Hi Andrew.

1) I'd value them based on an average of the last 3 years' Ebitda. I wouldn't give a better valuation to whomever jumps first, as this could cause resentment from the other owners in the future, especially if that first company to jump on board ends up not performing as well as the others.

2) I'd give one owner a seat on the board, as the member who represents all the 7 owners and their voting rights, but would make the 7 owners choose whom they select to that position. Two reasons why I would do this: a) to "force" the 7 owners to actually work with and talk to each other frequently and reach a consensus before any matter is discused on the Board; and b) since you're planning on adding more businesses into this "holding" company, you prevent any potential demands from new owers wanting to also be on the Board which would potentially create a Board that's too large, unbalanced and unmanageable.

3) I'd approach this owner by owner, determining what's their motivation and ideal outcome. Some may want to take some chips off the table and some may not. Break down any barrier that may prevent them from joining, but do it on a case by case basis... not every owner will want the same thing.

4) Ideally I'd elevate one of the owners to CEO of the group. In small and middle market companies, a CEO is often an operator who knows the industry inside and out. That role is hard to hire outside. As long as you have advisors or a Board that will contribute with strategic direction and oversight, a CEO from inside is the safest bet. Make sure that CEO can relate to and communicate the company's vision the rest of owners and employees.

5) Again, depends on each owner and what's behind them being hesitant about joining. It may be different things to different owners. A separate conversation with each will uncover this.

when you are rolling up how did you get it to the point that you could buy all 7 simultaneously?

Andrew, a bit off your topic, but are you also based in Spain? I'm down on the Costa Del Sol, just south of Malaga. Love to chat and discuss world domination plans.

Interested in this thread

1 - IMO having you weigh in on their ownership in the PF entity that you would then acquire could backfire and result in your own valuation of the entire consortium being criticized if you use inconsistent logic to try and get them to coalesce amongst themselves - in short, while in my opinion you should value each asset individually as part of your analysis (SOTP type view), you should probably avoid communicating your thoughts on it prescriptively

2 - Are you giving all of the owners equity rollovers in the entire NewCo? I may be a little confused in how you are thinking on setting this up

3- Could be difficult to get this many different owners/opinions/legal and tax advisors to align, seems complicated and unlikely

4 - Seems like a natural place for synergies / hire area manager etc.

5 - That the multiple / proceeds they would likely receive as the result of being bought as part of a scaled consortium is likely greater than sale of any single unit by itself - this more assumes that there isn't wildly varying performance among each location.

Andrew, thanks for sharind, these are interesting questions. I would agree with Santiago regarding the one by one approach in order to assess clearly the motivation and engagment possibilities. This could also give a sense of who could jump as CEO. Have you also consider expend this business to Portugal ?

Thanks Andrew for your comment. Italy is also a dynamic market, different culture different approach. Engagement will have to be different in Italy especially for the small independant structure but if you find the right leader it will help to bring new companies.

I have done this with Managed Service Providers and VoIP. Its a 2 sales process, and must select those that work well with others, typically org that are doing $5M or more in revenue

Andrew - having completed a few rollups in PE, I'd be careful trying to take on so much execution at once. I'd first focus on solely acquiring the one you think is most promising first (whether that means most likely to transact or best set up for growth are two key items you'd have to weigh). Acquiring one company at a time is hard, acquiring seven is really really tough. That's just a lot of opinions at one table no matter if all 7 have shown interest. After the acquisition you'd also be hoping to solve a lot of integration and branding issues at once. A couple questions to consider would be 1) Do these companies offer similar products/use similar tech as [art of their automation? 2) Do they use the same customer service systems to answer calls? 3) Do they use the same accounting software? If you're plan is to just let each one keep doing what it's doing - how does the integration provide economies of scale?

I agree with Ben. You often have to interview a few "Seed" Rollup organizations at a time, Then consider the non-seeds as part of rollup. This can be a lot of fun, Once you find the seed, things seem to go quickly from there. Stay away from the BAD seeds, they can sink the ship.;