Why One Supply Chain Risk Can Reshape an Exit Process
The deal fell apart at the last minute. The buyer had been ready to close, the price was strong, and…
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Welcome to the 3rd issue of the Winning M&A Advisor, the Axial publication that anonymously unpacks data, fees, and terms from the winning M&A engagement letters of professional M&A advisors using Axial to win new sell-side business.
| Engagement Letter Details | |
|---|---|
| Retainer Required | Yes |
| Retainer Amount | $75,000 |
| Retainer Applied to Success Fee | Yes |
| Payment Terms | Milestone-based |
| Milestone #1 | Start Fee |
| Milestone #2 | CIM Completion |
| Milestone #3 | LOI Execution |
| Engagement Duration | 9 months |
| Success Fee | 3% on first $10.5M | 10% on amount over $10.5M |
| Minimum Fee | Yes - $475,000 |
| Exclusive | Yes |
| Special Terms | |
| The M&A advisor is entitled to the Success Fee if the business is sold to any buyer during the term of the agreement or in the 12 months following the termination date. | |
Behind The Win:
As part of every Advisor Finder process, we ask the business owner or management team to provide a rationale for why they hired a given advisor. The following attributes contributed to the selection of the Winning M&A Advisor:
- Specialist: They are a specialist focusing exclusively on representing owners within Aerospace & Defense, the sector where the business has the highest customer concentration.
- Track Record: The firm has over 20 years of M&A advisory experience, with successful engagements totaling more than $1 billion in transaction value.
- Preparation: The advisor held multiple in-person meetings with the management team prior to finalizing the engagement, mapping out the specific steps of the entire process.
- Terms: The milestone incentives (detailed above) were structured to align with the management team’s goal of completing the sale within their desired timeline.
Looking to exit your business? Find an advisor you can trust.
| The Business | |
|---|---|
| Timeline | |
| Reaches Out To Axial | September 14th, 2023 |
| Begins Interviewing M&A Advisors | October 8th, 2023 |
| Signs The Winning Engagement Letter | January 3rd, 2024 |
| Business Data | |
| Industry | Industrials |
| Revenue Range | $13M - $15M |
| EBITDA Range | $1M - $2M |
| Desired Transaction | |
| Transaction Type | Change of ownership |
| Reason For Transaction | Majority investor seeking liquidity |
| Transaction Timeline | <1 year |
| Advisor Recommendation #1 | |
|---|---|
| Firm Type | M&A Advisory Firm |
| Generalist or Specialist | Generalist |
| Relevant Deals Marketed | 2 |
| Deals Marketed on Axial L12 | 7 |
| Average Revenue of Deals | $32,883,333 |
| Average EBITDA of Deals | $3,844,458 |
| Advisor Recommendation #2 | |
|---|---|
| Firm Type | M&A Advisory Firm |
| Generalist or Specialist | Specialist |
| Relevant Deals Marketed | 6 |
| Deals Marketed on Axial L12 | 1 |
| Average Revenue of Deals | $46,000,000 |
| Average EBITDA of Deals | $3,900,000 |
| Advisor Recommendation #3 | |
|---|---|
| Firm Type | M&A Advisory Firm |
| Generalist or Specialist | Generalist |
| Relevant Deals Marketed | 4 |
| Deals Marketed on Axial L12 | 13 |
| Average Revenue of Deals | $12,563,250 |
| Average EBITDA of Deals | $1,478,816 |
The Winning M&A Advisor – 1, 2 or 3?
Recommendation #2
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