Today we’re covering the story of Jeff Archibald, who managed to turn a 3x EBITDA offer into a 5x EBITDA win when selling his service firm, Paper Leaf.
When marketing firm ZGM approached Jeff with a 3x EBITDA offer, he didn’t just settle. He worked with the acquirer to design a unique earn-out structure that minimized their collective downside while ultimately netting Jeff close to 5x EBITDA:
“Their initial one came in at three. … So I came back with a counter to that. That was, I think, three and a half times. And that’s sort of where we landed…. When you factor in the profit sharing on the backend and hitting the ceiling, it ended up netting out around 5x.”
In our latest Built to Sell Radio episode, Jeff shares the strategies he used to negotiate a better deal, the importance of a well-structured earn-out, and how he aligned interests with his acquirer.
You’ll discover how to:
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Position your business strategically to attract potential buyers.
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Negotiate a fair and motivating earn-out structure.
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Identify and engage with the right buyers for your business.
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Prepare your business for sale to maximize its value.
Quote of the Week
Yeah, their initial one came in at three. … So I came back with a counter to that. That was, I think, three and a half times. And that’s sort of where we landed…. When you factor in the profit sharing on the backend and hitting the ceiling, it ended up netting out around 5x.
Jeff Archibald, founder of Paper Leaf, on how he got ZGM to pay around 5x EBITDA
Deals
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MedCurrent Corporation, a company that develops software to help doctors make better medical decisions by providing them with relevant guidelines and information during patient care, is being acquired by VitalHub Corp., a firm specializing in healthcare technology. The acquisition is structured with a total potential payment of up to C$34 million, contingent on MedCurrent meeting certain performance targets. Initially, VitalHub will pay C$12 million upfront at the closing, with adjustments typical for such transactions. Additionally, MedCurrent could earn up to C$21.875 million more over the next three years based on its financial performance. This valuation reflects more than five times MedCurrent’s projected revenue of $6 million for 2024.
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Clarence J. Venne, LLC, a company that makes bingo markers for charity bingo games, is being acquired by Pollard Banknote Limited, a producer of lottery tickets and gaming products. The acquisition is set for a total price of $12.6 million U.S. dollars. Venne’s projected revenue for 2024 is $7.8 million.
