This Calder Capital case study outlines how Calder helped the owners of a Midwest cleaning and facilities management company achieve an exceptional sale outcome.
Valuation Summary
Adjusted EBITDA of the cleaning and facilities management company at the time of sale was $2,340,282.
Prior to engaging with the client, Calder conducted a thorough valuation analysis that included identifying 11 similarly-sized sold comparable companies in cleaning and facilities management. The average EBITDA multiple across those comparables was 5.4x, and the median across these companies was 5.59x. No comparable transaction exceeded 6.17x. Calder’s valuation analysis estimated total gross proceeds of the business in this transaction as $12.1M, conservatively to $13M, as a market-high sale.
Background & Deal Summary
The Calder Capital Sell-Side team orchestrated a robust and efficient process, launching this Business to the market on January 18th. 84 days later, on April 11th, the seller accepted a Letter of Intent (LOI). Less than 7 months after the Company’s initial launch, the transaction was successfully concluded on August 1st.
Results after 84 days of confidentially, yet aggressively marketing the business:
- Nearly 500 buyers expressed interest in reviewing the business.
- 381 buyers returned confidentiality agreements and were approved to receive the CIM.
- 53 buyers submitted offers.
- The IOI to CIM ratio was 13.9%. 10% is average; however, we tend to see this move higher when the target company is more attractive.
The top three offers received were:
- $16,380,000 offer, 100% cash at closing.
- $16,500,000 total from a $15,000,000 Asset Purchase plus a $1.5M working capital cash sweep for the seller at close. The asset purchase consisted of $11M cash at close, a $2M equity roll, a $1M earnout, and a $1M escrow.
- $17,000,000, $15M cash at closing, $2M 1-year holdback (7.25x EBITDA).
After Indications of Interest, Calder Capital cut the bottom tier of buyers, and kept the top 17. Amongst the top 17 was a particular Western U.S. PE-backed strategic buyer who bought their way into the conversation.
Calder partnered with the seller to coordinate the management presentation with each of the top contenders. Upon an awkward vibe during the management presentation and dinner with the Western U.S. PE-backed strategic, it became apparent that the two groups didn’t mesh. From that point, Calder and the Seller concluded that they would not be proceeding with this group, which was the largest bidder.
Calder and the Seller’s leadership team continued to interview potential buyers, as they arrived for management presentations. Due to the volume of options the client had, the Seller was confident and able to ensure that management presentations were treated as a mutual interview.
Calder ultimately referenced the highest bidder’s offer to the other top contenders and negotiated up with them. Our client accepted the $16,500,000 offer, and the earnings multiple for this sale was 7.05x EBITDA.
With Calder’s marketing automation infrastructure, the Seller’s obtained immense interest and an ability to cut people out of the conversation. And due to Calder’s scalability and process centralization, our client had options and picked the option that was the best fit for them.
Why Work With Calder’s Sell-Side Team?
The marketing process included strategic and financial buyer research, confidential marketing of the business across 12 M&A listing sites and Calder’s website (which receives 20,000-50,000 visitors per month – mostly buyers), a broad database blast to 350,000+ 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.