Case Study #1 : Midwest Steel Fabricator

Goal

Retain four key employees critical to company operations while preserving flexibility for either an internal or external sale.

Background

A Midwest steel fabricator was uncertain whether they would eventually sell to insiders or pursue an outside sale. The owner needed a retention strategy that would work in either scenario and that rewarded key employees meaningfully without diluting ownership or granting shareholder rights.

Action

NAVIX designed a Stock Appreciation Rights (SAR) plan for the four employees. The plan provided synthetic equity tied to company value above a $10M threshold, with a payout of approximately 5% of the upside in the event of a sale. One-third of the benefit paid at close, the remainder over two years.

To complement the SAR plan in the event there was no outside sale, NAVIX also established a profit-sharing pool representing 12.5% of net income. Each key employee received an interest in the pool annually, with half held in reserve as dry powder for future key hires.

Results

Critical employees are now financially aligned with the owner's exit outcome. They're motivated to grow company value and committed to staying through a transition, all without any ownership dilution or shareholder complexity, making the company more attractive to buyers.

 

  Case Study #2: Southwest Steel Fabricator

Goal

Transition ownership to the next generation of leadership while protecting the owner's financial interests and maintaining company stability.

Background

A second-generation owner in his early 60s had built a strong leadership team. He wanted to sell internally to preserve company culture and reward key management, but needed a structure that was financially viable for employees who couldn't afford to pay full market value.

Action

NAVIX structured a partial internal sale of 25% of the company to the three-person leadership team at a 4x multiple, a discounted valuation relative to the fair market value of 5-6x, reflecting the owner's desire to reward the team while retaining majority control.

Each buyer contributed 10% down, with the owner financing the balance. Debt service was structured through company distributions, keeping cash flow manageable. A shareholder agreement with restrictive provisions was established to govern decision-making and protect all parties.

Results

The leadership team acquired meaningful ownership stakes, creating long-term alignment and retention. The owner retained majority control while beginning a structured transition, with a clear framework in place for an eventual full exit.