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The Winning LOI [Vol. 2, Issue 18, No. 21]


Welcome to the latest issue 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 dive into the M&A valuation data and key LOI deal terms of a 30+ year-old accounting software business that went to market and was sold during the height of the COVID-19 pandemic.

The business reported an EBITDA margin in the 80 – 83% range when it went to market confidentially via Axial in Q2 of 2020, spending a total of 116 days in market before the Winning LOI was executed, and closed 88 days later.

We took a look at Accounting Software deal activity on the Axial platform over the last 12 months. Even though the number of deals being brought to market is on the lower side, the pursuit-to-deal ratio is very much on the high end. Here’s the breakdown:

Looking to exit? Find an advisor you can trust.

See below for Winning LOI #21’s anonymized data ⬇️

The Deal
Deal TypeChange of Control
Revenue Range (TTM)$2M - $2.5M
EBITDA Range (TTM)$1.7M - $1.95M
EBITDA Margin Range80% - 83%
Key IndustriesTechnology
In-Market DateQ2 2020

Axial Deal Data
# of Pursuits*20
Deal Pursuit Rate*16.67%
Winning LOI Pursuit to LOI Executed102 Days
Winning LOI Executed to Deal Closed88 Days

Total Enterprise Value Range$2M - $2.5M
EBITDA Multiple Range (TTM) 1.25x - 1.5x
Exclusivity30 Days
➡️ Cash49% of TEV
➡️ Seller Note51% of TEV
➡️ Earnout
Noteworthy Elements of the LOIRevenue Share Agreement: Buyer and Seller will enter into a revenue share agreement with two key customers where the Seller will receive a percentage (25-50%) of all future revenues from those specific customer accounts capped at a specific revenue threshold.

Axial Sell-Side Member Data
Member TypeM&A Advisory Firm
Total Deals Marketed on Axial28
Average Annual Deals Marketed3
Average Revenue of Deals$4,759,185
Average EBITDA of Deals$894,716

Axial Buyside Member Data
Member TypePrivate Equity
Number of Acquisitions10
Buyside Pursuit Rate*2.20%
Buyer Responsiveness Rate*10.07%


*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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