(1/10)Story on $CSU.TO’s acquisition process that I saw up close. It makes me more confident in their ability to win deals:

A friend owned ~40% of a VMS company with ~$1mm EBITDA growing ~MSD and mentioned that he wanted to sell. He potentially wanted to stay on afterwards.
(2/10)I told him about $CSU.TO and said I could put them in touch. CSU had already reached out previously, but now they started talking specifics and offered ~3.5x EBITDA. That wasn’t enough for the majority partner, who likely would not stay on, so they rejected the offer.
(3/10)I happened to have a friend who worked at a boutique IB that sold software companies (minimum deal size $50mm) and had recently left the company to go to business school. I put them in touch and friend 2 agreed to run a process for friend 1 to try to sell the company.
(4/10)He got the bid from CSU up to 4x after ~6 months, but that still wasn’t high enough for the majority partner to sell. The banker found more potential buyers and had ~3 serious potential buyers. Over the next year each buyer went through dd, and one by one they dropped out.
(5/10)At that point, a public strategic buyer became interested and they started dd. This took another ~6 mos, so the whole process has taken ~2 years of intense effort. Thankfully, pubco closes the deal a couple of weeks ago for ~8.5x EBITDA and everyone goes home happy.
(6/10)I came away from this more confident in CSU’s acquisition engine. @brentbeshore talks about how all investor money isn’t equal. CSU came in very quickly with a hard cash offer and there was complete confidence they could and would close.
(7/10)If my friend owned the whole company and wanted to stay on, this could have actually worked quite well – cash out the ownership, still get paid to run it, the whole process is super easy, and the business isn’t disrupted.
(8/10)The first miracle was that we knew a good banker who just left his previous company, which had a ~$50mm deal minimum. Without this lucky coincidence, my friend's only option would be to hire a broker who would have charged probably 8%+ and wouldn’t have been good anyways.
(9/10)Second, you can easily see a situation where everything fell through. They went through serious dd with 3 buyers, all of which backed out. If the 4th buyer backed out, they probably would have given up. At that point, selling for 4x would look pretty attractive.
(10/10)The whole process was pretty much a disaster and my friend is exhausted, but thankfully it worked out well. Odds were clearly against that.

If you’re a big company with broad funnel that closes fast I think you continue to win your fair share of deals. Long $CSU.TO.
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