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The Winning LOI [Vol. 3, Issue 6, No. 33]

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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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In today’s issue, we review the LOI for a Technology Services company that reported a revenue range of $3M—$3.5M and an EBITDA range of $.5M—$.75M when the deal confidentially went to market via Axial in Q2 2022. The deal spent 357 days in market before the Winning LOI was executed and successfully closed 83 days later.

Looking to exit in Technology? Find an advisor you can trust.

See below for Winning LOI #33’s anonymized data ⬇️


The Deal
Deal TypeChange of Control
Revenue Range (TTM)$3M - $3.5M
EBITDA Range (TTM)$.5M - $.75M
EBITDA Margin Range17% - 20%
Key IndustriesTechnology
In-Market DateQ2 2022

Axial Deal Data
Recommendations*205
Recipients*205
# of Pursuits*34
Deal Pursuit Rate*16.59%
Winning LOI Pursuit to LOI Executed157 Days
Winning LOI Executed to Deal Closed83 Days

The LOI
Total Enterprise Value (TEV) Range$2.75M - $3.25M
EBITDA Multiple Range (TTM) 4.5x - 4.75x
Exclusivity60 Days
Structure
➡️ Cash73% of TEV
➡️ Seller Note18% of TEV
➡️ Rollover Equity9% of TEV
➡️ Earnout

Axial Sell-Side Member Data
Member TypeBusiness Broker
Total Deals Marketed on Axial372
Average Annual Deals Marketed26
Average Revenue of Deals$3,788,478
Average EBITDA of Deals$674,989

Axial Buyside Member Data
Member TypeIndependent Sponsor
Number of Acquisitions4
Buyside Pursuit Rate*20.73%
Buyer Responsiveness Rate*95%


Definitions: 

*Recommendations: 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 buy-side “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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