The Winning LOI [Vol. 4, Issue 6, No. 58]
Welcome to the latest issue of The Winning LOI, the Axial newsletter that anonymously reveals small business M&A valuation data…
The Middle Market Review Insights on the Middle Market.
Thanks for subscribing!
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.
To subscribe to The Winning LOI, please enter your email below.
In today’s issue, we break down the LOI for a Consumer Goods company that designs and manufactures furniture, equipment, storage solutions, and play structures for schools and childcare facilities. The business reported a revenue range of $10M-$12M and an EBITDA range of $3M-$4M when the deal confidentially went to market via Axial in Q3 2024. The deal was in market for 79 days before the winning LOI was executed and successfully closed 63 days later.
The deal was shared with 288 recipients and was pursued by 47 buyers, resulting in a 16.32% pursuit rate – more than 3x higher than the average for Consumer Goods deals within the same EBITDA margin. For more top-of-the-funnel deal activity insights, check out the latest issue of The SMB M&A Pipeline.
Of the 47 Axial buyside members that pursued this deal, ~60% were Private Equity firms or Independent Sponsors. However, the winning LOI—and subsequent closed transaction—came from a Corporation. See the full breakdown below.
Pursuit By Company Type
The LOI was structured as 95% cash, with the remaining 5% paid via a two-part earnout. The earnout is structured over two years, contingent on the business achieving specific revenue benchmarks in 2025 and 2026. If the full earnout is realized, the resulting EBITDA multiple for the transaction will range between 5.75x and 6x.
Looking to Exit Your Business? Explore Axial’s Advisor Finder.
See below for Winning LOI #57’s anonymized data ⬇️
| The Deal | |
|---|---|
| Deal Type | Change of Control |
| Revenue Range (TTM) | $10M - $12M |
| EBITDA Range (TTM) | $3M - $4M |
| EBITDA Margin Range | 27% - 30% |
| Key Industries | Consumer Goods, Manufacturing |
| In-Market Date | Q3 2024 |
| Axial Deal Data | |
|---|---|
| Recommendations* | 317 |
| Recipients* | 288 |
| # of Pursuits* | 47 |
| Deal Pursuit Rate* | 16.32% |
| Winning LOI Pursuit to LOI Executed | 79 Days |
| Winning LOI Executed to Deal Closed | 63 Days |
| The LOI | |
|---|---|
| Purchase Price Range | $17M - $20M |
| EBITDA Multiple Range (TTM) | 5.75x - 6x |
| Exclusivity | 60 Days |
| Structure | |
| ➡️ Cash | 95% of TEV |
| ➡️ Rollover Equity | ❌ |
| ➡️ Seller Note | ❌ |
| ➡️ Earnout | 5% of TEV - Performance-Based |
| Axial Sell-Side Member Data | |
|---|---|
| Member Type | M&A Advisory Firm |
| Total Deals Marketed on Axial | 13 |
| Average Annual Deals Marketed | 2 |
| Average Revenue of Deals | $18,231, 667 |
| Average EBITDA of Deals | $3,793,965 |
| Axial Buyside Member Data | |
|---|---|
| Member Type | Corporation |
| Number of Acquisitions | 4 |
| Buyside Pursuit Rate* | 10.59% |
| Buyer Responsiveness Rate* | 99.41% |
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.
Learn More About Joining Axial
Related Content
Subscribe to Middle Market Review
