Calder assisted a seasoned executive with over 20 years of corporate leadership experience with the sourcing and execution of a proprietary acquisition to help him realize his dream of becoming a business owner. It is worth noting that the buyer spent nearly two years beforehand searching on his own without success. Here’s a short overview of how it all happened.
Beginning & Preparation
In late 2022, the buyer approached Calder’s Buy-Side team with his mission of completing a business acquisition.
The first step focused on refining the acquisition criteria, which after deep reflection led to prioritizing geographical location while explicitly excluding job shops from the search. The buyer was interested in specialty manufacturing businesses within 90 minutes of his home.
This targeted approach was crucial for aligning the search with the client's business and lifestyle objectives.
After executing the Buy-Side Gold engagement agreement, Calder’s buy-side team quickly got to work preparing marketing materials and working on the master prospecting list. We developed a confidential buyer profile that educated potential sellers about the type of buyer we were working with and the acquisition criteria, as well as a personal profile that revealed who exactly the buyer was and further explained his motivation. The personal profile was not shared with potential sellers until our client approved moving forward with an introductory call or meeting.
Intensive Prospecting and Offer Submission
From October 2022 to February 2023, we embarked on a rigorous prospect search. This period, often likened to 'speed dating' in the business acquisition world, involved introducing the client to 22 off-market and proprietary acquisition targets. After review, our client declined 10 of the prospects and requested introductory calls or meetings with the remaining 12. Simultaneously, our team pursued deeper financial and other information requests from the prospects.
Our buyer concentrated on their top three choices and submitted Indications of Interest (IOIs) to each. Two of these IOIs turned into Letters of Intent (LOIs) and with various options available, our buyer was able to negotiate fiercely. Ultimately, after significant and detailed negotiations, an LOI was signed in March of 2023.
Navigating Challenges to Close the Deal
The journey from signing the LOI to closing the deal in October 2023 was complex and extended over six months. This duration was primarily due to a notable drop in the target's Trailing Twelve Months (TTM) EBITDA, which necessitated a renegotiation of the structure and terms. These renegotiations ultimately tilted in favor of our client, underscoring the importance of agility and adaptability in deal-making.
Additionally, the process involved in-depth interviews and interactions with key employees of the target company and extensive legal negotiations, both of which were instrumental in ensuring a seamless integration post-acquisition.
This case study exemplifies a successful acquisition process that combined strategic preparation, intensive prospecting, and skilled negotiation. The ability to adapt to changing financial landscapes and renegotiate terms showcases the importance of flexibility and due diligence in acquisition processes. Before engaging Calder’s buy-side team our buyer spent two years searching using their own capital and time.
It often takes longer than buyers expect to close an acquisition, and on average takes 6 offers before executing a signed LOI. With Calder’s help, our client closed a phenomenal specialty manufacturing deal at exceptional price and terms, that was put under LOI within 5 months of searching.