Case study: LINK Business Brokers
An in-depth look into LINK’s multiple capital raises through Snowball Effect
Capital raise summary
$6.6m
Raised through Snowball Effect
$1.3m
Largest single investment
$4m
from 10 investor groups
70%
of capital from $100k+ investments
Background
In mid 2017, Snowball Effect were engaged by LINK Business Brokers to execute an equity raise privately. The business secured a private placement of $3.15m in investment through a private retail offer from LINK personnel and a select group of external wholesale investors.
The capital was being used to fund the acquisition of several brokerages in NZ, as well as expansion in California and Australia. Following the raise, LINK exceeded their revenue forecasts, reaching over $13m in revenue and demonstrating their ability to execute and deliver successful results.
LINK returned in the second half of 2018 to raise a further $3.25m to continue implementing their expansion plan. By the end of the offer, the original raise was oversubscribed, leaving LINK with a total of $6.6m raised through Snowball Effect to date. Snowball Effect continues to maintain a strong relationship with LINK, managing their shareholder communications, nominee services, and registry services.
About LINK Business Brokers
Established in Auckland in 1996, LINK is New Zealand’s largest business brokerage and has grown rapidly to become one of the largest business brokerages in the world.
In mid 2017, LINK had 2,099 businesses for sale in NZ and Australia with a combined value of $1.14 billion, and had sold over 600 businesses in the 12 months prior with a combined value in excess of $300 million. In the last five years to 2018, LINK’s office locations had increased from 11 to 23 and broker numbers had increased from 72 to over 400. LINK now have offices in New Zealand, Australia, the Philippines and the United States.
LINK had achieved impressive results to date by taking an industry that is fragmented, immature and under-resourced and successfully applying a model that combines a franchise network with company-owned offices. It was time to bring on additional investment capital to execute on an ambitious international expansion plan.
Snowball Effect were very proactive and effective at assisting LINK with our capital raises. The talented Snowball Effect team put together a great IM, investment offer page, and effective social media marketing.
The follow up services are also excellent. We use Snowball Effect to mange our share registry and provide quarterly updates to shareholders which always looks clean and professional, and is met with appreciation from our shareholders.
Suneil Connor
Chief Financial Officer of LINK
LINK's requirements
LINK embarked on a capital raise to fund the acquisition of several brokerages in NZ, as well as expansion into California and Australia. Snowball Effect were engaged to facilitate all aspects of their capital raise. Across both offers, Snowball Effect's involvement began with preparing the initial offer materials and continues to this day through the management of LINK's shareholders.
Snowball Effect prepared private retail offers (see detail below) to existing LINK personnel and a select group of external investors. Private retail offers combine the privacy and control of a private offer with the legal ability to accept investment from outside investors through the use of Snowball Effect's equity crowdfunding license.
Once the offer was prepared, all live deal operations were handled by Snowball Effect from the handling of pre-emptive rights with existing shareholders, to marketing, compliance, payments, investor discussions, share issues, and more.
LINK also elected to make use of Snowball Effect's share registry, nominee, and shareholder communication services, providing a simple and professional way to manage and maintain shareholdings.
Snowball Effect services provided to LINK
The outcome
Both rounds attracted a total investment of ~$6.6m, with the top 10 investors accounting for over $4m of total investment. Over 70% of the capital raised came from investments of over $100k, with the largest single investment being $1.3m.
Since the initial raise in mid 2017, LINK achieved a great deal, including the rapid acquisition of several NZ brokerages and successful expansion into the US and Australia. LINK also grew their business by hiring further key personnel, investing in new technology development, and achieving many of the objectives set out before their capital raise.
Following the second raise in 2018, LINK showed no signs of slowing down, with the equity being put to good use straight away. LINK recently purchased the largest business brokerage in Melbourne, sold four new territory franchises in the United States, another in the Philippines and an additional franchise here in New Zealand.
Snowball Effect: Capital raising experts
Snowball Effect offers a wide range of services around capital raising that have helped companies of various different industries, backgrounds, and sizes. If you would like to know how we could help your company grow, please get in contact with our Director of Private Capital, Bill O’Boyle.
