This Calder Capital case study outlines how Calder helped the owners of a Construction Equipment Manufacturer and Distributor achieve an exceptional sale outcome.
Valuation Summary
At the time of the valuation, the Adjusted EBITDA utilized was $1,608,000, which was for the prior calendar year.
Prior to engaging with the client in a sales process, Calder conducted a thorough valuation analysis that included identifying 6 similarly-sized sold comparables in the machining industry. The average EBITDA multiple across those comparables was 4.13x, and the median multiple was 4.08x. In fact, no comparable transaction exceeded 4.9x. Calder’s valuation analysis estimated total gross proceeds of the business in this transaction as $6.5M (4.5x), conservatively to $7.9M (5.5x), as a market-high sale.
Background & Deal Summary
At the time the Calder Capital Sell-Side team brought their client to market, the TTM adjusted EBITDA of the Construction Equipment Manufacturer and Distributor had grown to $2,200,000.
The Calder Capital team orchestrated a robust and efficient process. Calder began their engagement with the client in late April, went to market in late July, the client accepted a Letter of Intent (LOI) in September, and less than 1.5 months after the Company signed the offer, the transaction closed in November.
Results after two months of confidentially, yet aggressively marketing and negotiating on behalf of the client:
- 395 buyers expressed interest in reviewing the business.
- 381 buyers returned confidentiality agreements and were approved to receive the CIM.
- 17 buyers submitted offers.
The top three offers received were:
- $13,200,000 offer: 100% cash at closing.
- $13,500,000 offer: 85% cash at closing, with a 15% indemnification escrow.
- $15,000,000 offer: 80%-90% cash at closing with a 10%-15% equity rollover.
Our client accepted the $15,000,000 offer, and the earnings multiple for this sale was 6.82x EBITDA.
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.