Exit strategy planning ppt 6 6 11


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  • 1.  Introduction Transaction Types Potential Buyers Current M&A Environment Critical Seller Decisions Creating Value in Your Business Preparing Your Business for Sale Selling Your Business – The Process Financing the Deal
  • 2.  Valuing Small Businesses◦ Shannon Pratt M&A Source 5/3 Bank – May 5, 2011 Capital StrategiesUpdate The $10 Trillion Opportunity◦ Richard Jackim and Peter Christman Selling Middle Market Businesses◦ Russell Robb
  • 3.  ESOPs Family Succession Sale Partnerships Stock Sale Asset Purchase Non-tax Issues – Stock vs. Asset Sale  Cash/working capital  Liabilities/Limiting assumed liabilities  Assignment of critical contracts  Transfer of licenses
  • 4.  Private Equity Groups (PEGs) Strategic Corporate Buyers High Net Worth Individuals
  • 5.  Approx. 1,500 active PEGs Platform investments – larger investments incertain categories “Add-on” investments – smaller investmentsadded to platforms Build financial leverage and critical mass Typically want to invest all money within 5yrs. and sell within 10 yrs. Often want business owner to stay on forseveral years
  • 6.  Have specific reasons for wanting to make aparticular purchase – distribution, newproducts, financial leverage, new footprint May be able to pay a premium due to synergy Generally looking for companies in the sameor related industry May have management team in place fortransition
  • 7.  Usually on the smaller end of middle market Bring specific expertise to transaction Relies on strong, existing management team Financing can be an issue –need personalguarantees
  • 8.  Seller’s Market◦ Many prospective buyers for too few strongbusinesses Business Values are on the rise◦ Back to levels of 3-4 yrs. ago◦ 3-4X for smaller companies with modest growth;5-7X for larger businesses with strong projections  Depends on industry, capability of management, balance sheet Strategic and PEGs are flush with cash Banks are lending Potential for capital gains tax increases
  • 9.  Timing◦ Planning can take 2-3 yrs.◦ Sale process can take 6-18 mos. Pre-sale self assessment◦ What are your motives◦ Desired outcome◦ Timeline◦ Financial◦ Buyer – what type of buyer do you want◦ Business Continuity◦ Prepare yourself – time, energy, disclosure, money
  • 10.  Evaluate your business◦ Financial health of business◦ Non-financial aspects◦ SWOT analysis◦ Transferability Take the time to improve where needed◦ Management team◦ Customer base◦ Brand◦ Balance sheet◦ Facilities
  • 11.  Assemble your team◦ Accountant◦ Attorney◦ Financial planner◦ Estate planner◦ Banker◦ M&A Intermediary/Business Broker Set the right expectations◦ Business valuation, real estate appraisal, equipmentvaluation Perform pre-sale due diligence Develop/update strategic plan and forecast
  • 12.  Develop marketing materials◦ Offering Memorandum◦ Blind profile/teaser Prepare target list of buyers Launch campaign Interview prospective buyers/screen Manage due diligence/data room Structuring and negotiating the deal Close sale Implement transition plan
  • 13.  Financing Sources◦ Commercial banks◦ SBICs/SBA◦ Subordinated debt funds Things Banks care about◦ Cash flow (EBITDA)◦ Balance sheet◦ Collateral (and ability to gain first lien position)◦ Personal Guarantees
  • 14.  Financing Sources◦ Commercial banks◦ SBICs/SBA◦ Subordinated debt funds Things Banks care about◦ Cash flow (EBITDA)  Does not include Seller’s discretionary expenses◦ Collateral (and ability to gain first lien position)◦ Personal Guarantees
  • 15. Questions
  • 16. 1129 Miamisburg-Centerville Rd. Suite 200 Dayton, OH 45459 937-866-4611dayton@sunbeltnetwork.com www.sunbeltofmiamivalley.comwww.facebook.com/sunbeltbusinessadvisorswww.twitter.com/sunbeltmvoh
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