Your Business         Your Life



Transition and Liquidity Strategies for Business Owners
When we think about your business, we see
it for what it really is, as part of a far larger
enterprise—

your life.


What...
seeing the Bigger piCture
     The Capital Strategies Group is a leading                        three decades our entrepre...
a comprehensive process is our foundation
A successful transaction involves a series of complex steps, meticulously
orches...
Identifying Prospective Buyers: The buyer        agreement. We stand ready with a wealth
    universe has changed. In the ...
understanding the                                 Our expertise in the sectors below guides
entrepreneur…through          ...
www.citicapitalstrategies.com




This information has been obtained from and is based upon sources the Capital Strategies...
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Your Biz Your Life Transition And Liquidity Strat For Bsns Owners Mssb

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Your Business I Your Life:
Transition and Liquidity Strategies for Business Owners

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Your Biz Your Life Transition And Liquidity Strat For Bsns Owners Mssb

  1. 1. Your Business Your Life Transition and Liquidity Strategies for Business Owners
  2. 2. When we think about your business, we see it for what it really is, as part of a far larger enterprise— your life. What exactly do we mean by that? Like many of our clients, you probably started and expanded your company at considerable personal risk. You worked hard and created a valuable firm. And then one day, something changes. Maybe you watch a competitor sell his The Capital Strategies Group understands firm for a good price. Or maybe your child the connection between the two. We are announces she wants to go to medical a leading provider of investment-banking school instead of taking over the reins services, which takes care of the business from you. Maybe you stop thinking about side. And with our colleagues, we offer retirement in the future tense. At that clients world-class wealth management moment, you see the value of your business expertise—the personal side. The result: in a new way. It’s time for a change and your business and your life, all in one plan. inevitably the change will affect both your business life and your personal life. 1
  3. 3. seeing the Bigger piCture The Capital Strategies Group is a leading three decades our entrepreneurial spirit investment bank dedicated to serving the is still going strong. We offer our clients needs of closely held and family-owned access to a worldwide network of contacts businesses. We specialize in the sale or and resources, buyer relationships, and recapitalization of companies with enterprise deep industry knowledge and research, all values of $20 million to $200 million. We coupled with wealth management expertise consistently rank among the top M&A applied before, during and after a sale. advisors for mid-tier companies,1 and after together With our Morgan stanLeY our serviCes inCLude: sMith BarneY partners, n Mergers and Acquisitions CapitaL strategies group offers: n Sell Side and Corporate Divestitures n Strategies that help you optimize the value of your business … and keep more of the n Partial exit strategies, including Recapital- proceeds izations, for the business owner looking to remain involved in the business n Strategies for selling to employees in a tax-advantaged way n ESOPs (Employee Stock Ownership Plans) n Strategies for transitioning your business to n Capital Solutions the next generation n Strategies that help ensure your proceeds are distributed and protected as you see fit n Strategies for protecting your heirs from unnecessary tax or debt consequences n Strategies to help you use the value of your business to accomplish what you want in life Business and personaL. entrepreneuriaL and gLoBaL. At the Capital Strategies Group, we see From our perspective, it’s simply treating the bigger picture—and our clients tell your business like it’s the most important us that this makes us different from other investment of your life—if for no other investment banks. It’s how we think, how reason than this: It is. we plan, and how we execute. 1 Based on results extracted on January 21, 2009 and prior years from information prepared by and available from Thomson Financial. The results were based on a query containing the following criteria: M&A transactions completed in calendar 2002-2008, private targets located in the United States, transaction deal value from not announced up to and including $100MM, seller financial advisor identified. 2
  4. 4. a comprehensive process is our foundation A successful transaction involves a series of complex steps, meticulously orchestrated. We prepare intensively in the early stages of an engagement, and have the experience and skills to work through the issues that inevitably arise. Our process includes the following steps: Pre-sale Planning: The best transactions Valuation: We understand what drives start long before the company is for sale. We value in the eyes of buyers, both financial work with you to understand your personal and corporate, in different industries. We goals, and advise you on how to prepare are able to identify ways that may help to your business for the type of transaction that increase value and, importantly, focus buyer will best fit your individual situation. With our attention on the things that can have the Morgan Stanley Smith Barney colleagues, most impact on price. we develop a thorough wealth management plan with a view toward structuring your Positioning and Deal Marketing: Working holdings to help minimize tax implications side-by-side with our clients, we develop when a sale finally occurs. Or, if you prefer a comprehensive marketing strategy, ad- to pass the business to family members, dressing potential issues before the formal we can provide succession planning for a marketing process begins and assessing smooth transition to the next generation. the relative importance of control, liquid- It’s a comprehensive approach, recognizing ity, price, and timing. Because of our years your life’s goals and developing strategies to of experience in closing transactions, we help optimize value and reduce risk. On the understand the questions that need to be business side this might include a strategy to asked—and the issues that need to be lock-in senior management and restructure positioned—prior to marketing. We strive to debt; on the personal side it might involve develop the interest of multiple, competitive arranging assets and structuring trusts early buyers by preparing comprehensive materi- on, to help minimize tax exposure. als about your company and appealing to the specific interests of each potential buyer. 3
  5. 5. Identifying Prospective Buyers: The buyer agreement. We stand ready with a wealth universe has changed. In the past, private of experience and knowledge to reconcile equity groups were driven by purely finan- the many complex issues that can arise at cial opportunities. Now they are strategically this step. adding to their portfolios of companies, looking for targets that complement their Due Diligence: Having your business holdings. These buyers have raised record scrutinized by prospective buyers, their funds in recent years, and are actively look- bankers, attorneys, accountants, tax ing for investments. Public companies, large advisors, operations managers, and others private companies, and offshore firms are can be a daunting prospect. Our goal is to also active in the middle market. We identify help all parties maintain an objective view of prospective buyers who suit your business, the business during this sensitive process. location, and size, and whose expressed We put expert guidance and experience goals most closely align with your objectives. to work in maintaining momentum while By emphasizing the value and synergies keeping the transaction and your personal from the perspective of each buyer, we work objectives on track. with a goal of optimizing the transaction Implementing Your Wealth Plan: price and terms. Congratulations—you have achieved a Evaluation and Negotiation of Offers: At substantial level of hard-earned liquid- this step, painstaking effort and attention to ity from creating, building, and selling or detail become key elements of the process, recapitalizing your business. You likely have and the value of an experienced investment- worked your entire life for this moment. Your banking professional is magnified. We review pre-planning has paid off. With the transac- each Letter of Intent, clarifying and evaluat- tion completed, you can now look forward ing the terms of each proposal compared to incorporating the sale proceeds into your with your goals and objectives, and valuing personal wealth management plan—a plan the forms of consideration offered for the developed to go beyond investments alone business. Alongside your legal counsel, to include estate and financial planning, we assist in negotiating the final purchase lending, risk management, philanthropic planning and more. reduCing Your risk, not Your roLe Your company is not on the market. You are The final plan? not planning to retire for at least another You sell anywhere from 25% to 75% of your five to 10 years. Your first response to an firm to a private equity buyer and retain an unsolicited offer: No thanks. ownership stake as well as the day-to-day management reins. You have successfully But then a productive meeting with a team capitalized on a strong market. You no from the Capital Strategies Group gives you longer live with the risk of having most of pause. Market valuations for good compa- your wealth in one asset—the company nies have been rising and more than one you built. And your remaining stake in the private equity group is looking to invest in company has the potential to increase your industry. Specifically, these buyers are substantially as you expand the business looking for a company with sound funda- with the financial backing and added value mentals and an excellent management team. of your new partners. 4
  6. 6. understanding the Our expertise in the sectors below guides entrepreneur…through our understanding of valuation benchmarks, the eYes of a BuYer buyer trends and interests, and the nuances Most business owners will sell only one of the business. Focus areas include: business in their lifetime. Most business n AEROSPACE, DEfEnSE AnD gOvERnMEnt buyers will acquire dozens. We bridge the gap. n BuilDing PRODuCtS AnD SERviCES n COnSuMER PRODuCtS We have the experience to navigate the complications that often arise in a transac- n HEAltH CARE AnD MEDiCAl PRODuCtS tion. For example, maybe you are wrestling n inDuStRiAl with how to break the news of a sale to n infORMAtiOn tECHnOlOgy AnD employees and customers, balancing the tElECOMMuniCAtiOnS risk that they will learn about it from others with the risk that the news will change their n Oil AnD EnERgy commitment to the company. Or, maybe If three decades and nearly 2,000 transac- you are in a highly seasonal business, with tions have taught us one thing, it’s this: a high line-of-credit balance in the peak Your business and your life are inextricably season and a purchaser who would rather linked. Either by design or by accident they not assume the debt. Or, maybe you’re are part of one, bigger plan. We advise that exiting your manufacturing company and it be by design. We believe you’ll see that need to protect yourself from liability related this approach makes all the difference in a to the thousands of products sold on your transaction—the difference between what watch. Years in the business have taught us you get, and what you get to keep. to anticipate—and resolve—these kinds of issues. 5
  7. 7. www.citicapitalstrategies.com This information has been obtained from and is based upon sources the Capital Strategies Group believes to be reliable. We do not guarantee its accuracy or completeness. All opinions and estimates constitute the Capital Strategies Group’s judgment as of the date of the document and are subject to change without notice. Past performance is not a guarantee of future results. This sales literature is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. Neither the Capital Strategies Group nor any other person accepts liability whatsoever for any loss (howsoever arising and whether direct or consequential) from any use of the information contained herein or otherwise arising in connection herewith. Morgan Stanley Smith Barney LLC, its affiliates, and its employees are not in the business of providing tax or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Tax-related statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor. © 2009 Morgan Stanley Smith Barney LLC. Member SIPC. 74075JV BIZ2015 06/09

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