Approached by a Strategic Buyer - thoughts?

by a searcher from Harvard University - Harvard Business School

1 year ago

Anonymous for NDA reasons, but I'm an operator (former successful self funded searcher) who has been approached by a Strategic acquirer who owns one of our main competitors. Our company is a Compliance related tech-enabled services business with strong recurring revenue and no assets/Capex. We'll hit EBITDA of ~$500k (unadjusted) end of this year and the Strategic is probably 15-20x larger than us.  If we combine, they'll get client/geo expansion, price uplift, cross-sell, and cost-out synergies (plus the EBITDA of course). I am interested in selling since this could mark a good exit (and would very beneficial for our current employees as well)

Main question is what sort of transaction price/exit multiple should we aim for? Any thoughts or watch-outs on negotiating with them? How can I protect my employees? I'm humbly requesting any input or advice because these guys are much larger and I'm worried they'll lowball or take advantage of a young inexperienced operator.

Thank you!

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19 comments

professional from Oregon State University

If you're interested in taking a look at some industry benchmarking, I recommend checking out the BVR transactions link at the top of the platform. I'm happy to walk you through the data and discuss any questions you may have. Feel free to IM me any time. I'm also happy to refer you to any valuation professionals in your area.

5 months ago | like reply | 0 likes

intermediary from Harvard University

You need to let them know you are talking to other buyers. Any time a buyer knows they are the only person involved in the process, they have all the negotiating power.

5 months ago | like reply | 0 likes

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