The Winning LOI [Vol. 4, Issue 9, No. 61]
Welcome to the latest issue of The Winning LOI, the Axial newsletter that anonymously reveals small business M&A valuation data…
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The Winning LOI [Vol. 4, Issue 10, No. 62]
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 Food & Hospitality company specializing in the manufacturing and distribution of high-quality food products for both foodservice and retail markets, with a focus on locally sourced items. Additionally, it offers ship provisioning services, supplying food, beverages, and technical supplies to commercial and private vessels.
The business reported a revenue range of $20M-$25M and an EBITDA range of $3M-$5M when the deal confidentially went to market via Axial in Q4 2023. The deal received 899 buyer recommendations and was pursued by 70 buyers (see full breakdown below), with a Search Fund successfully executing the winning LOI and closing the transaction in 206 days.
The LOI was structured as a combination of cash and a performance-based earnout. The earnout is tied to revenue growth over a one-year period and is contingent upon the business meeting or exceeding predefined revenue targets. If the full earnout is realized, the resulting EBITDA multiple for the transaction will range between 3.25x-3.5x.
See below for Winning LOI #62’s anonymized data ⬇️
| The Deal | |
|---|---|
| Deal Type | Change of Control |
| Revenue Range (TTM) | $20M - $25M |
| EBITDA Range (TTM) | $3M - $5M |
| EBITDA Margin Range | 12% -15% |
| Key Industries | Food & Hospitality |
| In-Market Date | Q4 2023 |
| Axial Deal Data | |
|---|---|
| Recommendations* | 899 |
| Recipients* | 899 |
| # of Pursuits* | 70 |
| Deal Pursuit Rate* | 7.79% |
| Winning LOI Pursuit to LOI Executed | 131 Days |
| Winning LOI Executed to Deal Closed | 206 Days |
| The LOI | |
|---|---|
| Purchase Price Range | $10M - $12M |
| EBITDA Multiple Range (TTM) | 3.25x - 3.5x |
| Exclusivity | 90 Days |
| Structure | |
| ➡️ Cash | 81% of TEV |
| ➡️ Rollover Equity | ❌ |
| ➡️ Seller Note | ❌ |
| ➡️ Earnout | 19% of TEV |
| Axial Sell-Side Member Data | |
|---|---|
| Member Type | Business Broker |
| Total Deals Marketed on Axial | 29 |
| Average Annual Deals Marketed | 2 |
| Average Revenue of Deals | $9,667,200 |
| Average EBITDA of Deals | $1,158,046 |
| Axial Buyside Member Data | |
|---|---|
| Member Type | Search Fund |
| Number of Acquisitions | 1 |
| Buyside Pursuit Rate* | 12.88% |
| Buyer Responsiveness Rate* | 69.01% |
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, also known as a “buyer match.”
*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 buyside 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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