Analysis Leading to Divestiture Strategy
$5 Million Net Present Value to Irwin (>100 to 1 Return)
April 27, 2000
To Whom It May Concern,
In 1907, my grandfather, Earle S. Irwin, founded our family business with the introduction of a small wooden chair and desk used by students in elementary schools. For much of the twentieth century the movable classroom furniture products made up the majority of our business.
In the final twenty years of the past century Irwin grew and evolved into a multi-national seating business providing quality products for the Movie Theatre and Auditorium Markets. As a result, the classroom furniture business became less than 5% of Irwin's total and was a loss position. It also turned into a highly competitive business with over 20 companies in the U.S. producing classroom furniture and driving prices down.
Therefore, we had to make a difficult decision about whether or not to revive this business. To help us with our decision, we commissioned
WinOvationsSM and MVA Business Development to conduct a thorough business assessment on what it would take to grow this business. Their quick, yet in-depth, managerial perspective of the market and the overall business conditions provided us with a clear understanding of what it would take to be competitive and grow the business from $8 million to $20 million. We would need to invest up to $3 million to develop new products and move to a
Learning Environment business, plus re-locate to a lower labor cost area.
After much consideration, we opted to sell the business. For this effort, we went back to MVA because of the knowledge and relationships developed during the market study. Within six months the business was successfully sold.
Based on what we had been losing, plus what we made on the sale of the classroom business, the value of this transaction was worth over $5 million on a net present value over 3 years. We are now able to apply these funds and freed-up energies to our other businesses.
The insight and professional approach WinOvationsSM
and MVA Business Development made to our business has had a significant impact on our financial performance. They guided us with the substantive data and executed the difficult task of divesting our founding business.
IRWIN SEATING COMPANY
Earle S. "Win" Irwin
C.E.O. & Chairman