Tobin & Company Investment Banking Group LLC acted as a sell side advisor to BreakFront which was acquired by an undisclosed buyer.
BreakFront provides marketing and software services to cabinet dealers and remodelers throughout North America.
We assisted our client in the negotiations among the prospective buyers and successfully closed the transaction.
SITUATION
Few CEO’s ever consider the impact an investment banker might have on their corporate board, but selecting the right banker can sometimes lead to a decisive moment in a company’s history. Take the case of Chris Mele, former CEO of Breakfront.
Breakfront is a computer-aided design software that helps contractors configure a myriad of building components such as kitchen and bath cabinets, windows, doors, stairways, railings – just about anything required for the remodeling and construction industry. After the start-up launched in one of Mele’s spare bedrooms, it quickly evolved to help facilitate contractor sales, purchasing, scheduling, shipping, receiving, and integration with all accounting systems.
Along the journey Mele built a prestigious board, filled with a “Who’s Who” of former CEO’s, angel investors, venture capitalists, attorneys, and CFO’s, many of whom were extremely independently minded.
SOLUTION
When the market crash and recession of 2008 took the economy by storm, Breakfront’s stock experienced tremendous downward pressure and ushered in a palpable anxiety among board members. That’s when Mele sought an independent stock valuation to quell investor’s concerns, but also to establish a revised fair value for future capital raises amid the volatility of an uncertain economy. Acting on a referral from his attorney, Mele selected Tobin & Company to conduct the valuation.
“I needed someone to create a valuation that could withstand the scrutiny of my highly knowledgeable, experienced board members,” Mele remembers. Looking back now on the pivotal point of the board conference call to review TOBIN’s final work, Mele recalls that one venture capital experts said essentially, ‘in the venture capital world you should handle this area with a little less discipline.’ (OK, CHRIS ACTUALLY SAID THAT YOU SAID, “WALTER THAT’S BULLSHIT!” – WE SHOULD DISCUSS)
“Justine instantly responded with three well-founded arguments for why the venture capital model did not apply to the complex economics faced by Breakfront,” Mele says. “You could have cut the silence with scissors.”
When the complete presentation ended, Mele remembers immediately receiving complementary calls from the majority of his board members, all saying “I love that girl!”
RESULTS
Tobin & Company defended the valuation in the most difficult market downturn since the Depression, and on through multiple rounds of raising operating capital.
“When I look back on my time with Breakfront, that one call turned out to be the anchor point that allowed us to continue raising capital through the market crash and on, from 2009 to 2013,” Mele says. “Justine defended our valuation at a time when everything around us screamed that the stock might have been essentially worthless.”
Eventually TOBIN found a buyer for Breakfront that provided a related technological platform and afforded an equity opportunity for investors and management, but ultimately, Mele’s co-founder bought out the company and it still operates today.
