Equity Engine helps facilitate successful business succession for retiring owners by converting their companies to employee ownership. Equity Engine’s model brings new, latent capital to bear while cutting transaction costs by half, benefiting sellers, new employee owners, local taxing authorities and disinvested communities.

1. Facilitating Business
Ownership Succession
PRESERVING JOBS &
GROWING COMMUNITY WEALTH
VIA EMPLOYEE OWNERSHIP.

2. Equity Engine helps facilitate successful business
succession for retiring owners by converting their
companies to employee ownership.
Equity Engine’s model brings new, latent capital
to bear while cutting transaction costs by half,
benefiting sellers, new employee owners,
local taxing authorities and disinvested
communities.

3. The Market Opportunity
UNITED STATES BY 2030
4,000,000 Businesses owned by
Baby Boomers to be sold
or dissolved.
$10 trillion Total wealth transferred.
(Source: Budget & Tax Center)
METRO CHICAGO AREA NOW
230,624 SMBs (< 100 employees.)
108, 393*
*(43%)
Companies with owners
> 65 years of age without
a succession plan .
(Source: Price Waterhouse Coopers)
70% prefer to keep business in the family.
30% will actually do so.
BUSINESS OWNERS
(Source: American Management Services)
A SILVER TSUNAMI: BY THE NUMBERS

4. % OF TOTAL JOBS
IN CHICAGO BY
COMPANIES WITH
< 250 EMPLOYEES.
Our “Why?”: Capital* + Jobs**
48%
% OF YOUNG BLACK
MALES NOT WORKING
AND NOT IN SCHOOL.
ANNUAL COST OF
CHICAGO GUN
VIOLENCE.
% OF TOTAL MFG. JOB POSTINGS
REQUIRE H.S. DIPLOMA OR
VOCATIONAL TRAINING.
LOCAL CHICAGO BUSNESSES IN
LOW-INCOME, MAJORITY-
MINORITY AREAS CREATED 8% OF
TOTAL REVENUE GENERATED...
...*BECAUSE THEY ONLY RECEIVED
3.8% OF AVAILABLE LOANS.
**IF EVERY SMALL BUSINESS
ADDED JUST OVER 1 JOB, CHICAGO
INNER-CITY UNEMPLOYMENT
WOULD BE ELIMINATED.
(Source: UIC Great Cities Institute) (Source: Century Foundation)
(Source: Woodstock Institute)(Source: Initiative for a
Competitive Inner City)
(Source: University of Chicago Crime Lab)
(Source: Initiative for a Competitive Inner City)
37% 61,468 $2.5B
8%
3.8%
58%

5. REALITY: MOST SALES ARE FUNDED WITH THE SELLER’S OWN MONEY.
The Problem 1.0
OWNER COMPANY BUYERS LENDER GOVERNMENT
Keeps .70 from
every $1.00 paid.
Must earn $1.82 for
every $1.00 paid.
Taxes & interest
strangle cash flows.
Double taxation for
C corporations;
primary financier of
the transaction.
Expensive, low LTV
and only 25% of
deals get any
funding at all.
Exorbitant taxation
on both sides, it is
the IRS’s highest
taxed transaction.
THE PARTIES TO A BUSINESS SALE

6. IT COSTS MORE THAN YOU THINK.
CONSEQUENCES CONSEQUENCES CONSEQUENCES
Sell Business to a competitor. Business is dissolved. Economic impacts.
Owner’s own company finances transaction due to
limited bank financing available (bank valuations
omit key metrics)
Double taxation for C corporations
Buyers use after-tax dollars for purchase
Business sales are the highest taxed transactions in
the Internal Revenue Code
Capital gains tax > 30%
Owner only gets real estate value as manufacturing
facility, pennies on the dollar for other hard assets
New owner will likely purchase customers, sell off
assets and close/sell facility
Employee buyouts can be expensive
High taxation + cost of finance kill many deals
Even if a deal can be reached, the seller takes less
and new owners are weakened by the transaction
No site + sold company = company closes + jobs lost
Local economy loses economic engine
Manufacturing jobs lost hurt the economy even more
because of their 5:1 multiplier effect
Local tax revenue lost impacts whole community
Abandoned facility adds blight to neighborhood
Typical Small Business Sale
$

7. 1 2 3 4 5
COMPANY
borrows $
from
LENDER
and lends it
to OWNER
at tax
deductible
simple
interest.
OWNER
uses
proceeds
to buy a
single
premium
high cash
value life
insurance
policy.
OWNER
borrows $
from policy
cash value
in year 3 to
create tax-
free
retirement
income.
Policy loan
interest
payments
are at <1%
AFR
allowing
OWNER to
convert
payments
to buyout
payments.
Buyout
payments
are exempt
from
capital
gains and
LENDER is
repaid with
tax-free
death
benefit.
New Capital Facility
STEP STEP STEP STEP STEP

8. The Solution 1.0
Purchase Price $1,600,000
Down Payment $320,000
Bank Loan 80% $1,280,000
Terms 10 yr. am.
P&I @ 6%
$128,000
$173,011
Pre-tax Earnings 42% $220,690
Deductible Interest $45,911
Tax Deduction $19,283
Cost of Interest $26,628
Total Annual Cash Flow Cost $154,628
Pre-tax Earnings to Make Payment $247,318
Total Cost $2,206,897
Total Interest $459,110
Tax Savings $192,826
Total Cost Tax Affected $2,473,180
Cost of Capital (Down Payment) $551,724
Total Cost of Purchase $3,024,904
DETAILS OF TRADITIONAL SALE ECONOMICS
Purchase Price $1,600,000
Down Payment $300,000
Bank Loan 80% $2,500,000
Terms Interest
Only @ 6%
$150,000
Pre-tax Earnings $220,690
Deductible Interest $150,000
Tax Deduction 42% $63,000
Cost of Interest $87,000
Total Annual Cash Flow Cost $133,000
Pre-tax Earnings to Make Payment $150,000
Total Cost $2,431,241
Total Interest $3,300,000
Tax Savings $1,386,000
Total Cost Tax Affected $1,914,000
Cost of Capital (Down Payment) $517,241
Cost Recovery $604,790
Total Cost of Purchase $1,826,452
DETAILS OF NEW CAPITAL FACILITY
CUTS TRANSACTION COSTS BY HALF.

9. The Problem 2.0: Disinvestment
DISINVESTMENT: THE BATHTUB EFFECT ON LOCAL ECONOMIES
Community
Assets
Skills + Jobs
Local Employers
City Services
Public Works
Social Services
Local Health Care
Community Banks
Local Real Estate Dev’t
Public Schools
Homeownership
Parks
Local Retail
Community
Leakages
Unemployment
Crime
Incarceration
Urban Decay
Budget Cuts
Urgent Care Facilities
Currency Exchanges
Payday Lenders
Charter Schools + Dropouts
Absentee Landlords
Chain Stores
Violence

10. The Solution 2.0
Utilize under-valued real estate as a
radical new model for cultivating
economic opportunity.
How?
Embrace Gentrification.
Direct and deploy economic engines to disinvested
communities for social equity.

11. Develop the real estate under the business
to highest and best use and relocate the
company to a neighborhood in need of the
economic impact.
Thoughtful, inclusive gentrification
doesn’t displace, but directs wealth to
communities that need it.
The Answer to Capital Scarcity
BRINGING NEW CAPITAL TO EMPLOYEE OWNERSHIP TRANSACTIONS

12. Combine property
redevelopment to
succession planning for
companies located on under-
valued real estate assets.
Equity Engine redevelops
property to highest and best
use and creates an economic
engine by relocating the
company to a disinvested
neighborhood.
Equity Engine profits benefit
the owner while providing
wealth for new company
employee owners and
economic activity for local
stakeholder communities.
The Model
1 2 3

13. More Capital = More Impact
OWNER’S REAL ESTATE OPTIONS
CONSEQUENCES CONSEQUENCES CONSEQUENCES
Include property with company sale. Sell property to a developer. Partner with Equity Engine.
Owner only gets value as current use
Takes a ton of capital off table for all stakeholders
High property taxes + cost basis for new owners
Little or no public incentives for new owners
Due to higher cost basis, balance sheet pressure
burdens new owners
New owner will likely purchase customers, sell off
assets and close/sell facility
New owner gets all the upside
City loses tax revenue + jobs + economic multipliers
Owner only gets value as current use
Slim chance to cash out full value of property and
zero chance to participate in back-end development
profits
Takes a ton of capital off table for all stakeholders
No capital available for employee ownership
conversion
No site + sold company = company closes + jobs lost
Brings most capital to all stakeholders
As development partner, owner gets more money
and employee-buyers get better cost basis
Capital pays for facility’s relocation to neighborhood
that needs economic engine
Relocation may offer powerful government
incentives impacting company’s bottom line and
prospects for success
Equity Engine profits used to build community
wealth near facility via development, job training, etc.

14. PHASE
1
PHASE
2
PHASE
3
PHASE
4
The Mechanics
Equity Engine approaches
company located on prime,
under-valued real estate
for development
Equity Engine develops
original site to highest
and best use for profit
shared between EE and
owner
Equity Engine identifies
property in disinvested
neighborhood, builds out
facility, relocates company
Equity Engine directs its development
profits to:
Improve nearby properties with
affordable housing + commercial
development
Promote job training program in
trades, etc.
UNDERVALUED ASSET
DEVELOP TO HIGHEST
AND BEST USERELOCATE COMPANY
BUILD COMMUNITY
WEALTH NEARBY
INCLUSIVE WEALTH BUILDING

15. Finance
OWNER EQUITY
BRIDGE LOAN
SENIOR DEBT
Owner contributes land to
development entity
Bridge loan covers balance
of construction expense +
cost to relocate/renovate
new facility
Senior debt covers most of
construction cost
TOTALPROJECTCOST
60%
30%
10%
$
PROJECT PROFIT SHARED
BETWEEN OWNER + EQUITY ENGINE
THE CAPITAL STACK

16. Owner participates in back-end
development profit providing
more $ for owner, cheaper
price for new owners or both.
PROPERTY DEVELOPMENT
More property taxes,
payroll taxes, sales taxes,
business fees, transfer
taxes and jobs.
LOCAL GOVERNMENT
Jobs saved + employees share
company profit if converted.
EMPLOYEE WEALTH
Valuable economic asset sent to
disinvested neighborhood, local
contractor opportunities, capital
circulating in local economy.
ECONOMIC ENGINE
Increased property values
near new facility offer
opportunity to help residents
improve properties, create
new training, jobs in trades.
WEALTH RIPPLE EFFECT
Maximum capital to owner,
legacy protected if converted.
OWNER CASHES OUT
The Win-Win
A NEW KIND OF CAPITAL STACK

17. Thank you.
Contact:
Michael Woyan
(312) 285-4242
mwoyan@marketsling.com
Thank you.
Contact:
Michael Woyan
(312) 285-4242
mwoyan@marketsling.com