When a fifth-generation family-owned business was ready to sell, they turned to Schwabe, Williamson & Wyatt
Henningsen Cold Storage operated under the business philosophy of “family owned, professionally managed.” During his 35 years at Henningsen, Paul Henningsen Jr. held numerous management positions before assuming the role of President and CEO. The company was proud of its family ownership and enjoyed a reputation as one of the best managed businesses in the cold storage industry. Yet the industry was changing and consolidating. Paul, with counsel from his Board and management team, concluded that trends in the industry would make it increasingly difficult for the business to compete. It was time to sell.
One of Henningsen’s first and most important tasks in initiating the sale process was selecting the company’s professional advisors. They selected Bank of America as their investment banker given its extensive experience representing other cold storage companies. For legal, Paul and his team turned to Schwabe’s Tom Tongue, who has extensive experience advising closely held and family-owned businesses and enterprises on corporate governance, mergers and acquisitions, and corporate finance, and is an active member of the firm’s Privately Held Businesses and Enterprises group.
Bank of America recommended that the company pursue a proactive multi-staged auction process to drive demand. For this strategy to to be successful, the team at Schwabe had to craft a transaction structure that would work for a wide range of buyers, such as public companies, private equity funds, and REITs. At the same time, the structure needed to consider that most of the company’s shareholders were passive owners and would not accept any personal liability for indemnification in connection with the transaction. The company also wanted to avoid a situation where every shareholder would need to sign the definitive documents. Schwabe developed a merger structure patterned after a recently closed public transaction in the same industry. The merger structure contemplated an “as is, where is” approach protecting the selling shareholders from liability while ensuring that the transaction could be approved with a simple majority vote.
As the auction process started, interest from potential buyers was high. Schwabe attorneys worked closely with Paul and his executive team to create a due diligence data room for potential buyers while managing numerous information requests. As the field of bidders narrowed, the Schwabe team negotiated revisions to the merger agreement with multiple bidders in parallel. The timeline accelerated as interest from potential buyers intensified. All of this occurred during the height of the COVID-19 pandemic lockdown, which created novel legal and logistical issues in negotiating a deal. The process culminated in the selection of Lineage Logistics as the winning bidder. Not only had Lineage provided the most compelling price and terms, but it was also an excellent cultural fit.
Ultimately, Paul stated, “The transaction exceeded our expectations both in terms of price and terms. We found a perfect partner in Lineage who not only shares our values but also is well positioned to provide opportunities for our employees and customers. Our family greatly appreciated the work of Tom Tongue and the Schwabe team. They understood the special considerations of a family-owned business, managed numerous work streams, which was critical for our auction sales strategy to work, and adapted to the new and novel issues created when attempting to sell a business during a pandemic.”
More about Henningsen Cold Storage
Henningsen Cold Storage operated 14 facilities across Oregon, Washington, Idaho, Pennsylvania, North Dakota, and Oklahoma. Their list of services included temperature-controlled warehousing and transportation, blast and room freezing, cold-chain fulfillment, and inventory and transportation management.
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