Source Capital, Ltd. began providing financial advisory services to RAM in 1990, and over a decade had assisted RAM Industries, Inc. on matters ranging from shareholder tax planning, to evaluating growth and acquisition strategies, negotiating terms and conditions of financing agreements, and evaluating long-term exit strategies.

By 2003, RAM Industries, Inc. had become a $60 million revenue base, highly specialized designer and manufacturer of high-horsepower, industrial electric motors, control devices and related products. The Company was a Tier 1 supplier to the industrial refrigeration and commercial air conditioning industry. Its principal OEM customer was York International. Mr. Walton wanted to focus on exit options. He, once again, selected Source Capital, Ltd. as his financial advisor and investment banker. Source helped Mr. Walton consider (and test) whether a sale of the Company to a strategic buyer or financial buyout fund would be a good option. During this time, the U. S. corporate tax law changed and the tax rate on dividend income was reduced to equal the tax rate on long term capital gains; both at 15%. Source saw an opportunity to use the low tax rates to complete a reorganization of the corporation into a limited liability company. By doing so, the future tax limitation for closely held corporations related to partial redemptions of shares owned by controlling shareholders would be eliminated. This would enable Mr. Walton to, in essence, act as a private equity capital investor who would back a management team to fund the leveraged buyout of a business. By taking this approach, Mr. Walton would realize a higher after tax return, would receive fair market value for his business, and would receive the type of downstream returns that typically are received by the capital provider. The Management Team was able to acquire the business, on terms no less favorable than would have been available in the open market, and they had a knowledgeable capital provider backing them. Win, win!

Financing the transaction was a challenge. None of the debt or equity capital providers contacted by Source had ever funded this type of transaction. Not surprisingly because during the past sixty years the tax laws would not have accommodated this type of transaction. However, with years of capital markets contacts and experience, Source was able to secure the financing commitments necessary to close. When creative business wealth transfer advice and financing assistance are needed, you can rely on Source.