The Winning LOI [Vol. 3, Issue 25, No. 52]
Welcome to the latest issue of The Winning LOI, the Axial newsletter that anonymously reveals small business M&A valuation data…
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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 break down the LOI for a Content Management Systems (CMS) business that provides technical solutions across various sectors, including healthcare, education, and government. The business reported a revenue range of $7M-$8M and an EBITDA range of $1M-$2M when the deal confidentially went to market via Axial in Q4 2022.
The EBITDA multiple for this business fell in the 4.75x-5x range, with the LOI structured as a combination of 70% cash and a 30% split between seller financing and rollover equity. The deal was in market for 154 days before the winning LOI was executed and successfully closed 46 days later.
Looking to Exit in Technology? Explore Axial’s Advisor Finder.
The Winning LOI eBook: Vol. 2, Issues 26-50
Check out Volume 2 of The Winning LOI eBook! This edition features issues 26-50, along with a summarized breakdown of LOI structures and EBITDA ranges by industry.
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See below for Winning LOI #51’s anonymized data ⬇️
| The Deal | |
|---|---|
| Deal Type | Change of Control |
| Revenue Range (TTM) | $7M - $8M |
| EBITDA Range (TTM) | $1M - $2M |
| EBITDA Margin Range | 22% - 25% |
| Key Industries | Technology |
| In-Market Date | Q4 2022 |
| Axial Deal Data | |
|---|---|
| Recommendations* | 808 |
| Recipients* | 808 |
| # of Pursuits* | 165 |
| Deal Pursuit Rate* | 20.42% |
| Winning LOI Pursuit to LOI Executed | 154 Days |
| Winning LOI Executed to Deal Closed | 46 Days |
| The LOI | |
|---|---|
| Purchase Price Range | $8M - $10M |
| EBITDA Multiple Range (TTM) | 4.75x - 5x |
| Exclusivity | 75 Days |
| Structure | |
| ➡️ Cash | 70% of TEV |
| ➡️ Rollover Equity | 15% of TEV |
| ➡️ Seller Note | 15% of TEV |
| ➡️ Earnout | ❌ |
| Axial Sell-Side Member Data | |
|---|---|
| Member Type | M&A Advisory Firm |
| Total Deals Marketed on Axial | 49 |
| Average Annual Deals Marketed | 4 |
| Average Revenue of Deals | $16,240,198 |
| Average EBITDA of Deals | $2,322,912 |
| Axial Buyside Member Data | |
|---|---|
| Member Type | Search Fund |
| Number of Acquisitions | 5 |
| Buyside Pursuit Rate* | 23.65% |
| Buyer Responsiveness Rate* | 62.84% |
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 buyside “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.
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