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April 7, 2022

A successful entrepreneur approached us last year; she was ready to monetize her ownership and found an excellent strategic buyer to take the company to the next level. The issue was the cash at closing component of the $28 Million deal was light, only $11 Million. Owing to the tight labor market the buyer was very excited….with one transaction they would obtain 92 good employees! The issue was there was no competitive tension from other buyers so negotiations were stalled, not moving

The owner hired us to run a full process which included 2-day customized training, creation of marketing materials including a video, confidentially marketing the company globally, vetting buyers, obtaining bids, qualifying bidders, facilitating buyer meetings, negotiating Letters of Intent, resolvingIssues in due diligence, adhering to a timeline and closing. The owner negotiated a discount on our fee should she sign a Letter of Intent with the buyer who submitted the $28 Million offer prior to us going to market and we end up closing with that buyer.

As things turned out the Strategic buyer wouldn’t materially improve the cash at closing component of their offer prior to us going to market, so off we went to the world!

We obtained 15 other bids for the company and consequently did move the strategic buyer up, they increased cash at closing by $4 Million to $15 Million. Additionally, $9 Million of the deal was thinly traded public company stock and we negotiated no lock up period so day one she could liquidate her stock.

So the deal we closed for our client was $31 Million, comprised of $15 Million of cash, $9 Million of stock (no lock up period) and a $7 Million earnout all for which our client paid us a $740,000 fee; the discount didn’t apply as the Strategic Buyer didn’t budge nor did we sign a Letter of Intent with them without obtaining other bids and creating real tension….not bluffs, but real bids. It’s important to note here that our client passed up a viable competing buyer we obtained: $27 Million deal with $22 Million cash at closing from a Private Equity Group; our client felt that her employees and the future of the company was in better hands with the Strategic Buyer.