This Calder Capital case study outlines how Calder Capital’s Sell-Side M&A Advisory team helped the owners of an information technology services company achieve an exceptional sale outcome.
Valuation Summary
Prior to engaging with the client, Calder conducted a thorough valuation analysis that included identifying 10 similarly sized, sold comparables in the information technology services industry. The average EBITDA multiple across those comparables was 3.99x. In fact, no comparable transaction exceeded 4.88x. Adjusted EBITDA of the Information Technology Services Company at the time of valuation was $978,575. Calder’s valuation analysis estimated total gross proceeds of the business in this transaction as $4.75M, conservatively to $5.49M, as a market-high sale.
Background & Deal Summary
The Calder Capital Sell-Side team orchestrated a robust and efficient process after conducting the valuation in November, launching this Business to the market in April. At the time the business went to market, the TTM EBITDA of the company moved to $894,182. 5 months later, in September, the seller accepted a Letter of Intent (LOI). The transaction successfully concluded on December 15th.
Results aggressively marketing the business:
- 137 buyers expressed interest in reviewing the business.
- 75 buyers returned confidentiality agreements and were qualified to receive the CIM.
- 9 buyers submitted offers.
Top three offers received:
- $5,500,000 offer, 100% cash at closing
- $7,100,000, with $5,500,000 being cash at close, a $500,000 earnout, and $1,100,000 being a seller’s note
- Maximum of $8,000,000, with $4,100,000 cash at close, $2,300,000 in earnouts, and a $1,500,000 seller’s note.
Our client accepted the $7,100,000 offer and the earnings multiple for this sale was 7.94x EBITDA.
Why Work With Calder’s Sell-Side Team?
The marketing process included strategic and financial buyer research, confidentially marketing the business across several M&A listing sites and Calder’s website (which receives 20,000-50,000 visitors per month – mostly buyers), a broad database blast to 400,000+ buyers, professional advisors, and business owners, and targeted emails, texts, and phone calls to buyers with specific matching criteria.
The purpose of this case study is to demonstrate that a robust limited auction-style sale process will generally yield the best possible result. Most firms rely exclusively on a researched buyer list. If we had utilized only this method, we would have failed to bring the top cash buyer.
Aggressive, coordinated marketing is the only way to ensure the best price, structure, and fit, as evidenced by this case study. When buyers compete, the best proposal rises to the top and the seller receives the best price and terms. This is the process that Calder Capital follows with every client.
About Calder Capital:
Founded in 2013, Calder Capital is a cross-industry mergers and acquisitions advisory firm with offices across the United States. Calder provides valuation, sell-side, and buy-side services. We are nationally recognized for excellence in advising $1-100M enterprise value transactions in manufacturing, construction, distribution, and business services. Calder serves business owners, entrepreneurs, family offices, financial buyers, and investors. Learn more at www.CalderGR.com.
Notice: Calder Capital, LLC is not affiliated with any similarly named organizations or entities. To verify communications from our firm, visit our website or contact [email protected].