Independent sponsors are disciplined on valuation
The latest Axial Independent Sponsor Report shows strong pricing discipline, with the vast majority of deals completed below 7x EBITDA,
Negotiations
29 posts
Do a sell-side QoE when you exit
Do a sell-side QoE when you exit. Benefits: • Higher valuation (see chart below from GF Data). • You can include it
Seller suddenly changing it all
After 5 months under LOI, the seller suddenly asked my friend to secure the seller note with a PG. The
Put options are ominous
If your investor demands a put option, then consider countering with a request for a call option. On one of
The impact of the seller's age
The seller's age colors both the target company and your deal process. • Bargains are most common among very
Deal of the Year Award
Sep 12, 2024: Malia Funk submitted Willistown Capital's new deal via the Minds Capital website. Oct 23, 2024:
11th hour, seller changes his mind
Your seller changed his mind in the 11th hour. The deal is gone. Not on pause, but dead. You have
Buy the real estate w/ company
Say YES to buy the real estate associated with the target company. Often a business owner will prefer to retain
Zone-skipping, visualized
This is what zone-skipping looks like. Bigger companies = Bigger multiples Why? Because bigger companies tend to carry lower risk: • People
PE returns are superior to most
PE returns have been superior to those of VC, S&P 500 (big public stocks), and Russell 2000 (small
CEO should earn more than the Independent Sponsor
Sir Alex Ferguson, former manager of Manchester United, had a clause inserted into his contract that stipulated no player should
Seller notes can be renegotiated, after the fact
Seller notes can be renegotiated - after the fact. Last year we had a $2.2m outstanding seller note that
"Strategic generosity" to build trust
Examples of strategic generosity as a way to build long-term value & trust: • Yield on GP terms if capital partner
Pushed Out by Anchor Investor
How to minimize the risk of predatory capital providers stealing your deal: • Include non-circumvention provision in NDA. • Own the relationship
PE Funds Aren't More Likely To Close
A seller may think a PE fund with committed capital is more likely to close than an IS. I disagree.
5 Pillars of Deal Structure
The 5 Pillars of Deal Structure: 1. Cash at close. Inversely correlated with valuation (the less cash the seller requires
Realistic Expectations = Seriously Hairy
Broker: “The seller has realistic expectations for valuation.” Translation: This deal is seriously hairy.
Use QoE Provider to Renegotiate
Use your QoE provider to renegotiate. If the QoE comes in light, then your QoE provider should: (1) Connect with
When Deal Drags On Pre-Closing
Best practices with a seller when your deal is dragging on without closing: (i) Over-communicate. Weekly email updates, frequent phone
Different Buyers From Seller's Perspective
Table: Different business buyers from a seller's perspective. Minds Capital invests equity into deals led by independent sponsors
Retiring vs. Entrepreneurial Sellers
When buying a business, your seller is either retiring or entrepreneurial. Below is a cheeky spin on the main differences
Seller w/ Cold Feet
If your seller is getting cold feet, they’re usually much colder than you think. 🥶 • Don’t wait and see.
Numbness
Searcher after closing his first deal: “By the time my deal closed I was so numb by the process -
$300k Break Fee
"I negotiated a $300K break fee if they walk away before it closes." Break fees aren't
