Accelerate Your Mid-Market Deals: Insider Tips from Tom Ellis and Acquire.com [Webinar Recap]

If you run M&A deals as an investment banker or business broker, you probably want to spend most of your time on acquisitions that pay the biggest commissions. Midmarket deals and above, the kind of eight or nine-figure deals that make those 60-hour weeks managing the transaction worth it. 

Nevertheless, that won’t stop clients in the lower-to-midmarket range asking for your help, and by turning them down, you’re turning down revenue, which probably feels a little frustrating. Every big deal you accept, you say no to several smaller ones, putting all your eggs (and income) in one basket.

This month’s special guest, Investment Banker Tom Ellis of Pebble Ventures, found a way to overcome this cost-vs-time dilemma. Using Acquire.com’s 500k+ global buyer network and hands-on M&A support, he can now find buyers for deals he normally would’ve turned down or referred to another banker or firm. 

Watch the interview below where Tom tells his story, sharing and how you might also use Acquire.com to boost revenue, increase your close rate, and raise your profile under our partnership program.

Tom shares how he overcame the challenge of finding buyers for lower-to-midmarket deals.

Who Are Your Presenters?

Tom Ellis, Managing Director of Pebble Ventures

Tom started his career in corporate banking, and after 14 years of working on leveraged buyouts and private equity, he built a SaaS from zero to buyout, worked in a Family Office, and now is an investment banker. He primarily manages M&A transactions for businesses with $10 – $200M annual turnover.

Andrew Gazdecki, Founder and CEO of Acquire.com

I’m Andrew Gazdecki, founder and CEO of Acquire.com. I’ve been an entrepreneur my whole life. I bootstrapped my first business, Bizness Apps, to $10 million in annual recurring revenue, which I later sold to a private equity firm in a life-changing acquisition. Since then, I’ve sold two more businesses, bought one, and founded the world’s largest startup acquisition marketplace.  

I’ve been on both sides of the M&A table, as a buyer and a seller, so I know how complex and difficult acquisitions can be. I started Acquire.com to fix the complex acquisition process and make it easier for founders to get acquired, and it’s my pleasure to share my knowledge with you today.

What Is Acquire.com?

Acquire.com is the best online marketplace to buy and sell SaaS startups. Combining expert M&A advisory and technology, our services help you get Acquire’d fast and maximize your exit. 

Since 2019, we’ve helped over a thousand founders sell their businesses, closed over half a billion dollars in deal volume, and registered over 500,000 buyers. Live internationally? No problem – we’re active in over 100 countries and every continent except Antarctica. 

Transaction Velocity: What It Means for Running Deals

Tom explains why he chose Acquire.com to run deals outside of his M&A firm and how the buyers and support accelerate transactions, leading to better outcomes for everyone.

Highlights

  • Tom wants high transaction velocity with more interactions for better outcomes for founding teams.
  • Tom has followed Andrew Gazdecki for some time and was curious to see what Acquire.com could do with deals his firm wouldn’t normally take on.
  • On the lower end of the M&A market, businesses don’t always get the right level of representation.
  • Tom wanted to access a big buyer network and a faster outcome than just cold outreach. 

Finding Buyers Capable of Closing Midmarket Deals

Tom describes the typical M&A transaction being slow and complicated, which can take him out of the game for months at a time when he could be working on more deals.

Highlights

  • Tom realized Acquire’s buyer pool could close midmarket deals, so it made sense to join forces.
  • One of Tom’s recent transactions, worth $30M, took 10 months to close. During that time, with nothing to announce, he was effectively out of the market.
  • Tom wants to be able to support more businesses that don’t need such a long transaction timeline.
  • Price discovery is important because it helps Tom decide which businesses to take on, and Acquire.com has proven to drive a more competitive process than he could’ve managed alone.

The Challenges of Closing Midmarket M&A Deals

Tom argues that you need the right bench of people when closing and that Acquire.com’s team has the depth and breadth of expertise to empower him to get more deals done. 

Highlights

  • Many deals go bad because someone didn’t ask a question.
  • Tom believes having the Acquire.com team on hand when he wasn’t sure of something was invaluable.
  • Even EBITDA, a defined term, is often debated between buyers and sellers, so transaction documents are super important, and knowing there’s someone to refer these questions, someone who knows conditions and so on, gave Tom peace of mind and confidence when closing.

What Tom Found Most Valuable in Working With Acquire.com

Tom describes the impact of the business listing scorecard, how it radically changed his view on a transaction, and eventually led to a much better outcome than he’d expected.

Highlights

  • James Graves, Acquire’s general counsel, and Rosa Romaine, president, scored one of Tom’s deals and explained exactly where they thought the deal would fail.
  • Acquire.com helped Tom nail the important talking points for a buyer pool that’s constantly comparing listings.
  • Tom was impressed with the Acquire team’s knowledge of what mattered to its buyers and this instantly validated the partnership in Tom’s eyes, demonstrating the team could close deals.
  • Getting interest is easy, closing deals is hard, and you only get to closing deals with interest.
  • Tom got many offers for the deals he ran on Acquire.com, and getting the support to answer questions on financing, SBA loans, and other details helped take the deals to the finish line.
  • Tom was impressed by the range of offered deal structures which gave his clients options. He managed to get 30+ offers at different prices and terms to achieve great outcomes.

How Can Investment Bankers and M&A Advisors Leverage Acquire to Close More Deals?

Tom believes M&A intermediaries need to unlock new buyer pools to justice by their clients and themselves since the more buyers competing, the better the outcome for everyone.

Highlights

  • Tom’s superpower as an M&A firm is buyer access. Alone, he can reach 200+, but with Acquire.com, he can reach 500k+ globally.
  • Tom sold a company to a firm in Utah which was a midmarket firm that he’d never have known about without Acquire.com.
  • Widening the buyer net and giving your clients the best opportunity to get over the finish line is where Tom believes Acquire.com adds the most value. It’s much easier to filter for the right outcome when you have multiple outcomes to choose from.
  • It’s very hard to say to a founder, “It’s this or nothing”, but with Acquire.com, there are a 100 different ways to get to Rome – you can explore the benefits of each.
  • Investment bankers should think of Acquire.com as a tool to reach more buyers and close more deals without the equivalent increase in workload.
  • As a firm, you can use Acquire.com any way you want – either brining in M&A advisory support or just running the deal on the platform behind the scenes. Choose whatever’s best for your clients.

Q&A

What’s the toughest challenge when selling multimillion dollar businesses? Is it finding a buyer? Is it negotiating price, or is it something else.

It's alignment. We're often finding that people are not sure on why they're selling. Just because Brian down the street got $50 million doesn't mean you will. I think the hardest thing is hammering down what their motivation is to sell and why. It's also alignment on the right buyer. Why is this person the right buyer for my business? So solving for that kind of mismatch, I think, is the hardest thing around. It's not necessarily price. It's alignment of who the next custodian is. Once you find that fit, price takes care of itself.

With a founder who may not have any idea what the M&A process is, doesn’t know how to properly value their business, and may waffle on reasons why they want to sell. How do you manage that?

It's partly anchored against the experiences of your M&A advisor but it's also corporate psychology. The process of sitting down and not race to start anything but spend time with with the client. We work really closely with the seller in a personal way to make sure that they understand HOW we work and what the process is. Making sure they know the expectations around what information and energy they need to put into it so there isn't a lack of connectivity. Harping back to the experiences of an expert M&A advisor, it's being able to convey the past struggles around similar deals or situations so it paints the right picture for where and how a deal can fail. 

The prep phase is the most important thing as a as an IB (Investment banker) or corporate advisor. Make sure that your data is tight and that you understand where the problems are, what questions may come up and do not take something to market until you've considered almost every potential issue that may arise because you've got to represent and understand how to navigate it. As soon as someone loses confidence as a buyer it's really hard to get it back.

And so that's why it's so important to use a good practitioner or a platform like Acquire.com. Having the support while you need to run the business at the same time and avoiding any deterioration is a big job. Making sure that your 'bench' is strong enough - have the right coaches, the right lawyers, the right accountants.

How do deals that require financing from the buy-side impact the overall acquisition?

When you start introducing debt into a deal you have to provide a different set of information to a different audience (the lender). Using an SBA loan or other bank/vendor financing, they will do their own diligence on the business and surface different types of questions and considerations around sustainability or longevity on the deal that the buyer may not have initially factored or even cared to factor before.

What aspects of the Acquire.com’s M&A process were you most impressed with and found the most useful?

The workflow. I buy and sell companies all day. For me, I know how to take on the more complex parts like taking something from diligence through to the data room and completion. If you haven't done that or don't have a cleanly laid out process to follow along, the Acquire platform provides those steps in an explicit way through the out-of-the-box workflow process. It shows what you need at the current phase, what's coming up, have all buyers been responded to, etc. The workflow management for deals is incredible. I run half a dozen different CRMs, communication tools, and different workflows for my business. And to have it consolidated all in one spot and linked to all the relevant people is a super power.

How did you manage your client while using Acquire.com? Were you using the tool as a silent partner, were you openly sharing it with them?

I've done it both ways. It's now become part of our arsenal that's a component of what we do. It's a way to open the world up with potential buyers or the management through workflows or something else that's tech-enabled through Acquire.com. But we look at every business and and opportunity with a different lens at what's appropriate. Sometimes they're anonymous.  Sometimes we're selling really sensitive businesses where founders don't want to put a sign up to the market that they're for sale. So we're quite careful and considered around what we're working on. It's a hard game when you do a hundred $1m+ deals in a year and can only talk about 45 of them. You've got to work out with your clients what the best fit for the outcome they're seeking, the time horizon, etc. and match to what's within your arsenal.

Approximately how much time did you save by using Acquire.com to find a buyer?

Time is kind of got elasticity to it. I would say the time spent was more efficient. We were very clear that everybody on Acquire.com platform was either trying to qualify to buy or a buyer. So in terms of hours evaluating buyers, it saved us hundred's of hours. But I think the more important thing is that we got to people we wouldn't necessarily have gotten even thought the price was relative to where we were getting elsewhere in the market. The people that we met through the platform were serious buyers, asking good questions, and filtering quickly.

What’s the financial benefit for M&A firms considering a tech-enabled services platform like Acquire.com?

Depending on what you negotiate with your client and what your fee band is, you've got to work out what the economics look like. I tend to have a view that bigger fees have more opportunity to carve it up and work with a number of expert practitioners and banks outside of my firm. And it's fluid - 'how much do you need? How much do I need? Who's working on what?' We're fairly commercial and that's having worked with investment banks, private equity, family offices. For me (Tom), it's about how do we get more things closed and make more people more money? Because then the deal flow takes care of itself. 

If I can do 3 times as many deals ranging from $1m - $10m that I wouldn't necessarily take on and support great people to great outcomes. That's fulfilling a personal goal of mine as well as the capital component. But you need to enjoy doing this stuff. If you don't and are just in it for a fee. Sit on the bench and try and do a big deal once every couple of years.

Would you recommend Acquire.com to other M&A firms?

Absolutely. Pragmatically, it's probably not as great for my business to say go to acquire.com versus coming to me but I've got that abundance mindset that the more we do and the more awareness we have, the easier we make it for people to get their dream outcomes. It's also how you use Acquire.com and the in-house M&A services team to support your firm. Now, I've got a huge pipeline of deals that I will take on that I wouldn't have previously because it means that I can support those people with a more efficient setup, less outreach, but still help them get a great outcome. Don't me wrong. I'll make money, but you know it's just an easier add-on than the longer-term 8 or 9 figure deals we love working on.

Tom, what’s the one biggest impact from utilizing Acquire.com to your M&A advisory?

Zooming out a bit, I had to built my firm through Covid. And having worked with investment banks that were hyper localized I saw the opportunity to go global and not have the huge boardroom. I deliberately built my advisory on a global model that allows more easily for international people to interface with our team. Now, not everyone has done that. If you're sitting in Montana and your reach is not into Switzerland, you can either start building personal relationships or take an easier route to open that network for your clients. Acquire.com platform provides that optionality to have a global presence at velocity. 

The content on this site is not intended to provide legal, financial, or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional before entering into any M&A transaction. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any M&A professional. 

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