SPONSOR ROLL-UP POOL

"At Roupp Acquisitions, we are interested in assisting you with your business concerns – because when you succeed, we succeed."

Why do it?

With a sponsor roll-up pool, you can sell your business for a guaranteed premium. You will get a higher price for your business when we help facilitate this process for you by participating in a middle market sized transaction when it is time to exit.

See How It Works

How It Works

Sponsor

The financial backer with the experience, know-how and expertise to drive the best possible outcome and get the highest price. Doing the hard work with your goals in mind.

Roll-Up

When investors or strategic acquirers combine multiple small companies into a larger entity to enjoy economies of scale, increase valuation multiples and get the highest price.

Pool

Strength in numbers when companies join together for a collective benefit such as; purchasing power, operational efficiency, market defensibility and to get the highest price.

You get the power of all 3

Private Equity: Size Matters

Private Equity Groups (PEGs) are historically the interim step between main street transactions (less than $5M) and middle market transactions (greater than $50M). They begin with a single acquisition that becomes their platform and then identify add-on opportunities, assimilate and repeat over 5-7 years until they have a large enough enterprise, with maximized EBITDA, at which point they exit as a middle market transaction or higher.

PEG Platforms are based on:

Size (A+A+A+A) which bundle similar businesses,
Synergies (A+B+C+D) which bundle complimentary businesses that allow for cross-selling to the same customer base, or
Both size and synergies (A+A+B+C+C+C+C+D+D).

Because a $5M transaction requires as much effort as a $50M or higher transaction, large buyers look for larger transactions to make efficient use of capital and effort. For example, Berkshire Hathaway (Warren Buffett) will not look at transactions less than $5B even if they meet all of their other acquisition criteria.

Size does matter.

The Solution

Roupp Acquisitions Inc has developed the Sponsor Roll-Up Pool Program to provide Sellers the access and ability to participate in middle market sized transactions and capture value greater than their stand-alone business value.

Utilizing a blind confidential approach, Sellers continue to own and operate their business while we combine it alongside other Sellers into the Roll-Up Pool and then market the Pool to buyers as a larger group transaction. This eliminates private equity groups from garnishing all of the upside benefits when pooling smaller Sellers over time and instead shares these benefits with each Seller.

Upon closing, we guarantee Sellers a Premium greater than their appraised value as well as the ability to participate in additional net proceeds. For committing to the Pool and allowing the Roll-Up Pool, LLC the exclusive time to complete a transaction, Sellers are awarded an Early Commitment Bonus in addition to the guaranteed Premium. Premiums and Bonuses are based on when Sellers commit to the Pool.

If we cannot achieve a transaction size large enough to meet the appraised value, Premium and Early Commitment Bonus of all Sellers in the Pool, we will not close and the Seller never loses ownership or control of their business.

The Roll-Up Pool enables Sellers to capture greater walk away liquidity by participating in a larger transaction and reduces exit fees.

Example: Real Estate Developer Analogy

We combine your home (company) with your neighbor’s home (company) into a bundle (pool) and sell the bundle (pool) to a developer (buyer) as a single large transaction.

The developer will pay a premium for the bundled properties greater than the individual value of each home for access and efficiency of a larger project that they can do more with.

Transaction Breakdown

Let’s assume your company is worth $1,000,000;

We will guarantee you $1.2M plus upside.

We anticipate a $1.5M-$2.0M purchase price or a 50%-100% premium for your company.

The buyer will pay the majority, if not all, of the purchase price at close.

We anticipate a minimum cash at closing of 70% of the Pool transaction which should be equal to or higher than your appraised value with no further risk.

Final Deal Approval

Every Seller in the Pool will get to review the negotiated Pool's price and terms before their final commitment and exit.

You remain in control of your company until the end.

Valuation Matrix

Larger EBITDA transactions enjoy higher multiples. Start with your EBITDA on the left and move across the various Multiples on the right to visualize the potential impact of higher multiples realized as part of a larger transaction. The below example is based on an appraised value equivalent to a 5x multiple.

See Example

Valuation Matrix

Why Will A Buyer Pay A Premium?

Instant multiple arbitrage

A public company trading at 23X earnings can easily pay anything less and realize a net gain to the earnings per share.

If they pay 15X for the Pool’s $5M EBITDA or $75M then they realize a market value increase of 23X $5M EBITDA or $115M increase in enterprise value.

Instant jump in earnings

Accelerates revenue growth to meet or exceed the 20% growth per year that shareholders or investors demand.

With a $5M EBITDA Pool, an acquiring company with $10M EBITDA can grow 50% in a single transaction whereas an acquiring company with $100M EBITDA grows by 5%, etc.

Executive bonuses

Many large companies incentivize their executives through growth metrics (see 1 and 2 above) and/or meeting a certain quota of transactions.

Think of buying a car at the end of the month when the dealership needs to hit its numbers.

Market dominance

Leapfrog the competition to become the largest player with a single transaction.

Defend your territory from other large buyers or competitors looking to leapfrog your current industry dominance.

Platform or Bolt-on acquisition

Create an instant market presence in a new niche or benefit from a synergistic product or service.Create cross-selling opportunities or instant inroads into hard to get customers/clients.

Seller Flexibility

You tell us what is important to you and we will incorporate your preferences into the promotion of the Pool.

Do you prefer to stay on or prefer to depart?
- If stay, how long would you prefer to stay?
- If depart, do you anticipate working in or around the same industry?
Is it advantageous to…
- …remove chips from the table now?
- …retain upside potential after the close?

Are You A Ready, Willing And Able Seller?

Ready

In a suitable state of activity and action. Prepared.

These are questions that better prepare you to sell your company:

Do you know why you are selling?
Do you know your ideal sell date?
Are your current and historical financials, tax returns, entity documentation, asset list, customer lists, documented IP ownership, employment records and other due diligence materials in order?
Are you prepared to sign a contract when the time comes?
When you sell are you buying another company, starting another company, going to work for someone else in the same industry or a new industry or retiring?

Willing

Enthusiasm about completing a task. Eager.

Making sure the seller is committed 100% to selling is critical. You aren’t forced to sell your company but you can’t really just put your toe in the water either.
So once you are prepared;

Will you return document requests, emails, phone calls or texts in a timely manner? Many requests are time sensitive and any delay can cost you a good buyer.
Will you allow buyers to inspect your company and records?
Are you willing to consult an attorney or certified public accountant?

Able

Having the power, skill or means. Opportunity.

These are questions that better prepare you to sell your company:

Do you have the authority to sell or is there anyone else required to make the decision with you?
Do you have the time to comply with all that is required to sell your company?
Do you have a forecasted amount of net profit you will receive from the sale? Knowing the amount you will net from the sale and/or the amount of time commitment required post-closing is an important part in deciding if this was a successful transaction.

Summary

If you are considering exiting your company in the next 36 months and interested in:

Generating greater value than your stand-alone enterprise value;
Taking chips off the table;
Realizing greater walk away liquidity with far fewer fees than you would otherwise spend to exit on your own;
Garnishing the upside benefits that private equity groups have experienced for decades;
Participating in a middle market transaction; and
Maintaining control of your company through the entire process until closing.

Then our Roll-Up Pool Program may be the solution for you.

Next Steps

Schedule A Confidential Call

We value your privacy and trust.

We will not share your name, company name, that we are having a call or that you might be considering a transaction.

Prior to our call, we will send an electronic mutual non-disclosure agreement to allow us to speak freely with one another.

We look forward to discussing the Roll-Up Pool in more detail and learning about you, your goals, your objectives and how we might assist you to accomplish them.

Schedule A Call