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The Winning LOI [Vol. 2, Issue 12, No. 15]

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This is Issue #15 of The Winning LOI, the Axial newsletter that anonymously reveals small business M&A valuation data and certain key deal terms associated with winning LOIs.

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Sponsorship inquiries: [email protected]


In this issue, we look into the M&A valuation data and key deal terms of a collection of three retail stores specializing in lawn, garden, hardware, outdoor products & equipment. The business also offers power equipment sales and rentals. 

The deal went to market confidentially via Axial in Q3 of 2021, was in market for 204 days, and the transaction closed 228 days after the LOI was signed.

Along with cash and bank financing, the structure of this LOI, which was executed by an Axial independent private equity sponsor, also included a seller note. Axial recently surveyed the lower middle market Independent Sponsor community to gain insight into their market perception, deal origination, and investment approach – including how they bridge valuation gaps.

 

Want to learn more? 

Click here to review the full report

See below for Winning LOI #15’s anonymized data ⬇️


The Deal
Deal TypeChange of Control
Revenue Range (2021)$9.5M - $10M
EBITDA Range (2021)$1M - $1.25M
EBITDA Margin Range10% - 13%
Key IndustriesConsumer Retail
In-Market DateQ3 2021

Axial Deal Data
Recommendations*110
Recipients*110
# of Pursuits*6
Deal Pursuit Rate*5.45%
Winning LOI Pursuit to LOI Executed64 Days
Winning LOI Executed to Deal Closed228 Days

The LOI
Total Enterprise Value Range$7M - $7.5M
EBITDA Multiple Range (2021) 6x - 6.5x
Exclusivity60 Days
Structure
➡️ Cash93% of TEV
➡️ Seller Note7% of TEV
➡️ Earnout
Noteworthy Elements of the LOIBrand Consent: The Buyer has been pre-vetted by the franchisor corporate to pursue acquisition opportunities.

Axial Sell-Side Member Data
Member TypeBusiness Broker
Total Deals Marketed on Axial312
Average Annual Deals Marketed23
Average Revenue of Deals$4,127,976
Average EBITDA of Deals$715,717

Axial Buyside Member Data
Member TypeIndependent Sponsor
Number of Acquisitions12
Buyside Pursuit Rate*14.37%
Buyer Responsiveness Rate*98.51%


Definitions: 

*Buyside Recommendation: Axial sell-side members receive a matching set of buyside members for every deal they manage via Axial. A buyside recommendation refers to a specific buyside Axial member who matches a particular deal.

*Recipient: A recipient is a buyside member who has been granted access by an Axial sell-side member to review a particular deal.

*Pursuit: Axial buyside members express initial interest in a deal by clicking “Pursue”, after which they can access and sign the NDA.

*Deal Pursuit Rate: The deal “Pursuit Rate” is defined as the number of times a particular deal is pursued by unique buyside members (i.e. the buyer shows explicit interest in exploring the deal) divided by the total number of buy-side firms invited to evaluate the deal

*Buyside Pursuit Rate: The buyside “Pursuit Rate” is defined as the number of deals pursued by a particular buyer throughout an entire Axial membership term, divided by the total number of deals sourced during the same timeframe.

*Buyside Responsiveness Rate: The buyside “Responsiveness Rate” is defined as the rate at which a member responds to teaser shares within 5 days. The calculation initiates when a member has a minimum of 10 teasers and is calculated based on the member’s last 100 teasers received.


Disclosures: All data presented in The Winning LOI is anonymized to respect and protect the confidentiality of Axial members and their transactions. Data is provided to Axial by Axial members in accordance with the Axial Member Terms of Service. Axial has endeavored to present data accurately, but Axial does not and cannot fully verify the accuracy of the presented information. Information contained in The Winning LOI is for informational purposes only, and does not represent investment advice or recommendations of any kind.

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