Rental Car Company
After successfully operating rental car franchises for several years, the owner sought to consolidate additional franchises. On a one-by-one basis, it was difficult in the private markets to finance each acquisition as the individual franchise earnings were typically small, and therefore could support very little debt.
Tunstall worked with the owner to arrange an initial acquisition of franchises, and produced a "pro-forma" income statement of the combined entity, eliminating duplicative expenses and increasing net income from ($300,000) to nearly $3 million. These pro-forma earnings and the associated valuation supported an IPO with first-tier underwriters using the proceeds to 1) acquire the target franchise, 2) retire existing debt, and 3) continue to acquire franchises.
The owner was able to execute his acquisition concurrently with the IPO, using the IPO proceeds to consummate the initial acquisition, as well as provide the capital required to expedite his growth plan. This avoided what could have been a difficult, costly, and slow growth path in the private market.