Investors & Search Community:

April was a good month for us. We received verbal acceptance for our first LOI! This was our sixth LOI, so it feels good to get real momentum.

The deal is for a CRT (complex rehab technology) provider, codename: Pat Healy Company, at a 5.15x multiple. Our primary SBA lender would like us to increase our equity injected into the deal and/or increase the seller note. Currently, we are awaiting redlines from the seller, so we will decide which path to take once we see those. We are looking to take on strategic investors to help with the equity injection on this deal. Our current model shows an IRR of 36% and MOIC of 5. We placed a high NWC (net working capital) target in the LOI as the seller had not given us enough information to make an informed offer, so we expect that to be the primary counter from the seller.

The majority of our LOIs are penciled at 2-4x EBITDA. However, in the case of Pat Healy Company, we see an opportunity to “add-on” to this seed company. Our data suggests that the top players in the category have been sitting on the sidelines waiting for the current investment environment to loosen up. We don’t believe interest rates will budge in the near future, so we will leverage this period to be in the game rather than on the sidelines.


The screenshots below are our total deal pipeline numbers since the start of our search (Oct 2023).

For April, the average total deal size was at $5.8 million, which is higher than our $2 million target. However, we view our average weighted deal amount of $1.1 million to be our most realistic number and will focus on growing this number. We plan to increase the size of deals we are looking at to $4 million in EBITDA.

We looked at fifteen deals in the month April. For May, we want to increase our deal flow by 33% to 20 total deals reviewed. While we do not believe that the total number of deals reviewed directly correlates to the quality of deals, we are getting stronger at making faster decisions on deal quality. Thus total deals for our previous month is not an apples-to-apples comparison. We have also increased our pool of potential search investors, which gives us the confidence to search for bigger deals.

The “If you’re not first, you’re last.” Award

“You placed top 5 out of 29. They (the LOI winner) were all cash,” the broker told me. “You tempted her because of your background.”

The background the broker was speaking of was our co-founder Rhea. She has taught medical coding for years and has run operations of a clinic with 100 physicians.

After 19 years, the retiring owner of a $1 million EBITDA is looking to sell her medical billing company that has both recurring and reoccurring revenue.

This deal was the siren song that is used to lure searchers into the ETA community. But, it was not to be. Hopefully, the next time such a song lures us in, we will have committed capital to capture the sea monster.

Search Community Resources

The BDE Capital network in the search community is growing. As it does, we have been receiving many of the same questions. Below are some resources that will help searchers.

-How to model a self-funded acquisition by Sam Rosati

-Why and how to model NWC (net working capital) by Eric Pacifici

-Biggest mistake I made with NWC by Andrew Swiler

How you can help

Capital Call: We’re looking for strategic capital. We are primarily interested in search investors who have a background in healthcare.

Talent: We are on the lookout for a QOE provider who has a background in healthcare M&A.

Marketing: We would like to build a relationship with any journalists or media personalities who are covering the ETA community.

In May, we hope to be honing in on our first acquisition. We will have at least two more LOIs written the week that this email goes out. Our goal is to take ownership of our first company by the end of this Summer.

Thank you for your support. Please reach out to me anytime.

Christien Louviere

CEO, BDE Capital

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