- Key Questions
- Value Proposition
- Buyer Pool Facts
- Sample Buyer Profiles
- Case Study
The M&A MARKETPLACE by cHcsm offers the business owner a valuable resource to educate, facilitate and better prepare them in making the most important business decision of their career - the SALE of their company. Whether an owner is considering selling a minority or controlling interest or is ready to retire and leave the business altogether, they are confronted with difficult questions:
- What is my company worth?
- How do I find the best Buyer/Investor?
- Is my business ready for SALE?
- What are the most important things I can do to achieve the maximum value?
- How do I protect sensitive and confidential information from reaching my competitors?
- When do I tell my employees, vendors and customers of my desires?
- How do I minimize the tax impact that will allow me to maximize my retirement objectives (retirement income, charitable giving, etc)?
The M&A MARKETPLACE by cHcsm has identified steps owners can take prior to a transaction to increase value (please see the Owner's Checklist). Also, we invite you to take our quick multiple-choice quiz for owners to determine if you are ready for a transaction. The M&A MARKETPLACE by cHcsm also provides referrals to experts to assist the owner in this process (SEE Maxi-LINKSsm ) should the owner desire an introduction.
Selling a family owned company will only occur once! Typically, it represents the largest percentage of the owner's net worth yet many owners do not think about selling until they receive an unsolicited offer. Once they sign a Letter of Intent to sell at a specific price, they have dramatically limited their ability to minimize the tax impact of a sale transaction.
If interested in finding out more about our proprietary process or how the M&A MARKETPLACE by cHcsm can assist to maximize your company's value, please CLICK HERE.
Many business owners do not understand the value added by a professional intermediary. However, these owners do see what appears to them as large fees with no guarantee of success. This sales process can be long (nine to eighteen months) and the owner is not prepared for this disruption to his normal operations. Click Here to view traditional "Broad Auction" process. These same owners are comfortable negotiating directly with a private equity firm or strategic buyer since the first can demonstrate a history of acquisitions and the seller usually knows the second. Unfortunately, unless there is competitive tension to keep the buyer honest, the seller usually leaves a significant amount on the table. Worst of all, if the transaction fails with a competitor, he has just disclosed his most sensitive information to someone that can cause major harm to his business and greatly reduce his company's attractiveness to other potential buyers.
The M&A Marketplace by cHcsm is about fairness and building TRUST with business owners and their advisors who assist them in selling part or all of their company. The proprietary auction process is an alternative for the family business owner that provides:
- Transparency and speed
- Reduction in complexity and uncertainty of the existing "broad auction" process
The Maxi-AUCTIONsm provides the owner a "competitive process" and MARKET VALIDATION within 30 DAYS of contacting buyers and removes adversarial and burdensome features of the existing M&A process that have kept many owners from hiring a professional intermediary and receiving a competitive price.
|Key Value Metrics||Maxi-AUCTIONsm||Current Process - Broad Auction|
|Time to Market Validation of "Essential Seller Deal Criteria"||30 days||4-6 months|
|Adversarial Documentation Process||NO||YES|
|Closing Success Fees Paid By||Buyer
|Retainer Due Regardless of Results||NO||YES|
|Time to CLOSING||120 days||9-18 months|
|Disruption to Business||Minimal||High|
Maxi-AUCTION (BUYER POOL FACTS)
|Number of Buyers||30|
|Total Deals Closed by Buyers||1,896|
|Numbers of Industries Represented||74|
|Buyers that focus on a single industry||7|
|Buyers that have Closed Acquisitions since September 2008||30|
Most Popular Industries:
- Business Services
- Distribution - value add
- Manufacturing - Niche
- Consumer Products & Services
Sample of Specialty areas of Interest:
- Consumer Branding
- Media & Publishing
- Supply Chain Management
|EBITDA Range||$1MM to $50MM|
|# of Buyers||Control Only||Minority +
|$50 to $100MM||12||7||5|
* Total number in size categories is greater than total number of firms because some buyers invest in multiple size categories.
SAMPLE BUYER PROFILES
Buyer 16 - ".... seeks to become long-term partners with family business owners, management teams,
and exceptional CEOs who have as their goal significant long-term growth in their enterprise."
"Philosophically, we believe that building a business takes time. We can invest capital in a business for up to ten years, or twice the duration of most funds ..."
"We believe in people...we have had the privilege of building trusted relationships with amazingly talented ...people of the highest integrity ... that do business on a handshake and put the interest of their
employees and partners ahead of themselves.... We treasure the connections that business owners have to their communities as well as their own employees, a connection that makes their businesses great places to work."
Buyer 19 - "We also remove syndication risk by using single lenders or a small group of lenders that we
know to finance our platforms. As a result, we have closed over 90% of the Letters of Intent that we have signed in our 20 year history and have never failed to close a transaction due to financing."
Buyer 24 - "...is focused on the lower middle market and invest in a wide range of industries...we target private family businesses with revenue between $10 and $100 million and we strive to be the partner of choice for owners, entrepreneurs and management teams....we partner with management teams where they have limited or no current ownership...work with owners to facilitate generational transition of ownership for estate planning ...or to acquire ownership stake of those family members not active in the business."
The proprietary Maxi-AUCTIONsm process was the result of an actual transaction. The majority owner of a very profitable $220 million revenue distribution company wanted to bring in an outside investor to provide liquidity for several non-active family shareholders and allow him to reinvest a large portion of his equity along side of a strong financial partner to buy his largest counterpart on the west coast and reap the benefits of a second exit in five to seven years.
After TWO failed trips down the aisle, the owner approached a partner of Nixon's and indicated he was a seller if a Letter of Intent (" LOI") from a buyer (willing to match or exceed the $115 million purchase price and terms of the best offer previously made, but not closed) could be delivered within 40 days. The seller REFUSED to retain our firm or pay our fee but agreed to an exclusivity period of 40 days to produce a buyer. Additionally, the seller had major deal fatigue and required that the buyer diligence and documentation be performed simultaneously to achieve a closing within 90 days of signing an LOI.
Ten financial buyers were approached on a no-name basis with a one page "Teaser" highlighting the three essential deal points of the seller along with summary financial results for the past three years. Six buyers signed the confidentiality agreement and agreed to pay the success fee of 1.75%. Five visited the company and submitted offers with a better price and terms than the most recent failed attempt. Two buyers offered a price equal to 30% more than offered just six months prior. A winner was selected and all diligence and document negotiations were completed within the 90-day requirement.
The above process served as the Genesis of the M&A Marketplace's "Maxi-Auction?" where the family business owner - not the financial world, made the rules. To request actual "Teaser" click here to contact us.
The Maxi-AUCTIONsm establishes a fair, swift, uncomplicated, competitive and VERY confidential sales process for qualified business owners. It also provides a limited number of financial investor/buyers an exclusive "first-look" at an opportunity to pursue a transaction with a motivated business owner that meets the investor/investor/buyer's investment criteria. In this process, the auction closing fees are borne by the investor/buyer. Both participants must sign the auction participation agreement that spells out the rules and requirements that apply to each in order to participate.
Requirements of Business owner:
- Private Company with minimum of $2 M in Normalized EBITDA*
- Growth or consolidation opportunity
- Good accounting controls in place - audited financials preferred
- Owner must place a "Good Faith" deposit in escrow to demonstrate they are motivated to complete a transaction. The deposit is fully refundable when transaction closes, a buyer diligence issue prevents a closing or the Maxi-AUCTIONsm fails to produce a successful bidder.
- Administrative diligence fee due upon receipt of a acceptable Letter of Intent ("LOI")
- There are no customer concentration issues
- Sign NDA/Non Circumvention and Maxi-AUCTIONsm participation agreement and
- Willingness to retain legal counsel or co-counsel approved by M&A MARKETPLACE by cHcsm
* Normalized EBITDA - Earnings before interest, taxes, depreciation and amortization adjusted for owner compensation that exceeds market norms and expenses not related to normal operations of the business in the future. Add back all owner compensation/benefits (salary, insurance, auto, profit sharing and one time or non-essential expenses for benefit of owners) less market compensation for services being performed by owner. The M&A MARKETPLACE by cHcsm will assist you in determining this adjusted EBITDA number.
Click here to contact us. We treat all inquiries confidentially.