The Winning LOI [Vol. 3, Issue 10, No. 37]

Welcome to the latest issue of The Winning LOI, the Axial newsletter that anonymously reveals small business M&A valuation data and certain key deal terms associated with winning LOIs.

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In today’s issue, we review the LOI for an Industrial Distribution company that reported a revenue range of $23M—$25M and an EBITDA range of $3M—$4M when the deal confidentially went to market via Axial in Q2 2023. The Winning LOI was executed 44 days after being pursued and successfully closed 130 days later.

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We recently released the Axial Advisor Industry Awards, which showcased the top 2023 closed deals in the eight industries with the highest volume of deal flow on Axial. One of the attributes considered in selecting these top deals was buyer interest, measured by pursuit rate. The deal from today’s Winning LOI generated 454 buyer matches, which led to 102 pursuits and a pursuit rate of 22.47%, more than 2x that of the average (11.12%) for Industrial deals last year.

Considering the above-average buyer interest generated from this deal, we reviewed the breakdown of the different interested company types (below). Private Equity accounted for the highest number of pursuits, with an Independent Sponsor ultimately winning and successfully closing the transaction.

Pursuits By Company Type

See below for Winning LOI #37’s anonymized data ⬇️

Definitions: 

*Recommendations: Axial sell-side members receive a matching set of buyside members for every deal they manage via Axial. A buyside recommendation refers to a specific buyside Axial member who matches a particular deal, also known as a “buyer match.”

*Recipient: A recipient is a buyside member who has been granted access by an Axial sell-side member to review a particular deal.

*Pursuit: Axial buyside members express initial interest in a deal by clicking “Pursue”, after which they can access and sign the NDA.

*Deal Pursuit Rate: The deal “Pursuit Rate” is defined as the number of times a particular deal is pursued by unique buyside members (i.e. the buyer shows explicit interest in exploring the deal) divided by the total number of buyside firms invited to evaluate the deal

*Buyside Pursuit Rate: The buy-side “Pursuit Rate” is defined as the number of deals pursued by a particular buyer throughout an entire Axial membership term, divided by the total number of deals sourced during the same timeframe.

*Buyside Responsiveness Rate: The buyside “Responsiveness Rate” is defined as the rate at which a member responds to teaser shares within 5 days. The calculation initiates when a member has a minimum of 10 teasers and is calculated based on the member’s last 100 teasers received.

Disclosures: All data presented in The Winning LOI is anonymized to respect and protect the confidentiality of Axial members and their transactions. Data is provided to Axial by Axial members in accordance with the Axial Member Terms of Service. Axial has endeavored to present data accurately, but Axial does not and cannot fully verify the accuracy of the presented information. Information contained in The Winning LOI is for informational purposes only and does not represent investment advice or recommendations of any kind.