Calder Capital's recent case study on a niche machining manufacturer highlights the effectiveness of a robust marketing strategy in achieving exceptional sale outcomes.
Adjusted EBITDA of the Niche Machining Manufacturer at the time of sale: $890,000
Results after 40 days of confidentially, yet aggressively marketing the business:
- 173 buyers expressed interest in reviewing the business.
- 159 buyers returned confidentiality agreements and were approved to receive the CIM.
- 21 buyers submitted offers.
Top three offers received:
- 3,900,000 offer, 90% cash at closing, 10% seller-financing over 5 years
- 4,500,000, 100% cash at closing
- 5,000,000, 100% cash at closing
Our client accepted the $5,000,000 cash offer.
The earnings multiple for this sale was 5.62x EBITDA. Prior to engaging with the client, Calder conducted a thorough valuation analysis that included identifying 10 similarly-sized sold comparables in the machining industry. The average EBITDA multiple across those comparables was 4.02x. In fact, no comparable transaction exceeded 5x. Additionally, Calder identified 8 “for-sale” comps prior to the transaction. The average asking price multiple was 4.16x and the top asking price multiple was 4.96x.
The Calder Capital team orchestrated a robust and efficient process, launching this Business to the market on October 13th, 40 days later on November 22nd, the seller accepted a Letter of Intent (LOI). Less than 5 months after the Company’s initial launch, the transaction was successfully concluded on March 1st.
The marketing process included strategic and financial buyer research, confidentially marketing the business across 12 M&A listing sites and Calder’s website (which receives 18,000 visitors per month - mostly buyers), a broad database blast to 185,000 buyers, professional advisors, and business owners, and targeted emails, texts, and phone calls to buyers with specific matching criteria (ex. At the time of this writing, Calder had 2,020 buyers with signed NDAs on file specifically interested in Michigan-based manufacturers with $500,000 - $1M in EBITDA).
The purpose of this case study is to demonstrate that a robust limited auction-style sale process will generally yield the best possible result. Most firms rely exclusively on a researched buyer list. If we had utilized only this method, we would have failed to bring the top cash buyer. Aggressive, coordinated marketing is the only way to ensure the best price, structure, and fit, as evidenced by this case study. When buyers compete, the best proposal rises to the top and the seller receives the best price and terms. This is the process that Calder Capital follows with every client.
About Calder Capital:
Calder Capital, LLC is a lower middle market investment bank providing mergers and acquisitions advisory services to business owners, entrepreneurs, family offices, and investors across the United States. Our dedicated team of professionals combines extensive industry experience, technological innovation, negotiation savvy, and key relationships to exhibit exceptional execution. Calder’s services include mergers and acquisitions advisory, private funds and capital markets advisory, and business valuations.
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