What Is A Consortium Sale? Insights, Strategies & Key Takeaways

Bundy Group Insights

In this episode of Bundy Group Insights, Clint Bundy, managing director, is joined by Stewart Carlin, managing director at Bundy Group, to discuss the unique concept of a consortium sale. While the term may not immediately resonate with many, the structure itself can provide incredible opportunities for business owners. The hosts explain how this strategy involves combining two or more companies into a single sale process to maximize valuation for the sellers. Drawing on a successful consortium deal, led by the Bundy Group team, Clint and Stewart delve into the complexities and benefits of such an approach.

Key Takeaways:

Consortium Sale Overview: A consortium sale involves presenting multiple companies (usually within the same industry) as a packaged acquisition opportunity for a buyer. For the sellers, this playbook can create enhanced value and options.

Value Enhancement: The goal is to increase seller value in a competitive sale process by highlighting to buyers the combined synergies and growth potential of these companies together. Because a consortium delivers to buyers a larger, more profitable platform, the valuation paid to the consortium owners should be significantly higher versus if they sold their businesses independently.

Private Equity Reversal: The traditional private equity strategy approach is to buy a platform company and then complete add-on acquisitions at lower transaction multiples, which creates an arbitrage for a buyer’s benefit. In a consortium sale, all owners unite to drive for a shared, higher transaction multiple. In short, it is a value arbitrage for the seller’s benefit.

Strategic Alignment is Key: For a consortium sale to succeed, the companies involved must have defensible combination benefits and not be competitive to one another. Additionally, clear communication and complementary goals among all owner participants are crucial for the success of the deal.

Bundy Group’s Role: Acting as the manager of the process, Bundy Group guides the complexities of a consortium sale, ensuring that the preparation, presentation, and execution are seamless for the business owners.

Learn more by visiting https://bundygroup.com.