Virginia Plastics Utility Division:
Clear Plan, Successful Sale

A recent example of seller success based on these principles is the sale of the Utility Division of Virginia Plastics Company, a multi-million dollar, family-owned business founded in Roanoke in 1949. Bundy & Company represented the seller and facilitated the sale.

Virginia Plastics Company began as a designer and manufacturer of hearing aids and later formed a Cable and Electronics Division to make conductive wiring, copper cable, retractile coiled cords, and cable assemblies for the electronics, communications and medical industries, along with high-security applications for the military and aeronautics industry.

In 1954, in response to the growing demand for plastics in the electrical utility business, the company began a Utility Division. It developed innovative outdoor products, including industry standards Leadergard® and P Class ground molding. The Utility Division later added more injection-molded products such as the Wildlife Barrier System for substations; high-voltage insulators; multi-voltage cable protectors; ground wire insulators; and visibility markers.

Recently, sole stockholder and chairman of the board, Stephen Bogese II, decided to sell the Utility Division to focus on electronic product lines. Sale proceeds would fund additional growth of the Cable and Electronics Division. He elected to have company president Jim Hancock and CFO Sandy Barbour help plan the sale.

Bill Bundy, principal broker of Bundy & Company was chosen to assist the company in the sale. He created a strategic plan to guide preparation for the sale. The process included meeting with company officers, accountants and attorneys.

"A critical task was to help shape the transaction to
minimize tax consequences for the seller."

Bundy & Company then prepared and executed a plan that included developing company profiles, industry specific advertising, direct mail, and Internet marketing. As responses were submitted, Bill Bundy worked with the sellers to identify the better offers and then to negotiate with the prime bidder, Gianni Enterprises of Cleveland, Ohio. Gianni was identified as a woman-owned business with a strong background and track record in manufacturing and industrial sales. Following extensive due diligence, the transaction closed in the summer
of 2005, after 13 months on the market.

The new president and chief executive officer is Jamie Gianni. The company has leased space at Virginia Plastics' facility on Aerial Way Drive in Roanoke and named the company Virginia Plastics Utility. Jamie Gianni works alongside her husband Angelo Gianni, who also plays a major role in the business.

A critical task Bundy & Company performed for Virginia Plastics, a
C-Corporation, was to shape the transaction to benefit the seller by minimizing stockholder tax consequences. Bill Bundy worked closely with VP's company officers and other professional advisors on important business and tax-related matters.

To assist in this task, Bundy & Company introduced the concept of "Personal Goodwill" as a relatively new but generally accepted accounting technique. This concept helps allocate a portion of the sale price for more beneficial tax treatment and helps minimize the seller's taxes.

(Please see the accompanying story below on Personal Goodwill.)