Transaction

• Sleep America is a private premium branded mattress retailer in Arizona, with more than 32 locations throughout the state
• Sleep Country Canada (TSX:Z.UN), a $270 million market cap company,  is Canada’s largest specialty retailer of mattresses with 116 locations resulting in more than $200 million in annual sales
• Sleep America owners sought a strategic partner that would provide liquidity for shareholders and offer a platform for continued success for the Company
• Sleep America received an unsolicited bid from Sleep Country Canada to acquire 100% of the Company stock

Challenges

• Negotiating the initially proposed transaction which included very substantial earnouts over a long period of time
• Aligning minority shareholders without the benefit of drag along shareholder provisions
• Avoiding cross border complications associated with Unit Trust structure that would have been assumed with public stock

 Solution

• CWC negotiated an all cash transaction eliminating high earnout hurdles
• CWC negotiated improvements in the adjusted EBITDA resulting in an improved valuation
• CWC negotiated substantial improvements in original earnout proposal, resulting in significantly more cash at close and a shorter earnout timeline with lower hurdles, and interest to be paid on earnout balances.
• CWC adeptly convinced minority shareholders to align with the deal resulting in 100% conversion of stock without a drag along provision