STRATEGIC PROCESS TO SELLOverview 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 SELLFrame 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 buyersManage 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 documentationMinimize 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 & MessageGo to Market Now Negotiate Deal Or Distribute Profiles Letter of Intent StructureValue 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 –Determinediligence and strategy prospective environment appropriate tacticsbusiness evaluation buyers –Determine marketing –Evaluate indications of –Grant exclusivity‒Perform strategy –Explain the interest (price,comprehensive past, sell the consideration, timing, –Negotiate andvaluation –Select and prioritize future terms) execute definitive prospective buyers agreement‒Review objectives –Negotiate –Select final candidatesand 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 BUSINESSValue Drivers 0-3 Times 4-6 Times 6+ TimesProfitability Erratic Steady HighBiz Type Commodities Competitive TechnicalBiz Growth Low Moderate HighCustomers Transient Steady LargeManagement OK Good Very GoodMarket Share Tiny Measurable LargeStatements Compiled Reviewed AuditedROE 10% 20% 30%Size Small $10-$25M $25MTerms Difficult Financing EasyIRS REVENUE RULING 80-123, 59-60: VALUATION OF SECURITIES IS, IN ESSENCE, A PROPHECY AS TOTHE FUTURE…NO FORMULA CAN BE DEVISED THAT WILL BE GENERALLY APPLICABLE TO THEMULTITUDE OF DIFFERENT VALUATION ISSUES…BECAUSE VALUATIONS CANNOT BE MADE ON THEBASIS OF A PRESCRIBED FORMULA, THERE IS NO MEANS WHEREBY THE VARIOUS APPLICABLEFACTORS IN A PARTICULAR CASE CAN BE ASSIGNED MATHEMATICAL WEIGHTS IN DERIVING THEFAIR 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 andmajority 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’smarket 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, includingtiming considerations. In addition, we will make recommendations on the structure of management exit packagesand BOD benefits should a change of Company control occur.
EXIT PLANNING The Oxford Center helps key employees negotiate contract terms and timelineson behalf of management prior to transaction close We create excess compensation triggers for management upon early terminationand other events, using tenure and earn out structures, always structuring aminimum cash payment We advise management to incorporate in their contracts key provisions such asan ability to select key staff members. We also provide recommendations tomanagement 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.
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