A vertical software company, sold through a rebuilt competitive process

The situation

The founder signed a $38M letter of intent without an advisor. Eleven weeks into exclusivity, the buyer's quality-of-earnings review surfaced the usual material: revenue-recognition judgments to argue about, customer concentration to dramatize, and three renewals to characterize as at risk. None of it was new information. All of it became leverage, because she had no alternative left, her other interest had gone cold, and her team was exhausted. The revised offer was $30M, take it or restart.

What we did

She walked, and we rebuilt the process from that failure backward. Before any buyer saw a document, we commissioned sell-side quality-of-earnings work so the accounting questions were answered in the data room rather than discovered in week nine. Concentration was addressed head-on with renewal and expansion data. Two of the three at-risk contracts were renewed before launch on multi-year terms, and the third was disclosed openly and modeled both ways. Fourteen parties entered under NDA, and exclusivity was granted late, short, and only against an agreed purchase agreement.

The outcome

The company closed at $40M to $45M with no retrade, above the original letter of intent and well above the $30M she had been told was her only option. A retrade is not really a diligence event. It is a leverage event that diligence gives the vocabulary for, and it works only when the seller has spent her alternatives.