M&A Insights

M&A Advisory Drives Significant ROI

M&A Advisory Drives Significant ROI

You hear more and more about the importance of ROI-based selling, to demonstrate to customers the potential tangible value of your product and service, especially as we may be heading into a recession where expenses tighten up. This is no different in investment banking, where the ability to demonstrate value, in relation to fees, is critical in customers’ decision-making process.

In three M&A transactions where HRC represented sellers, ran processes, and negotiated multiple acquisition offers, the end results equated to ROIs between 3x, to as high as 28xThe ROI here is calculated by taking the value increase (final sale price minus the initial acquisition offer) divided by the sum of all HRC’s fees for the transaction (retainers, success fees, etc.).

While the 28x may be viewed as an outlier, HRC is seeing more consistency around an expected ROI between 3-5x, due to the ability to bring in highly strategic acquirers where there’s existing relationships, run a tight competitive process, and negotiate a market transaction.

This type of ROI potential is often prevalent in situations where a seller is negotiating an acquisition with one buyer without current investment banking representation. In two of the three cases noted above, including the 28x case, this was the current situation before HRC was engaged.

We welcome discussing any M&A or capital raise opportunities you may be exploring and how we may be helpful.

About: Harbor Ridge Capital is a leading M&A boutique, with a focus on technology verticals, including software, IT/Cloud services, marketing technology, and healthcare IT, in the $5-50mm revenue or value range. The group has developed extensive expertise in these industries over a 20-year period, as well as fostered relationships with the most active strategic acquirers and private equity investors. Learn more at www.harborridgecap.com.

The Principal of Harbor Ridge Capital is a registered representative of, and Securities and Investment Banking services are offered through, Ashland Securities, LLC, Member FINRA, SIPC. Harbor Ridge Capital and Ashland Securities are separate and unaffiliated entities. This email/information does not constitute an offer, invitation or recommendation to buy, sell, subscribe for or issue any securities.

Buy-Side Advisory Grew Client EBITDA from $3mm to $25mm Overnight

Buy-Side Advisory Grew Client EBITDA from $3mm to $25mm Overnight

When first learning of this acquisition opportunity, the first thought was, this will take a miracle to get done. The Client (“RM”), the second largest player in the domain name monetization space, a form of internet marketing, with roughly $3mm of EBITDA, was interested in acquiring its main competitor and the largest player in the space, Target (“DS”), which had around $20mm of EBITDA at the time. Beyond the obvious size differential in seller vs. buyer, there were other material challenges

RM was based in Zurich, Switzerland, while DS was based Los Angeles

The industry had declined since the recession, yet flattened out in recent years

Google, their largest supplier, represented 80% of revenue

Very niche, nuanced business; hard for investors to understand 

Adtech had soured most investors due to the volatile nature of the business, and overarching control of Google 

RM was not private equity backed, and hadn’t made an acquisition before 


All the more reason for RM to engage a specialist like HRC, to advise on the transaction, raise the financing, help with the integration plans, and other areas which were uncharted territory for RM. While the challenges were plentiful, and this certainly classified as a “hairy” deal, there were several key fundamentals making the opportunity very compelling and likely to get done, with a properly run process. This included:

• An attractive acquisition multiple of DS

Large amount of pro-forma EBITDA to raise capital against – $25mm

Low pro-forma leverage multiple 

RM management knowing the business inside and out, with significant synergies

RM having strong management team to lead the combined business


With this in mind, HRC was up for the challenge, and we engaged in a formal contract, (monthly retainer plus success fee), and got to work. The sellers were interested yet required some coaxing given RM’s size, lack of private equity backing, etc.., yet were cognizant of the strong fit and synergies. After much back and forth, the term sheet for the acquisition was signed, with a 60-day window to raise financing, diligence the transaction, and close the deal.  

With any deal, the way the company is positioned and how the story is told is immensely important. HRC having extensive private equity experience in addition to advisory, proved highly valuable in how to best tell the story, the positioning, and how to highlight key aspects of the business. Further, our comprehensive fundraising materials spoke the same language to the target audience of investors, answering the expected questions with tangible operational and financial information. Additionally, we needed to combat the stated challenges, yet be open about certain negative elements, and address them head on, vs. any kind of omission of the truth. This all ensured the highest likelihood of closing and at the strongest valuation. Ultimately this deal was not for everyone, and with HRC’s depth of network, and thorough process, the right investors were identified, which were comfortable with the level of risk/reward of the deal.

After all was said and done, the transaction closed, and $50mm was raised with two different types of debt financing. With the acquisition, RM grew their business from $3mm to $25mm in EBITDA, and a top line north of $100mm, all with minimal equity dilution. Post-acquisition the combined company was undeniably the industry leader, paid down all of its debt after a few years, and significantly arbitraged the value of the equity. 

HRC proved instrumental through every step of the transaction, and had developed a strong working with relationship with the management of Rook. So much so that after the transaction, Cyrus Maghami of HRC was offered an interim-CFO role with the company that he held for nearly a year after the closing.  

About: Harbor Ridge Capital is a leading M&A boutique, with a focus on technology verticals, including software, IT/Cloud services, marketing technology, and healthcare IT. Learn more at www.harborridgecap.com. 

Feel free to reply herein to discuss any strategic opportunities you may be exploring.

Preparing for a Capital Raise or Future Sale? Get Your Ducks in a Row First

Preparing for a Capital Raise or Future Sale? Get Your Ducks in a Row First

Harbor Ridge Capital Launches Contract CFO Services to Companies Preparing for a Capital Raise or M&A Transaction

We understand the hoops investors and buyers make you jump through
Like many founders, running your business and making sure you hit your projections, to achieve your desired valuation, is a top priority. However, you’ve started engaging in discussions with buyers or investors, and the information requests are beginning to ramp up quickly. Or perhaps you have an offer in hand and received a due diligence list, which you’ve never seen so many document requests in your life! How can you be expected to run your business, and generate such a vast amount of information in parallel? How should this information be presented to best represent your company’s value? How can you be certain you are talking to the best investors or buyers? What if all this time spent, negatively affects your business, and you don’t end up closing the transaction?

How Our Contract CFO Services Can Help
We’ve helped many founders and business owners in your position and may be able to help you as well. Harbor Ridge Capital provides contract CFO services to properly prepare companies for a transaction of this magnitude, allowing you to remain focused on operating your company. We act as an extension of your management team, working with key managers, to help implement best practices for M&A and capital raise preparation.

How We Work With You
Specifically, we engage with companies on a project basis, for typically 2-3 months, where we start by analyzing the company’s current state of organization, and map out where you need to be, to become prepared for transaction. Thereafter, specific deliverables include:

  • Company presentation – helps with proper positioning, storytelling, key operational and financial information, and unit economics/KPIs
  • Financial model – detailed projection with implementation of KPIs, unit economics, top-down and bottom-up analysis, laying in of the use of proceeds from capital raise, and incorporating the acquisition
  • Data room review – ensuring the right documentation is populated and organized based on future expected accounting, operating and legal due diligence lists
  • Accounting and reporting – advising on how financials should be positioned and organized; potentially modify accordingly
  • Moving from cash based accounting to GAAP accrual, which is required by buyers/investors
  • other advisory related to the contemplated transaction

Once the above tasks are completed, and you are satisfied with the deliverables, we can part ways at such point. However, we’ve found that many founders request us to stay engaged going into the transaction process, to support and advise in other areas. Please note, our M&A and capital raise advisory engagements include the scope of work listed above.

We Would Love to Work With You
For more information on services or pricing, feel free to reply to this email with background information on your company, the contemplated transaction, and any questions you may have, so we can set up a call and discuss.

About Harbor Ridge Capital
Harbor Ridge Capital (HRC) is a boutique technology-focused M&A advisory firm, working with companies in the $5-100mm revenue range. HRC has completed over 30 transactions, representing over $300mm of transaction value. The firm’s professionals have diversified, well-rounded experience including investment banking, private equity, and CFO roles for companies as large as $25mm in EBITDA. We look forward to working with you on your strategic objectives. www.harborridgecap.com


Securities Products and Investment Banking Services are offered through Ashland Securities, LLC.

Supervised by the Home Office, located at 80 S.W. 8th Street, Suite 2000 Miami, Florida 33130. Phone Number 305-279-3176.  Member FINRA SIPC. Please refer to BrokerCheck for more information about Ashland Securities, LLC. Harbor Ridge Capital and Ashland Securities, LLC are separate and unaffiliated entities.

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