Globaljet Systems & Business Solutions - We make your business work, not you....
Mainstreet presentation book
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MINNEAPOLIS
1300 Godward Street NE, Suite 6000
Minneapolis, MN 55413
612-455-0880
SAINT PAUL
3212 Rice Street
Saint Paul, MN 55126
651-484-2677
CHICAGO
8745 W. Higgins Road, Suite 220
Chicago, IL 60631
773-243-1603
MILWAUKEE
330 S Executive Drive, Suite 102
Brookfield, WI 53005
262-901-0086
LAS VEGAS
2300 West Sahara Avenue, Suite 800
Las Vegas, NV 89102
702-364-2551
MAIN STREET BUSINESS BROKERAGE
We Build Bridges Between Buyers & Sellers
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Why Use Sunbelt?
§ Largest Worldwide, National, and Regional Presence
§ Confidential Proactive Marketing Brings More Buyers
§ Our Unique Comprehensive Process Drives Highest Value
§ Worldwide Leader in Lower Middle Market
§ Experienced Team has led Thousands of Transactions
WHY USE SUNBELT
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Largest Worldwide, Regional, and National PresenceLARGEST WORLDWIDE, REGIONAL, AND NATIONAL PRESENCE
§ Founded in 1978
§ 200 + Offices Worldwide
§ 1,400 Professionals
§ 50 Member Midwest Team – Largest
Geographic Group
§ Sunbelt Business Advisors Specializes in
Lower Middle Market Companies with $5 to
$50 Million + in Revenue.
§ Sunbelt Sells More Businesses than any
Firm in the World
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Services & Expertise – While we know many industries…
Sell Side
Engagements
Buy Side
Engagements
Corporate
Divestitures
INDUSTRY EXPERTISE
• Manufacturing
• Service
• Distribution
• Constr./Trades
• Technology
• Energy
• Transportation
We don’t Specialize in Industries - We Specialize in Transactions
SERVICES & EXPERTISE – WHILE WE KNOW MANY INDUSTRIES
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Strategic Sales Process: Middle Market vs Main Street
MERGERS & ACQUISITIONS
u LOWER MIDDLE MARKET TRANSACTIONS
u $5-$50 + MILLION REVENUE
Typically outbound in nature—
Sunbelt calls decision maker to
illustrate opportunity
• Subset of team focuses
here
• Large number of team
members to make initial
call and funnel to
investment banker
• Sunbelt does more strategic
sales than any other
boutique firm by far
• Manpower plus leverage of
Sunbelt offices
internationally creates best
price and terms
• Analyst Team dedicated
to identifying best buyers
• Confidential
• In-bound in nature
• Buyers reach out to Sunbelt
• Mass marketing
• Over 10,000 listings on web site
• Marketed through 14 web sites
• 12,000 unique buyers in database
• Brokers match buyer needs, ability,
and net worth with listings
• Supermarket effect
• Buyers more likely to be local or
regional
• Confidential
• Outbound in nature
• Strategically market and illustrate
opportunity to buyers
• Heavy collaboration to execute
deal with precision
• Analyst team dedicated to
identifying best buyers
• Manpower + leverage of Sunbelt
• Offices internationally creates best
price and terms
BUSINESS BROKERAGE
u MAIN STREET TRANSACTIONS
u UNDER $5 MILLION REVENUE
M&A vs. BUSINESS BROKERAGE
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Client Objectives
Realize your Personal and Financial Post-Closing Goals
§ Confidentially Market the Business
§ Maximize Acquisition Candidates
§ Maximize Selling Price
§ Maximize Cash at Closing
§ Minimize Tax Burden
§ Minimize Post-Closing Risks
CLIENT OBJECTIVES
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Our Unique Comprehensive Process
§ Capitalize on client control during offer stage
§ Maximizes price & terms
§ Multiple buyers keeps seller in control
§ Secures optimal tax strategy
§ Saves legal and accounting fees
OUR UNIQUE COMPREHENSIVE PROCESS
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Phase 1 – Planning
§ Sign Listing Paperwork
§ Define Goals, Objectives, and Sales Strategy
§ Obtain 3rd Party Business Valuation
§ Collect Company Data
§ Prepare Confidential Business Profile (CBP)
§ Identify and Analyze Key Potential Buyers
Phase 2 – Marketing
§ Identify and Approach Potential Buyers
§ Distribute Teasers & Confidentiality Agreements
§ Establish On-Going Dialogue with Potential Buyers
§ Select Buyers for CBP Reviews
ENGAGEMENT TIMELINE
ENGAGEMENT TIMELINE: PHASE 1 & 2
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ENGAGEMENT TIMELINE: PHASE 3 & 4
Phase 3 - Management Presentation
§ Management Presentations
§ Conduct Facility Tours
§ Hold Data Room Visits
§ Continued Dialogue with Potential Buyers
Phase 4 - Structuring and Negotiating
§ Solicit Formal Offers
§ Evaluate Formal Offers
§ Select Optimum Offer
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ENGAGEMENT TIMELINE: PHASE 5 & 6
Phase 5 - Due Diligence
§ Assist in Buyer’s Due Diligence
§ Prepare Purchase Agreement
Phase 6 – Closing
§ Finalize and Execute Purchase Agreement
§ Disburse Funds
§ Make Public Announcement if Appropriate
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Dominant Marketing
Proprietary Websites
§ www.sunbeltmidwest.com
§ www.sunbeltnetwork.com
Industry Websites
§ More than a dozen sites to confidentially match your business to relevant acquirers
Traditional Advertising Brings Acquirer Traffic
§ Corporate Branding via direct mail, magazines, radio*
The Sunbelt Network
§ 1,400 agents in 200+ offices worldwide
DOMINANT MARKETING
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BUYERS GO WHERE LISTINGS ARE
§ We have the largest proprietary database of business listings and buyers in the world.
§ We generate more website traffic than the franchised competition COMBINED.
§ Sunbelt has 3x the number of listings, than the competition COMBINED.
§ We have more $1M+ listings than the competition COMBINED.
§ Our API feed relationships with top, third-party websites automatically feed your
Sunbelt listings to searchable databases.
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Our 550 Deal Update Reaches Key AcquirersMARKETING: NEW BUSINESS ALERTS
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Confidentiality & Knowing the AcquirerCONFIDENTIALITY & KNOWING THE ACQUIRER
§ Customers
§ Employees
§ Vendors
Buyers are required to sign/fill out...
1. Confidentiality Agreement
2. Non - Disclosure Agreement
3. Buyer Profile
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Circles of Buyers: Further from You = Greater Value
Seller
Employees & Competitors
High Net Worth Individuals
& Small Buying Groups
Private Equity Groups
Strategic Acquirers
Closest to
Seller
(see the least value)
Furthest from
Seller
(see the most value)
CIRCLES OF BUYERS: FURTHER FROM YOU = GREATER VALUE
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Sunbelt’s New Circle of Value – The NON-OBVIOUS
Targeting Strategic Buyers
§ Sunbelt creates a target list of potential bidders using
Sunbelt’s market research capabilities and gathering input
from Seller.
§ Waterfront coverage on PEGs and within your Industry.
Private Equity Groups
Strategic Acquirers
NON-OBVIOUS BUYERS
“Bench Markers”
EVERY INDUSTRY – EVERY COMPANY HAS
NON-OBVIOUS or HIDDEN BUYERS
NEW CIRCLE OF VALUE: NON - OBVIOUS BUYERS
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Valuation Multiples are Driven By Risk & GrowthVALUATION MULTIPLES ARE DRIVEN BY RISK & GROWTH
§ Growing Industry
§ Proprietary Product/High Barriers to Entry
§ Strong Brand
§ Intellectual Property / Patents
§ Consistent and Growing Revenues &
Earnings
§ Customer Diversity
§ Management in Place Post Closing
§ Audited Financials
§ Declining Industry
§ Commodity Products
§ Inconsistent Revenues and
Earnings
§ Heavily Dependent on Owner
§ Partial Sale/Divestiture
§ Low Barriers to Entry
§ Large Customer Concentration
§ Low Repeat Customer Factor
§ Compete on Price
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BANK FINANCING & SELLER FINANCING
§ Banks restrict the largest pool of buyers
§ Every Dollar Gained In Recast Earnings Equals Multiple Dollars In Sales Price
§ Every Dollar You ‘CAN’T COUNT’ because of a bank costs you Multiple Dollars
POPULATION OF BUYERS
HIGH NET WORTH
INDIVIDUALS
INDUSTRY BUYERS
OTHER
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ADVANTAGES OF SELLER FINANCING
Certainly, you would not want to offer financing to just anyone. We will show you how to
conduct due diligence on a buyer by checking business experience, financial resources and
other factors.
Offering financing for credible buyer will help you by:
§ Getting you a dramatically higher sales price and overall net proceeds for your business in most cases
§ Earning you higher interest rates on the note than you would earn in a money market account
§ Allowing your business to be accessible to a substantially larger pool of buyers
§ Deferring ordinary income to a later tax year – potentially at a lower tax rate if you are retiring
§ Increasing the speed of closing by avoiding delays and price restrictions of bank financing
§ Keeps you in first lien position to reduce risk
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WHY TO ENGAGE IN SELLER FINANCING IF BANK WON’T LEND
Banks Lend on Tax Return Income
Owner’s run books to pay lower taxes. Many discretionary expenses are not considered by bank loan programs.
Banks Limit Sales Price
Strict guidelines and Debt Coverage Ratio formulas limit the price of a bank financed transaction.
Sales Must Be Trending Upward
If your sales or profits are trending downward, SBA guidelines will likely not allow bank financing on your business.
Experienced Buyers Get Disqualified
If a buyer’s occupation and work history don’t line up with stringent SBA guidelines, he won’t qualify. Buyers with
years of management experience and no direct industry experience won’t qualify for SBA.
High Net Worth Buyers are Disqualified
If a buyer has made too much money, SBA lending programs are not available.
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SELLER FINANCING – PROTECTING YOURSELF
Most business owners have heard horror stories about seller financing.
By being proactive and smart, you can avoid many problems.
§ Demand enough of a down payment. After investing a large portion of their net worth, months of hard work and
note payment, buyers can’t afford to walk away.
§ Look at a pool of potential buyers. Don’t just offer the business to an employee, brother-in-law or friend for a low
down payment.
§ Carefully interview buyers and choose the buyer with the best mix of experience, potential and financial ability.
§ Perform due diligence on a buyer, including a credit report and buyer’s personal financial statement.
§ Use a broker. If a buyer gets in trouble, he’ll call the broker to resell before defaulting.
§ Get a personal guarantee from the buyer.
§ Make sure to file security interests and include conditions in the note to receive regular financial updates from the
buyer.
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SELLER FINANCING NETS YOU MORE
Bank Financing Seller Financing
Cash Flow/SDE
(banks may not recognize all add-backs)
$150,000 $200,000
Multiple of SDE 3.00 3.50
Sales Price $450,000 $700,000
Seller Note $90,000 $490,000
Seller Financing
(7.0%, 10 yr. amo, 5 yr. balloon)
20% 70%
Cash at Closing $360,000 $210,000
Monthly Payment to Seller $1,045 $5,689 ($68,272 annually)
Total Note Payments $115,472 $628,681
Total Pre-Tax Proceeds
(after broker fee)
$428,472 $766,681
Extra $338,209 Seller Advantage • 79% HIGHER
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Questions Every Seller Should ask Investment Bankers
1) What’s the size of your team?
2) How many transactions does your firm have an engagement agreement with?
3) How many offices do you have? Do you have International presence?
4) Process for maximizing price for your clients?
5) Do you have dedicated analysts on staff?
6) Does your firm have a dedicated marketing department?
7) Who does your firm represent, is it exclusive, who pays your fee?
8) Do you know our Industry?
9) What type of buyers are you targeting and give me examples of each?
QUESTIONS SELLERS SHOULD ASK BROKERS