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 28x. The 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.