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Exit Strategy

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Thien Dang
Thien Dang

The document outlines a strategic process for selling a company, beginning with evaluating the company and developing a marketing plan, identifying potential buyers, conducting due diligence, and negotiating a final deal to close the transaction while maximizing value for the company and its owners. It also discusses how to value different types of businesses based on factors like profitability, growth, customers, and management, and the role of an advisory firm in assisting with exit planning.

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www.Oxford-Center.com
Exit Exit Exit
STRATEGIC PROCESS TO SELL Overview of the Oxford Process Explain the past in financial numbers; sell the future in market terms. Create and find a competitive market among selected strategic and financial buyers Target approximately five to seven carefully screened strategic buyers. Frame the debate and sell the story based on future earnings. Drafting of Confidential Memorandum that explains why you should be paid on future earnings. Capitalize on Company and industry momentum. Certain strategic buyers enjoy strong financial results. Financial buyers have recognized value in industry or sector. Marketing process based on explaining the past and selling the future.
STRATEGIC PROCESS TO SELL Frame the Market Debate Tell the story & Position the Company Maximize Value Perform pre-due diligence Thoroughly evaluate the universe of potential Buyers. Level the playing field against potential buyers (information) Maintain Control of Process Parallel process for potential buyers (“wagon train”) Distribution of information limited to qualified parties Confidentiality of transaction is accorded highest priority Determine buyer universe and prioritize potential buyers Manage the Marketing Process Assess type, extent and timing of information to be provided Maintain competitive dynamic at all stages Assure that buyers accurately value the company Shift procedural tactics if and when appropriate Manage unforeseen events and changing conditions Front load due diligence Develop and draft confidential Memorandum presentation Assist in negotiations and documentation Minimize Time and Disruption Preserve options/ competitive environment to closing Close the transaction quickly
STRATEGIC PROCESS TO SELL Start Buyer Visit Receive Offers -Evaluation -Fin. Review Closing ~ SOLD Distribute O.M. Limited Auction -Research -Story & Message Go to Market Now Negotiate Deal Or Distribute Profiles Letter of Intent Structure Value Enhancement Develop Buyer Exit Planning Letter of Intent Due Diligence Prospects
STRATEGIC PROCESS TO SELL Analyze and value the company. Develop an overall marketing plan for selling the company. Prepare Private Placement Memorandum (PPM) Identify, qualify and prioritize potential investors/ capital sources. Lead due diligence process by interested parties. Create an auction environment as well as a sense of urgency on both pricing and transaction structure with targeted buyers. Structure, Negotiate, and Document – the MaxNet Methodology Close the deal and Celebrate!
STRATEGIC PROCESS TO SELL Company Preparation Develop and Evaluate Buyer Negotiate Final Evaluation Phase Implement Interest/ Begin Deal and Close Marketing Due Diligence Strategy –Evaluate Proposals ‒Undertake due –Develop positioning –Contact –Create auction –Determine diligence and strategy prospective environment appropriate tactics business evaluation buyers –Determine marketing –Evaluate indications of –Grant exclusivity ‒Perform strategy –Explain the interest (price, comprehensive past, sell the consideration, timing, –Negotiate and valuation –Select and prioritize future terms) execute definitive prospective buyers agreement ‒Review objectives –Negotiate –Select final candidates and timing –Prepare Confidential confidentiality –Announce Memorandum agreements –Coordinate visits for transaction selected buyers –Distribute –File regulatory “Explain the past, sell the confidential –Distribute draft documents (if memoranda future, close the deal” Purchase Agreement necessary) –Prepare –Close transaction management and celebrate presentation Planning Phase Execution Phase Finalization Phase Four Weeks Six to Eight Weeks Four Weeks
HOW TO VALUE YOUR BUSINESS Value Drivers 0-3 Times 4-6 Times 6+ Times Profitability Erratic Steady High Biz Type Commodities Competitive Technical Biz Growth Low Moderate High Customers Transient Steady Large Management OK Good Very Good Market Share Tiny Measurable Large Statements Compiled Reviewed Audited ROE 10% 20% 30% Size Small $10-$25M $25M Terms Difficult Financing Easy IRS REVENUE RULING 80-123, 59-60: VALUATION OF SECURITIES IS, IN ESSENCE, A PROPHECY AS TO THE FUTURE…NO FORMULA CAN BE DEVISED THAT WILL BE GENERALLY APPLICABLE TO THE MULTITUDE OF DIFFERENT VALUATION ISSUES…BECAUSE VALUATIONS CANNOT BE MADE ON THE BASIS OF A PRESCRIBED FORMULA, THERE IS NO MEANS WHEREBY THE VARIOUS APPLICABLE FACTORS IN A PARTICULAR CASE CAN BE ASSIGNED MATHEMATICAL WEIGHTS IN DERIVING THE FAIR MARKET VALUE
STRATEGIC PROCESS TO SELL Oxford Center’s Strategic Advisory Role A “weekend retreat” focused on the Company’s business opportunities and strategic options. We will complete valuation of the Company assuming the sale of both a minority and majority stake utilizing a thorough review of the Company’s current financial condition. We will analyze the Company’s competitors and provide perspective on both the Company’s market share growth opportunities and limitations. We will provide perspective on buyer interest in the Company at various valuation levels. We will provide specific names of targeted strategic and financial buyers. Finally, we provide a recommendation on the optimal strategic option or options, including timing considerations. In addition, we will make recommendations on the structure of management exit packages and BOD benefits should a change of Company control occur.
EXIT PLANNING The Oxford Center helps key employees negotiate contract terms and timelines on behalf of management prior to transaction close We create excess compensation triggers for management upon early termination and other events, using tenure and earn out structures, always structuring a minimum cash payment We advise management to incorporate in their contracts key provisions such as an ability to select key staff members. We also provide recommendations to management or selection of independent legal counsel.
Maximum Company Net Long Term Enhancement Oxford Center Personal Enterprise Estate Involvement Planning Value Strategic Exit Plannin/ Assessment BOD Benefits Package EBITDA Transactional Multiple Investment Expansion Banks Financial Enterprise Minimum Advisor Value Company Enhancements Net Minimum Maximum Personal “Net” Personal “Net” Traditional investment banking is transactional, offering minimal personal net and marginal Company net. The Oxford Center provides Enterprise Banking that maximizes Company and personal net. The Oxford Center Personal is our business education program provided through our Educational Symposiums.
Join Us In The Revolution of Business Education www.Oxford-Center.com

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Exit Strategy

  • 2.
  • 3. Exit Exit Exit
  • 4. STRATEGIC PROCESS TO SELL Overview of the Oxford Process Explain the past in financial numbers; sell the future in market terms. Create and find a competitive market among selected strategic and financial buyers Target approximately five to seven carefully screened strategic buyers. Frame the debate and sell the story based on future earnings. Drafting of Confidential Memorandum that explains why you should be paid on future earnings. Capitalize on Company and industry momentum. Certain strategic buyers enjoy strong financial results. Financial buyers have recognized value in industry or sector. Marketing process based on explaining the past and selling the future.
  • 5. STRATEGIC PROCESS TO SELL Frame the Market Debate Tell the story & Position the Company Maximize Value Perform pre-due diligence Thoroughly evaluate the universe of potential Buyers. Level the playing field against potential buyers (information) Maintain Control of Process Parallel process for potential buyers (“wagon train”) Distribution of information limited to qualified parties Confidentiality of transaction is accorded highest priority Determine buyer universe and prioritize potential buyers Manage the Marketing Process Assess type, extent and timing of information to be provided Maintain competitive dynamic at all stages Assure that buyers accurately value the company Shift procedural tactics if and when appropriate Manage unforeseen events and changing conditions Front load due diligence Develop and draft confidential Memorandum presentation Assist in negotiations and documentation Minimize Time and Disruption Preserve options/ competitive environment to closing Close the transaction quickly
  • 6. STRATEGIC PROCESS TO SELL Start Buyer Visit Receive Offers -Evaluation -Fin. Review Closing ~ SOLD Distribute O.M. Limited Auction -Research -Story & Message Go to Market Now Negotiate Deal Or Distribute Profiles Letter of Intent Structure Value Enhancement Develop Buyer Exit Planning Letter of Intent Due Diligence Prospects
  • 7. STRATEGIC PROCESS TO SELL Analyze and value the company. Develop an overall marketing plan for selling the company. Prepare Private Placement Memorandum (PPM) Identify, qualify and prioritize potential investors/ capital sources. Lead due diligence process by interested parties. Create an auction environment as well as a sense of urgency on both pricing and transaction structure with targeted buyers. Structure, Negotiate, and Document – the MaxNet Methodology Close the deal and Celebrate!
  • 8. STRATEGIC PROCESS TO SELL Company Preparation Develop and Evaluate Buyer Negotiate Final Evaluation Phase Implement Interest/ Begin Deal and Close Marketing Due Diligence Strategy –Evaluate Proposals ‒Undertake due –Develop positioning –Contact –Create auction –Determine diligence and strategy prospective environment appropriate tactics business evaluation buyers –Determine marketing –Evaluate indications of –Grant exclusivity ‒Perform strategy –Explain the interest (price, comprehensive past, sell the consideration, timing, –Negotiate and valuation –Select and prioritize future terms) execute definitive prospective buyers agreement ‒Review objectives –Negotiate –Select final candidates and timing –Prepare Confidential confidentiality –Announce Memorandum agreements –Coordinate visits for transaction selected buyers –Distribute –File regulatory “Explain the past, sell the confidential –Distribute draft documents (if memoranda future, close the deal” Purchase Agreement necessary) –Prepare –Close transaction management and celebrate presentation Planning Phase Execution Phase Finalization Phase Four Weeks Six to Eight Weeks Four Weeks
  • 9. HOW TO VALUE YOUR BUSINESS Value Drivers 0-3 Times 4-6 Times 6+ Times Profitability Erratic Steady High Biz Type Commodities Competitive Technical Biz Growth Low Moderate High Customers Transient Steady Large Management OK Good Very Good Market Share Tiny Measurable Large Statements Compiled Reviewed Audited ROE 10% 20% 30% Size Small $10-$25M $25M Terms Difficult Financing Easy IRS REVENUE RULING 80-123, 59-60: VALUATION OF SECURITIES IS, IN ESSENCE, A PROPHECY AS TO THE FUTURE…NO FORMULA CAN BE DEVISED THAT WILL BE GENERALLY APPLICABLE TO THE MULTITUDE OF DIFFERENT VALUATION ISSUES…BECAUSE VALUATIONS CANNOT BE MADE ON THE BASIS OF A PRESCRIBED FORMULA, THERE IS NO MEANS WHEREBY THE VARIOUS APPLICABLE FACTORS IN A PARTICULAR CASE CAN BE ASSIGNED MATHEMATICAL WEIGHTS IN DERIVING THE FAIR MARKET VALUE
  • 10. STRATEGIC PROCESS TO SELL Oxford Center’s Strategic Advisory Role A “weekend retreat” focused on the Company’s business opportunities and strategic options. We will complete valuation of the Company assuming the sale of both a minority and majority stake utilizing a thorough review of the Company’s current financial condition. We will analyze the Company’s competitors and provide perspective on both the Company’s market share growth opportunities and limitations. We will provide perspective on buyer interest in the Company at various valuation levels. We will provide specific names of targeted strategic and financial buyers. Finally, we provide a recommendation on the optimal strategic option or options, including timing considerations. In addition, we will make recommendations on the structure of management exit packages and BOD benefits should a change of Company control occur.
  • 11. EXIT PLANNING The Oxford Center helps key employees negotiate contract terms and timelines on behalf of management prior to transaction close We create excess compensation triggers for management upon early termination and other events, using tenure and earn out structures, always structuring a minimum cash payment We advise management to incorporate in their contracts key provisions such as an ability to select key staff members. We also provide recommendations to management or selection of independent legal counsel.
  • 12. Maximum Company Net Long Term Enhancement Oxford Center Personal Enterprise Estate Involvement Planning Value Strategic Exit Plannin/ Assessment BOD Benefits Package EBITDA Transactional Multiple Investment Expansion Banks Financial Enterprise Minimum Advisor Value Company Enhancements Net Minimum Maximum Personal “Net” Personal “Net” Traditional investment banking is transactional, offering minimal personal net and marginal Company net. The Oxford Center provides Enterprise Banking that maximizes Company and personal net. The Oxford Center Personal is our business education program provided through our Educational Symposiums.
  • 13. Join Us In The Revolution of Business Education www.Oxford-Center.com