Two long-time friends became business partners and hired Calder Capital’s Buy-Side team to assist in their search efforts. The partners both have strong finance backgrounds, and after successful corporate careers, they decided to join together and find a business to acquire. Their investment strategy focused on manufacturing and business service companies in cities across the Eastern United States. In just under eight months, Calder’s client closed on the successful acquisition of a Pennsylvania-based sign and awning manufacturing business operating across five states.
Introductions, Advisory, and Reassessment
After being engaged, Calder immediately started introducing prospective sellers to the client, totaling 22 opportunities over the term of the engagement. The clients decided to have an introductory conversation with 14 of those owners during the initial prospect evaluation phase of Calder’s Buy-Side search process.
After just one month, Calder identified the eventual sellers and promptly qualified the off-market opportunity before introducing it to the clients as a potential acquisition target. The clients initially passed on the opportunity to speak with the potential seller, sharing that the sign and awning manufacturing industry was one they were unfamiliar with, so they chose not to pursue the lead.
Calder’s lead advisor on the deal, Brad, met with the clients to provide additional insight into the business and presented information about the sign and awning manufacturing industry that they had not previously considered. After further evaluation, the clients decided to proceed with the opportunity, which ultimately became the business they now own.
After a successful introductory meeting between the buyers and sellers, Calder quickly began a deep dive into the company’s financials. A financial valuation was then conducted, and the clients were guided on submitting an offer that was ultimately accepted. The offer included personal capital from the client, SBA funding, and seller financing.
Calder’s Buy-Side team assisted its client throughout the diligence, quality of earnings, bank underwriting, and legal documentation processes. The business continued to grow throughout the acquisition process, resulting in an implied purchase price of less than 4x TTM EBITDA.
Navigating Due Diligence
Once the clients had an executed LOI, the Calder team began coordinating the due diligence process with third parties.
The deal was progressing as expected until the lender’s underwriting team began missing deadlines, and the close date got pushed back time and time again. These delays caused the sellers to begin to reach out to the buyers and question whether the deal would ultimately even happen. This tension was immediately recognized by Brad, who stepped in right away to act as an intermediary between the buyer and seller. Brad reassured the sellers’ doubts to keep the deal alive and worked with the lender to speed the process along and verify that certain deadlines were met. Despite the challenges, perseverance paid off, and the deal ultimately closed seven and a half months after signing an engagement with Calder.
Conclusion
This case highlights the importance of not overlooking investment opportunities and ensuring that you evaluate each one with serious consideration. Buyers also need perseverance to complete a transaction, especially when working with third-party lenders and other professionals. Having the right team to separate emotions from business can be the difference between getting a deal done or not. Calder’s guidance and insights motivated these buyers to take a second look at an opportunity, which resulted in a smooth transition of ownership and a great outcome for both parties.
Why Work With Calder’s Buy-Side Team?
Buyer competition, research, calling/emailing bankers, lack of time for prospecting/pipeline building, and limited administrative resources: these are all factors that add to the difficulty of sourcing enough deal flow to be successful in buying one or more businesses. We understand these limitations, which is why we have created an aggressive buy-side M&A advisory firm focused on sourcing services designed to do the work that corporate, family office, private equity, and individual entrepreneurial buyers know is necessary but often falls to the bottom of the priority list.
Calder Capital’s Buy-Side M&A Advisory is focused on bringing buyers proprietary, off-market deal flow driven by high-quality, high-quantity direct outreach to potential sellers, matching our client’s specific criteria, and by leveraging our existing network. Our team can source and execute deals nationwide, as evidenced by having completed deals in 30+ different states to date. By completing all of the work in-house, our team can uphold professionalism and quality in establishing the first impression on behalf of our client, as well as guarantee leads and deal flow.
Our Buy-Side Gold clients are guaranteed 10 introductions with sellers that meet their criteria (or they don’t pay) and often pay a .5x EBITDA multiple less than fair market value for these businesses. Similarly, our buy-side clients’ ability to consistently close transactions with off-market sellers is tied directly to our willingness to research, call, email, and qualify sellers diligently. Most firms offering buy-side services tap their existing network, issue a press release, and hope the phone rings. We contact each owner seven times through cold calling and emailing within two weeks. That’s how we get a “yes”, “no”, or “call me in a year” response from 40%+ of those owners we reach out to. And for those that say “yes”, we conduct a 30-minute interview with them to ensure that they’re a fit before we bother our client.
Additionally, we will reach out to acquisition targets that you already have in mind but haven’t been able to get a hold of or for confidentiality reasons, don’t feel comfortable reaching out to.
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.