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Project Cortex Case Study
Cre8tive Technology & Design – Minority Recap / Acquisition

Transaction Description:

Merit Securities deep knowledge in the technology sector and existing relationships with key players in the space helped identify Petra as the ideal partner to support Cre8tive’s pursuit of organic growth initiatives and future acquisitions. Leveraging its expertise, Merit cultivated strong relationships with both Cre8tive and Petra, smoothly navigating negotiations and shepherding the transaction process. Through careful deal execution and effective relationship management, Merit successfully delivered an optimal outcome for Cre8tive.

Case Study

The Challenge

  • Market Valuation Decline: Tech-enabled services companies faced reduced market valuations, making equity financing less attractive. The company needed capital for recapitalization and acquisition but lacked sufficient EBITDA to secure financing without equity dilution.

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  • R&D Add-Back Complexity: Investors and lenders questioned the validity of capitalized software development costs as EBITDA add-backs, creating uncertainty in financial assessments.

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  • Deal Execution Risk: The prolonged financing process created uncertainty, leading the acquisition target to walk away, threatening the company’s growth strategy.
The Solution
  • Alternative Financing Strategy: Instead of selling at a low valuation, Merit Securities pursued structured debt and equity financing to minimize dilution while securing necessary capital.

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  • Investor & Lender Alignment: Merit helped demonstrate historical R&D investments as legitimate add-backs, presenting a stronger financial profile to lenders and investors through engaging with the firm’s tax consultant who conducted the R&D study.

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  • Rebuilding Seller Confidence: Merit leveraged its credibility to reassure the acquisition target, ultimately keeping the deal on track despite earlier setbacks.
The Results
  • After the initial process, Merit was able to find a structured debt & equity shop through it’s network that would meet the objectives of the client.
  • Merit was then able to convince the seller to re-engage in the process and negotiate deal terms that were satisfactory to both parties.
  • Multiple times in the process, Merit used it’s negotiating and communications skills to keep the deal on track and ultimately to a closing.
  • The buyer received funding from the PE firm that allowed owners to take chips off the table while also giving them sufficient capital to acquire the target and operating runway to run the business without the fear of running out of cash.

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Jeff Rubenstein

"The team at Merit Investment Bank works hard and puts in a lot of time and energy. And because of that, they're talking to people with a lot more sincerity than just putting out a deck. They went deeper and not only understood our strategy, but they understood how to pitch the right strategy to the folks on the other end of the transaction. They explained our business so a potential suitor understood how it could be integrated into their business.

Merit Investment Bank thought of a more strategic transaction and they built a better story. It's what's created more offers and what made the offers higher."

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Tom Fleck

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Chris Noorda

“I greatly appreciated Merit Investment Bank’s expertise and guidance throughout this process and appreciated, even more, their attention to the intangible things that were important to me and my company beyond just getting a deal done.”

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Marco Allegretti

“I enjoyed working with Merit Investment Bank—they made an enormous contribution in such a complex but successful transaction. I would be happy for the chance to give a reference in the future for what a great job they did!”

Private Equity / M&A Executive, Atlantia; SpA Managing Director, McKinsey & Co

Bill Adams

"I wanted to work with an Investment Banking firm that was going to be able to understand our business, get to know me and my team, and then not only help us secure the investor, but help us find the right investor because they understood what we really needed. We got that and more with Merit Investment Bank. Their strategic guidance, patience, and diligence were critical in getting this transaction finished, and was the difference maker in this process.”

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Howard Perea

"We are thrilled with the outcome Merit Investment Bank delivered for our family through the sale of the business. With their guidance, we were able to unlock significant shareholder liquidity while positioning the employees of the company for continued success within a growing platform.”

Co-Owner, RAC Transport Inc.

D. Roberts

"We hired Merit Investment Bank over other investment bankers because of the responsiveness to our questions, aggressive approach to winning, persistence in following-up, and the many creative ideas the team presented. Merit Investment Bank added significant value beyond just running a process."

EVP, Project Yellowstone

Dave Carr

"Unlike many investment banks I've worked with during my career, Merit Investment Bank was attentive at all stages of our transaction, which really made a difference in achieving a great outcome."

CPA, Interim CFO

Mike Olson

“Through the broad auction, Merit Investment Bank got us another 75% above the offers that originally came in. We still have a piece of the company and I’m still able to run it. I feel good that our key employees are going to be secure in the future. It’s a win-win for everybody.”

Keith Jackson

"The team at Merit Investment Bank have provided invaluable assistance in stabilizing and growing my company. They’ve helped with both short-term challenges and long-term planning. Their experience running multiple businesses like mine and vast network of contacts have brought value to my company and to me personally. If you want help taking your business to the next level, I highly recommend Merit Investment Bank."

Owner of Industrial Revolution, Inc.

Carl Peterson

"As a business/transactional attorney, I have had the opportunity to work with many investment bankers in the M&A arena. The Merit Investment Bank team is, without question, the best in the local middle-market space. They make clients feel comfortable by both listening to and provide thoughtful advice for legal counsel. Most importantly, they are able to negotiate a great deal.

Quite refreshingly, Merit Investment Bank puts the needs of the client above closing a deal – something very rare in the M&A world. I give my highest possible recommendation to the Merit Investment Bank team."

Managing Partner, Eisenhower Carlson PLLC

Gary Goeldner

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CFO, Apex Linen Service LLC

Walt Maas,

“The Merit Investment Bank team has extensive M&A and capital-raising experience in the middle market, both as investment bankers and entrepreneurs. They are great to have on an engagement team and are committed to helping clients succeed, whether buying or selling a business or sourcing capital to scale a growing business.”

Attorney & Partner, Karr Tuttle Campbelle
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