When waiting for financials from the seller, go for a buyer/seller call in the interim to move the process forward. If the buyer wants to wait for financials, then request that the buyer write out their questions of the seller in an email and then forward these questions to the seller. This should set up the next step which is the buyer/seller call. After which financials will be more forthcoming. In fact, it is better
Most sellers that are interested in having a discussion are 1 to 5 years away from actually selling. They either are waiting for a strategic buyer or simply need to grow a few more years to hit a target valuation to be in line with the lower middle market/middle market valuation spectrum: $500k to <$1m is 4x $1m is 5x $1m to $2m is 6x >$2m is 7x Since sellers are likely a few years away even if you get
From Origination to M&A Execution Once the investment banker has originated 8 to 10 multimillion dollar listings, one should transition from origination to M&A execution process creating a shortlist for each deal (10 in the shortlist). The investment banker should concurrently prepare the marketing package which includes the teaser and the executive summary. Once the teaser is finished, the investment banker should begin emailing the shortlist with the teaser. From this shortlist, a percentage will reply
An asset sale in M&A does not mean distressed but rather is where a buyer acquires the assets of a company rather than the stock. In a stock sale, the depreciation schedule is transferred to the new buyer. Purchase Price Allocation The purchase price allocation forms points of negotiation where hard assets are stepped up to the purchase price.
After matching a financial or strategic buyer’s mandate with a target, landing the M&A engagement and building & executing on a buyer list, it is up to the investment banker to work with the buyer and seller to structure a deal. Deal structures initially involve a rough range of valuation to make sure that both parties are in the sphere of reasonability. Reasonable deals typically look like the following: 4x <$1M EBITDA 5x ~$1M EBITDA 6x $1M -
In order to build a buyer list, the investment banker uses a database service such as Mergr.com to pull a list of likely strategic and financial buyers along with contact information in order to run the M&A process and build a market for control of the perpetuity.