Selling a Business for 50% More – Case Studies

BY Basil Peters

Most people have difficulty believing that you can sell a business for 50% more just by executing the exit well. I’ve written before about how this can be achieved. This post has video excerpts where you’ll see CEOs and Chairs who have actually done it.

It is very unusual to hear case studies like these. Almost every exit is covered by a non-disclosure agreement. These are rare cases where the acquiring company was public, and small enough to make the transaction material to their financial statements.

In our business, we see prices increase 50% about half of the time. We know of many other cases like these, but unfortunately we can’t share the other stories.

Parasun’s CEO – Moving the Price from $10 million to $14.8 million

  • The biggest factor was multiple bidders
  • The M&A advisors had the ‘good cop – bad cop’ thing down
  • The CEO ended up being the person the buyer confided in during the negotiations

Parasun’s Largest Shareholder – Adding $2 million more

  • It was important that Barry not be involved in the negotiations
  • We needed to have ‘someone on the outside’ for ‘the bad guy’ to come back to
  • Barry’s job was in large part theater
  • “If I had been sitting at the table I would have caved”
  • This was Barry’s third exit
  • The difference was that he brought in pros that sell [companies] all the time
  • The importance of stipulating a working capital on closing – a $2 million win
  • “I thought, well, that pays for them” [the M&A Advisors]

The full case study on Parasun is available here.

Pacinian’s Chairman – Moving the Price from $20 million to $30 million

  • Pacinian was pre-revenue – so the entire value was intangible
  • Exit strategy minimum selling price was $10 million
  • Exit strategy asking price was $20 million
  • Closing price was $30 million
  • That took some competition
  • When we were certain we’d get more than one bid, we raised the price.

Read the full Pacinian case study and view the complete set of video interviews here.

Vineyard’s CEO – Moving the Price from $18 million to $28 million

  • They re-did the valuation and discounted everything
  • Initial offer was $18 million
  • We thought it should be more like $30 million
  • Maybe we don’t know how to negotiate this
  • At that point we went out and started to seek some serious help
  • Closing price was $28 million
  • We were like a family for 3 or 4 months
  • The price for companies like this aren’t precisely determined
  • There weren’t competitive bidders
  • Jason describes the revenue multiples and the factors affecting the final valuation

Please check back for more on the Vineyard exit, coming soon.