John’s Story: A Tale of an M&A Journey

by Cristian Anastasiu, Excendio Advisors

I’ve known John (not his real name), the owner of an IT company, for some time. We had spoken several times about the M&A process and how Excendio could help him – and while interested in eventually selling, he wasn’t quite ready.

Then one day, John called with surprising news: he had accepted an LOI from a buyer who, it turned out, knew me well. At some point during their conversations, my name came up, and the buyer told John they knew me from representing other sellers and from industry events – and went further: “If Cristian is involved, the chances of a deal closing and you getting what you want out of the transaction increase.” Despite that endorsement, John decided to move forward with due diligence without engaging Excendio.

A few months later, he called again – the deal had fallen through. John now understood the value an outside, trusted advisor could bring and agreed to retain us. There was one condition, though: just days earlier, he had received another offer from a buyer he’d previously met and wanted that buyer included in the process. I agreed, and we signed the engagement.

We began the process – wrote the memorandum and reached out to a select group of buyers, including John’s named buyer. Within hours of receiving the memorandum, that buyer called John, thanked him for the document, and submitted an expression of interest significantly higher than the offer made just weeks prior. Had John accepted that improved offer, based on the increase in value alone, the improvement would have more than covered Excendio’s entire fee multiple times over.

But we kept the process going – and shortly received several strong offers from buyers we brought to the table. John’s original buyer didn’t make the top three. Naturally, John chose one of our buyers, and the deal closed successfully a few weeks later.

We’ll likely never know exactly why that buyer improved his offer so significantly after reviewing the memorandum. Was it the way the business was presented? Or – more likely – was it the realization that with Excendio involved, John would soon have many other options?

The takeaways:

• The probability of closing a successful deal with a single buyer is very low – far lower than many founders think
• A good advisor helps sellers increase proceeds enough to more than cover the advisory fee – often by a wide margin
• When an advisor is involved, buyers know there is competition and that the seller is motivated and prepared – not just exploring options
• Working with an advisor frees the business owner to focus on running the business, while the advisor handles the M&A process -which is, after all, what each does best