggressively acquisitive companies with a unique opportunity to leverage our client’s technology and product line," says Kern.
Competition among the acquiring entities drove the price higher. But price wasn't the only consideration for Fiberod.

"Our employees were like family," says Rutledge. "This became an important factor in whether or not we sold the company and who we sold it to."

Allegiance Capital and Fiberod worked together to structure a deal that would meet Rutledge’s personal and financial goals for himself and employees. Ultimately, Fiberod was sold to The Smiths Group, an international firm with strong interest in growth and diversification in its U.S. markets.

"Words can't describe how happy I was," says Rutledge.

For Kern, the impact his work has on his clients is extremely rewarding. "I get to help people like Russ Rutledge realize their dreams from a financial standpoint. We changed a lot of lives on the day that transaction closed," he says.

About Allegiance Capital Corporation
Allegiance Capital Corporation is an investment bank specializing in financing and selling businesses in the middle market. Allegiance Capital has won multiple awards recognizing the value it delivers to clients. Examples include: 2009 Dealmaker of the Year (Dallas Business Journal), 2008 Boutique Investment Bank of the Year (M&A Advisor), 2006 Investment Bank of the Year (Dallas Business Journal). Subscribe to the Capital Ideas blog. Follow Allegiance Capital on LinkedIn, Facebook, and Twitter:@ALLCAP.

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Katherine Kirkpatrick

Eric Kern
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