This document summarizes strategies for apparel and textile companies considering selling their business. It discusses reasons to consider a sale like cashing out value, difficulties obtaining financing, or lack of family succession. It also outlines mechanisms for selling like hiring an investment banker, conducting an active search yourself, or passive outreach. Requirements for a successful transaction include commitment to the process, realistic goals, cleaning up financials, identifying issues in advance, and planning buyer integration. The document provides tips for positioning a company for sale through planning, improving positioning, addressing family/ownership, considering minority vs majority sale, and optimizing operations.

1. Company Sell‐Side Strategies
Apparel and Textile Webinar
Apparel and Textile Webinar
June 9, 2010
Teleconferencing: (888) 858-6021 / Participant code: 4987578731

2. Marc Federbush, CPA
Chair of Anchin’s Apparel, Textile, Diamond & Jewelry Services
Marc Federbush is an accounting and audit partner at Anchin, Block & Anchin with
over 20 years of experience. As chair of the firm s Apparel, Textile, Diamond &
firm’s
Jewelry Services Group he provides accounting, business, and financial services
to companies in the industry. His clients range from aggressive, growing
companies to well-established companies. His knowledge of the business,
accounting and tax practices of the industry makes him a sought after resource.
Marc has assisted many clients in business planning and analysis, mergers and
acquisitions, and sales of companies. He routinely consults to businesses and
their owners, advises individuals and businesses on federal and state tax matters,
and works with individuals and their advisors on estate planning matters. He has
directed due diligence services in connection with the acquisition of manufacturers
and distributors and formulated the related tax strategies Marc is a member of the
strategies.
American Institute of Certified Public Accountants (AICPA) and the New York
State Society of Certified Public Accountants (NYSSCPA). Marc is Series 7, 24,
and 66 FINRA registered.
marc.federbush@anchin.com
@

3. Key Anchin Capital Advisors LLC Team Members:
Sol Lipshitz,
S l Li hit CPA
Executive Director of Anchin Capital
Sol is a partner Anchin, Block & Anchin LLP and the Executive Director of
Anchin Capital. Sol has more than 25 years of experience and has been
involved i more than 100 M&A transactions. Th
i l d in h i Throughout hi career, S l h
h his Sol has
assisted clients through the intricate transaction process of either buying
another business or selling all or part of their existing business. In many
instances, he has assisted clients through multiple mergers and/or
acquisitions. He takes an in-depth look at the "big picture" of the transaction,
not only from a financial point of view but from an operational and
view,
management point of view, as well. He knows that in the case of a merger, not
only must the numbers work, but the management philosophy, style and
method of the operations must match as well. A recognized leader in the
merger and acquisition field, Sol has addressed numerous bankers, attorneys,
and business and professional organizations on issues affecting mergers and
p g g g
acquisitions, including company strategies and shareholder and family
relationships. Sol is Series 7 and 66 FINRA registered.
sol.lipshitz@anchin.com

4. Key Anchin Capital Advisors LLC Team Members:
Kuldeepak (KD) Acharya, CPA
Senior Director of Anchin Capital
Kuldeepak (KD) Acharya, CPA, is an accounting and audit partner at Anchin,
Block & Anchin LLP and a Senior Director in charge of Due Diligence at Anchin
Capital. He advises clients on a wide range of industries including
manufacturing & distribution, construction, apparel & textile, and entertainment
& advertising. KD has been involved with some of Anchin Capital’s largest
mergers and acquisitions transactions. He is also a member of the American
Institute of Certified Public Accountants (AICPA). In addition to English, KD is
fluent in Hindi and Gujarati. KD is Series 7 and 66 FINRA registered.
kuldeepak.acharya@anchin.com

5. Key Anchin Capital Advisors LLC Team Members:
Michael Luchinsky,
Mi h l L hi k MBA
Senior Director of Anchin Capital
Prior to joining Anchin Capital Advisors, Michael Luchinsky was instrumental in
raising over $100 million in private equity to help fund a startup company’s
strategic objective t acquire companies globally i th b i
t t i bj ti to i i l b ll in the business/financial
/fi i l
services industries. Prior to this engagement, Michael managed the
international M&A department for a Fortune 500 company and was involved in
numerous cross-border transactions. Michael has the knowledge and expertise
to assist companies through the entire M&A process, from assessing the goals
and needs of a client to advising his clients after the deal is closed His 15-
closed.
year track record spans over 100 merger and acquisition transactions in both
domestic and international markets and covers a wide range of investment
banking and M&A advisory services. Michael is Series 7 and 66 FINRA
registered.
michael.luchinsky@anchin.com

6. A. Industry overview and reasons to consider a sale:
1. Cash Out on Value
2. Difficulty in Obtaining Appropriate Financing
2 Difficulty in Obtaining Appropriate Financing
3. Inability to Attract Investment Capital to Grow
4. No Family Succession
5. Size of Business Matters

7. 1. Cash Out on Value
a. Strategic buyer interest
b. Brand, customers, talent pool, diversify product
category
category
2. Financing Issues
a. Banks/Factors have tightened lending formulas

8. 3. Investment Capital
a. Difficult to obtain for apparel & textile industry
(volatility)
b. Give up substantial ownership
b Give up substantial ownership
4. Family Succession
a. Tough industry
b. Risk value of business

9. 5. Size of Business Matters
a. Size of business is important to be competitive
b. Need to grow to have better chance for success
c. Retailer consolidation and their relationship with
c Retailer consolidation and their relationship with
vendors

10. B. Mechanisms for Selling Your Company:
1. Hire an Investment Banker
2. Do Your own Active Search
3. Going it Alone Vs. Using a Professional
3 Going it Alone Vs Using a Professional
4. Conduct Passive Search: Get the word out

11.
1. Hire an Investment Banker
Hire an Investment Banker
a. Position companies for a sale
b. Find potential buyers
b Fi d t ti l b
c. Design and implement a very specific strategy to meet
owners’ objectives

12. 2. Do Your Own Active Search
2. Do Your Own Active Search
a. Conduct your own research to find potential buyers
b. Search conducted concurrently with running the
b Search cond cted conc rrentl ith r nning the
business
c. Negotiate with potential buyers

13. 3. Going it alone Vs. using a professional
3 Going it alone Vs using a professional
Buyers on their own
2%
With a rookie broker 2%
Experienced broker 5%
Intermediary
Intermediary 17%
Exceptional intermediaries 50%
Investment Banker +90%
Source: Burbank Group

14. Going it alone Vs. using a professional
Going it alone Vs using a professional (continued)
a. Experience negotiating deals
b. Cost of engagement
b C f
c. Opportunity cost of going it alone

15. 4. Conduct Passive Search: Get the word out
Conduct Passive Search: Get the word out
a. Let your bankers, accountants whomever else you
deal with know that your company is for sale
deal with know that your company is for sale
b. Functional issues of making a deal work
c. Effectiveness

16. C. Requirements for a successful transaction:
1. Commitment to Process
2. Realistic Goals
3. Cleanup Balance Sheet and Income Statement
3 Cleanup Balance Sheet and Income Statement
4. Identify Deal Issues in Advance
5. Buyer Integration Issues

17. 1. Commitment to process
a. Internal and external team
b. All owners on board
2. Realistic goals
a. Timetable
b. Price range of valuation
c. Tax impact
c Tax impact

18. 3. Cleanup balance sheet and income statement
a. Presentation
b. Non‐performing divisions, brands
c. Bad assets evaluation
4. Identify deal issues in advance
y
a. Customers
b.
b Employees
Employees
c. Legal
d. Financial Reporting

19. 5. Buyer integration issues
a. Financial
b. Operational
c. Human Resources

20. D. How to position your company for sale:
1. Planning
2. Positioning
3. Family/Ownership Issues
4. Minority/Majority
5.
5 Operations
Operations

21. 1. Planning
a. Develop process
b. Discuss objectives
c. Timing

22. 2. Positioning
a. Improve reporting and financials
b. Restructure operations if needed
c. Determine best type of buyer
d. Clean up legal issues, if possible
e.
e Get consensus on commitment from owners
f. Line up key executives support
g. Determine costs that are not true business costs
h.
h Define l
D fi value of b i
f business

23. 3. Family/Ownership Issues
a. Consensus exists
b. Talented versus not talented employees
c. No excess baggage
d. Estate / family planning

24. 4. Minority/Majority
a. What are objectives
b. Sale of majority
1) Loss of control (but may not be so bad)
2) Maintain % for future growth
3) Only way to make a deal
4) Ability to grow with less risk
5) Keep younger generation employed
6) Favored by private equity
Favored by private equity

25. 4. Minority/Majority
c. Sale of minority
a. Maintain control but not as it seems
b. Provides initial liquidity event
c. Get a partner to support growth
d.
d Need to find right partner interested
Need to find right partner interested
e. Future sale controlled by minority owner

26. 5. Operations
a. Clean up
b. Zero based budgeting analysis
g g y
c. Eliminate divisions / products that are drag on
profits

27. Questions?
This presentation is not an offer to sell securities or any other services.