Western Security Company Sold for $3.125M After 6 LOIs
Rachel Horner
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2 min read
About the Business
Industry: Business Services – Security Services
Location: West
Size: $4M–$5M in annual revenue, $500K–$750K in cash flow
Sale price: $3,125,000 (asking price: $3,420,000)
Listing to signed LOI: 92 days
Signed LOI to close: 388 days
The Challenge: Keeping the Company Local
The owner was ready to retire and refused to sell to a national chain. He wanted a local owner who would keep the company and its employees intact.
92 Days to a Signed LOI: Six Buyers Competed
What happened at every stage
Valuation: Baton listed the business at $3,420,000, about 4.7 times cash flow.
Buyer Outreach: Baton marketed the listing on its own marketplace and partner sites. 230+ buyers viewed it, 65 opened the data room, and the owner met 12 buyers on calls hosted by the Baton advisor.
Offer Selection and Negotiation Support: 6 buyers submitted LOIs in one month. The owner signed a $3,240,000 LOI from a first-time buyer who committed to running the company full-time.
Diligence and Closing Support: When the first SBA lender capped its loan, the price was re-cut to $3,125,000 with a $400,000 seller note, and the Baton advisor kept both sides in the deal. He prepared the financial analysis the lender needed for underwriting, moved the file to a second lender and took working capital out of the purchase agreement to get it signed, and the deal closed 388 days after the LOI.
The Results
The buyer is a first-time owner who bought the company with an SBA loan, his own equity and outside investors. Through Baton's process, the business:
Sold for $3,125,000 in an SBA-financed deal
Received 6 LOIs after the owner met 12 buyers
Closed with $2,725,000 in cash at closing (an SBA 7(a) loan plus buyer equity) and a $400,000 seller note
What's next for the owner?
The owner has retired after selling to an individual owner-operator instead of a national chain, as he wanted.
Advice and Lessons for Future Sellers
Expect SBA underwriting to take time. Lender reviews and a lender switch drove most of the 388 days from LOI to close.
Expect the lender to shape the price. A seller note let the deal survive a smaller loan than the buyer first expected.
Meet a lot of buyers. Twelve buyer calls produced six LOIs and a buyer who matched the owner's goals.