Country club & Racecar
An independent sponsor was able to move a seller from "NO" to "Yes!" on an 8-
Negotiations
34 posts
Losing a deal to a strategic
Losing a deal under LOI when a strategic buyer swoops in with $7m more = brutal. Time kills all deals, exhibit
$10m EBITDA platform w/ no equity
$10m EBITDA platform w/ no equity (real-life case study): The independent sponsor had 3 LOIs, with $4m, $4m, and
Seller's rollover equity, what's the sweetspot
The amount of rollover equity from the seller affects the pre-closing dynamics, transition risks, and continuity of operations. Almost
Unsolicited inbound offers
If you receive an unsolicited inbound offer for your business, do not accept right away. Inbounds won’t walk away,
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,
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
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:
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 was
"Strategic generosity" to build trust
Examples of strategic generosity as a way to build long-term value & trust: • Yield on GP terms if capital
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
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
