Deal Type
Sell-side transaction

Deal Team
Andrew Allred, John Kirkland

Company Overview
Atlanta-based BAY Mediation and Arbitration Services was established in 2002 by the founders of the Barrickman, Allred & Young firm in Atlanta. Over the past 23 years, BAY has earned a reputation for being the city’s top alternate dispute resolution (ADR) firm. Known primarily for fast-track mediations on smaller cases, for which the firm boasts an 85% client success rate, BAY also has a proven track record tackling complex, multi-party disputes. Currently helmed by Bill Allred and F. Scott Young, the firm has enjoyed rapid expansion and extensive growth over the years, and now includes a roster of around 50 mediators.

Situation
Though owners Bill Allred and F. Scott Young were not looking to sell the firm, they received an unsolicited letter of intent from Veritext, the nation’s largest court reporting firm owned by leading private equity investment firm, Leonard Green & Partners. In the interest of evaluating the offer, improving its terms, and ultimately getting a deal done, they turned to Bill Allred’s son, Andrew Allred, Vice President at FourBridges Capital Advisors.

Process
FourBridges reviewed the letter of intent, negotiated to improve the valuation, negotiated better ‘around the edges’ terms than initially offered, and drove the diligence process to the finish line in a timely manner.

Challenge
During due diligence, FourBridges faced challenges navigating the quality of earnings, net working capital, and indebtedness calculations and related negotiations. BAY reported financials on a cash basis, so FourBridges had to perform a cash-to-accrual conversion to create proforma accounts receivable and proforma accounts payable balances related to the firm’s mediators in order to determine net working capital and the associated true up. 

FourBridges also faced a challenge in the form of a potential health and benefits coverage gap.  BAY’s owners weren’t comfortable moving forward if their people weren’t protected, and the Buyer didn’t have an out-of-the-box solution at hand. FourBridges helped BAY envision, craft, and negotiate a Transition Services Agreement (TSA) by which healthcare coverage and retirement benefits could continue for BAY’s longstanding employees until they were able to join Veritext’s plans.

Results
FourBridges helped BAY meaningfully increase their valuation and negotiate better terms and economics than were presented in the initial letter of intent. The team also honored BAY’s legacy by helping Allred and Young achieve their goal of protecting BAY’s employees along with their many valued clients.