Sales Strategies & Case Studies
Sales Strategies & Case Studies
Earnings quality & strategic buyers
- Financial Buyers, in particular, are rating the quality of your earnings. They want to know the likelihood that this quality of earnings will continue.
- Most businesses in our sector will sell for 4-6 times EBITDA (with an average of 4.5x). They just don’t score that well in many of the key Value Drivers that buyers look at. We can improve that score by creating a unique strategy for your business.
- Our job is often to try to defend the past and convince the buyer that historical earnings are actually sustainable, rather than spending time explaining a business model that generates high quality, growth earnings.
The only realistic way most businesses achieve a premium to market is by selling to a Strategic Buyer that gets one (or a combination of) 5 things:
- Cost Synergies (most Trade Buyers and generally the lowest premium);
- Geographic or Demographic Market Access for their products; or
- Value by adding your product, services or distribution channel to their business; or
- Multiple Arbitrage by paying a lower multiple for you than what they are worth; or
- Key supplier risk minimisation.
We’re here for every step of the process, from correcting your weaknesses where possible to identifying and highlighting key strengths and ultimately finding buyers that understand and value them. Then, we’ll, extract as much of Their synergies as possible in the negotiated price to get your worth.
Competitive tension & finding buyers
- With most other valuation methods, you are provided base-line multiple valuations that DON’T value strategic buyer synergies.
- Buyers will perform valuations that value you both in your current state AND including their expected synergies.
- A competitive, properly managed sales process provides the potential to capture some of these buyer synergies & achieve a higher price.
- Our Valuation process will help you identify the parts of your business that will be most attractive to acquirers.
how do we find buyers?
4 ways:
- Undertake a detailed mapping process with you to uncover the obvious (& not so obvious) strategic ones;
- Our network;
- Cost-effective, targeted traditional media marketing (almost ignored by competitors);
- Proprietary, hyper targeted digital campaigns, primarily through LinkedIn; and
case studies
A strategic buyer willing to pay a significant premium will be thinking about how your company can sell more of their products & services. Which is exactly how the buyers of the Pharmaceutical Business & Pensioners’ Network were thinking.
Pharmaceuticals Business
- This business was only able to conduct 1st stage clinical trials which attracted an average revenue of circa $5m. 2nd and 3rd stage trials attracted an average revenue of $20m and $30m respectively.
- Purchased by a US-based buyer (a Partners Group Pharmaceuticals subsidiary) that had the capability to conduct 2nd & 3rd stage clinical trials. They bought the business to add to their pipeline at much higher margins and paid a multiple of 14x EBITDA.
- The end result was a 90+ overall score business which had impeccable management, demonstrable growth history and a pipeline of business that was way more valuable in the right acquirer’s hands. The owner’s expectations were at a multiple of around 4x to 5x EBITDA, based on the price achieved by the chairman’s sale of a more profitable business in the same industry, a few years prior, for 5x EBITDA.
Local packaging manufacturer (de-identified for confidentiality reasons)
- A packaging manufacturer sold for 7x EBITDA to an International Group wanting to enter the Australian market.
- The business had no particular market differentiated position, but had value as a baseline acquisition for a large international company that wanted to enter the Australian market, roll-up local manufacturers and capture both multiple arbitrage and synergies.
packaging business sold to a listed Australian manufacturer (de-identified for confidentiality reasons)
- Listed group purchased the business because they provide short-run packaging services that the listed group couldn’t currently offer in that geographic location.
- In future, once the customer becomes larger and needs long-run services, instead of being lost, they will be migrated to one of the purchaser’s other manufacturing facilities.
- A multiple of 5.5 x EBITDA was achieved for a business with virtually no contracted customers and a less than average Value Builder Score.
pensioners' network (retiree financial products)
- Pensioners Network (PN), a retirement advisory business, had the exclusive right to hold seminars in Bowls Clubs, hosted by ex-Bank Managers, through their major sponsorship of The Royal Victorian Bowls Association. PN also had a tie-up with Bendigo Bank.
- Credibility and Direct Benefits to members were both very high. Members’ clubs and members benefited from Major Sponsorship dollars to the Victorian Bowls Association and a percentage of any term deposits with the bank going to their individual clubs.
- The individuals benefited from retirement advice delivered by well-credentialed & trusted advisors.
- Pensioners Network did not need to do any more marketing and had a constant stream of customers through the door.
- PN’s Net Promoter Score was off the charts (a measure we cover in depth during our programs) and led to the business being approached and bought by a Financial Product Supplier for Distribution.
- One of their competitors, Norwich, was the main supplier until the sale.
- Challenger paid 9x EBITDA.
Recall (paper manufacturer & recycler)
- Were targeted to buy just the customers of Infoshred’s paper-shredding and recycling operation as this had way more value in their hands, under their manufacturing cost structure (and they had plenty of excess capacity).
- Additionally, Recall was able to integrate the business into their logistics capability at much lesser cost.
- 1.5 x Revenue was achieved for a loss-making business.