Creative Art Service Firm Case Study
IndustryCreative Art Service
Morgan & Westfield helped sell Imago Dei, a creative art service firm with stable revenue growth, using a combination of bank and seller financing. The company was positioned in the market to target non-industry buyers and corporate executives with management or marketing experience. This allowed Morgan & Westfield to widen its pool of potential buyers. Our marketing strategy generated 106 buyer inquiries and was sold after 10 months. Morgan & Westfield’s in-house appraiser increased the sale price by $75,000 by doing an internal review on the business appraiser performed by an independent party.
Jeremy Wells is a serial entrepreneur and an artist who comes from a family of entrepreneurs. He started Imago Dei in 1999 in Ventura, California. He and his wife, also an artist, later moved the business to Houston, Texas in 2001. Jeremy owned and managed Imago Dei for 17 years.
Imago Dei is a creative art service firm that started by offering murals and fine art. The company later expanded its services to offer decorative paintings and posters. Custom murals and finishes have become the bread and butter of the business.
Imago Dei offers the following products and services:
Finishes: Customers can choose from thousands of unique samples and an average of two new custom boards are being created every day.
Murals: Imago Dei designs original custom murals and produces them for installation either with paint on canvas or by printing them and installing large vinyl murals.
Art: Imago Dei also sells original and commissioned fine art.
- Seller's Goals
- Maximize value
- Maintain confidentiality
- Maximize after-sale proceeds
- Minimize tax implications
- Ensure successful continuity of the business
- Morgan & Westfield
- Business Appraiser (Morgan & Westfield)
- Seller’s Financial/Tax Advisor
- Seller’s Attorney
- SBA Loan Consultants/Brokers
- Pricing Strategy
- Morgan & Westfield normalized the historical financial statements to determine Seller’s Discretionary Earnings
- A weighted, average figure was calculated for SDE
- A multiple was applied based on similar, comparable transactions
- A business appraisal was performed by an independent third party once an offer was accepted and the buyer was seeking to obtain bank financing. Morgan & Westfield’s in-house appraiser reviewed the business appraisal submitted to the bank and spotted several errors. Our internal appraiser then sent the bank a critique of the said appraisal. This drove the price of the business up by over $75,000.
- Key Drivers
- 15+ years in business
- Significant preparations were made to sell the business, which included adding management systems and infrastructure to the business
- Bank financing was available to facilitate the purchase
- Technology automated several key processes in the business
- Key differentiators in the business prevented the business from being commoditized
- Stable revenue growth
- Consistent increase in gross margins
- Positive cash flow cycles that reduce working capital requirements
- Large transaction size
- Positioning & Packaging
- We positioned the company to be sold to those outside of the industry. Selling a creative services business is always a unique challenge because these types of businesses historically have a limited buyer pool.
- Because the seller had installed management systems, this allowed us to market the business to a wider audience of buyers.
- The selling memorandum was prepared to highlight the unique advantages of the company and to assuage the fears of a non-industry buyer.
- Marketing Methods
- The company was confidentially marketed through online business acquisition portals.
- The company was positioned to sell to non-industry buyers and corporate executives with management or marketing experience.
- Process & Results
- The marketing strategy generated 109 buyer inquiries.
- The business was sold in 10 months.
- The Deal
- The business was sold using a combination of bank and seller financing.
- Morgan & Westfield prepared the closing documents.
- The seller’s and buyer’s attorney reviewed the closing documents.
- Conclusions & Lessons Learned
- Persistence pays off - the seller persisted throughout the process despite numerous setbacks.
- Deals are always easier to get done when bank financing is available.
- It pays to have experts on staff. Morgan & Westfield had an in-house business appraiser who was available to question the appraisal submitted to the bank. Morgan & Westfield’s critique of the report likely saved the deal.
- The period of time after a sale can be used for reflection and discovery.
- Use this time to explore both the world or oneself. Bring a journal to facilitate the exploration process.
Jeremy Wells is a serial entrepreneur, experienced commercial real estate investor, an actor, painter and a photographer. Aside from being the former owner of Imago Dei for 17 years, Wells is currently the president and founder of Village Executive Suites in Houston, Texas, and president of Wells Realty Development Group.