Acquisition Referral Program Guide Deal Referral Program... · This business plan contains...

Acquisition Referral Program Guide

An Introduction to Kamylon,

the Kamylon Acquisition Referral Program and Program Compensation Guidelines

MAY 2013

[email protected] 781-263-7373 x227 www.kamylon.com

CONFIDENTIAL

Kamylon Acquisition Referral Program Guide

Page 1 of 18

KAMYLON CONFIDENTIAL - DO NOT DISSEMINATE. This business plan contains confidential, trade-secret information and is shared only with the understanding that you will not share its contents or ideas with third parties without the express written consent of Kamylon.

TABLE OF CONTENTS

In Summary.......................................................................................... 2

In a Nutshell ....................................................................................................................2

What You Can Expect From Us ......................................................................................2

What We Expect of You ..................................................................................................3

Referral Program Mechanics ............................................................. 4

Our Investment Criteria .................................................................................................4

Types of Opportunity Referrals ....................................................................................5

The Opportunity Submission Process..........................................................................6

Add-backs to EBITDA ....................................................................................................7

Your Compensation ........................................................................................................8

About Kamylon ................................................................................... 9

A Managerial Holding Company ..................................................................................9

Our Strategy ................................................................................................................... 10

Benefits to Business Owners ....................................................................................... 11

Our Core Competencies ............................................................................................... 12

Our Values & Cultural Practices ................................................................................. 13

Expectations of Kamylon Leaders ............................................................................... 14

Appendix ............................................................................................ 16

Useful Contacts .............................................................................................................. 16

Information Sources ..................................................................................................... 16

Suggested Reading ........................................................................................................ 16

Opportunity Submission Web-form .......................................................................... 17

Acquisition Opportunity Summary............................................................................ 18


Page 2 of 18


In Summary

In a Nutshell

This program is designed to mutually benefit Kamylon, company owners seeking liquidity and industry executives who are aware of potential acquisition opportunities that meet Kamylon’s criteria. This program does not apply to intermediaries such as business brokers and investment banks. Any executive who refers a potential acquisition to Kamylon can earn compensation for their efforts as described herein, usually in the form of a success fee for successfully completed acquisitions. In some cases a referring executive may play a role in the business post close, though this is dependent upon the specific situation.

You can download this guide and other resources and templates at the link below:

https://kamylon.box.com/referdeals

What You Can Expect From Us

We always seek to make doing business with Kamylon an efficient and rewarding experience for all and believe that Kamylon’s managerial holding company structure provides the perfect home for many LargeLocal businesses allowing the business owner to achieve their liquidity goals while protecting and enhancing their business legacy for decades to come.

Executives referring potential deals to Kamylon can expect the following:

To work with people of honorable character and impeccable integrity To be listened to and have your input valued To receive timely feedback on actionable proposals you submit To be compensated fairly for your efforts To gain access to and benefit from a unique ownership transition solution that

raises the probability of a successful close

Business owners selling to Kamylon can expect the following:


Page 3 of 18


To work with people of honorable character and impeccable integrity To find a great home for your business and employees To protect and, over time, enhance your business legacy To be paid a fair price To enjoy a streamlined process in which we try to make the complex process of

selling a business as painless as possible

What We Expect of You

To make this program work effectively for everyone we ask that you:

Refer only opportunities that meet the investment criteria described under ‘Our Investment Criteria’ and that are not a part of a broad auction process

Prepare a thoughtful 1-pager summarizing the opportunity (see appendix) Submit opportunities through our online portal (see appendix) Always respect any confidentiality agreements, treat all information shared with

you as confidential and always treat business owners with the utmost integrity Please do not describe yourself as “representing” Kamylon, rather describe your

understanding of who we are and focus on making introductions to business owners where you have a pre-existing relationship

Do not negotiate the terms of a deal with a business owner. Kamylon will take the lead on this after the initial evaluation

Respond in a timely fashion to requests for additional information so that we can advance opportunities to a conclusion as quickly as possible

Read the description of how we do business herein so that you can effectively describe us to business owners with whom you come into contact

Leverage your personal relationships with business owners to make warm introductions and to assist where needed during the evaluation process

Make yourself available to provide industry expertise and assist us with our evaluation of opportunities

Be clear about what you do and don’t know to be facts. Conjecture or hypothesis is fine so long as we know that’s what it is!

Please introduce this program to other executives who you feel may have line of sight to acquisition opportunities


Page 4 of 18


Referral Program Mechanics

Our Investment Criteria

Kamylon acquires controlling interests in businesses that we refer to as “LargeLocal”. The term LargeLocal is a term that refers to a set of investment opportunities comprising companies that meet the following criteria:

$8-80 million of revenue $1-8 million of trailing cash flow (defined as EBITDA less capital expenditures) Strong position in a specific geography or niche Typically family owned and/or owner operated ~5 years or older Located primarily in North America

Currently we have a particular interest in the following broad sectors:

Branded niche consumer products Specialty manufacturing Transportation & logistics Media & information services Aviation services Education & training Healthcare consumable/disposable products Business services

While Kamylon may invest in almost any industry if the opportunity is right, we generally DO NOT invest in the following industries:

Accounting & Tax Preparation Services Agri-business Construction Credit Intermediation Hospitality Hospitals & Healthcare Providers Legal Services Natural Resources


Page 5 of 18


Performing Arts Companies Petroleum Refining Public Administration Religious, Grantmaking, Civic, Professional Organizations Textiles Wholesale & Retail Trade

Other important qualifying criteria for opportunities you should submit are:

Opportunities that represent an attractive investment proposition A transaction is expected or thought possible within the next 6 - 12 months Not part of a broad auction process. Broad auctions typically have low

probability of success and are oftentimes not the best use of our collective efforts

Types of Opportunity Referrals

You may submit investment opportunities for evaluation that range from known-for-certain near term transactions to industry rumors or conjecture that indicate the likelihood of a transaction. Your compensation may vary depending upon the stage of development of the opportunity. Several referral types are summarized in the table below.

Deal Type Description FIRST PRIORITY Pre-packaged deal A deal that you already have under a letter of intent Narrow process A deal that is being actively marketed by the seller or an

intermediary to a very select audience. We do not participate in broad-based auction processes

Broken process A deal that was part of a broader sales process that failed, perhaps because of lack of interest, changed circumstances, buyer/seller fatigue or because the buyer or seller dropped out and/or recut the deal

Intended sale Where you know for a fact that the seller is interested in selling a controlling stake in the business within the next 6 - 12 months

Rumored deal A deal that is rumored within the industry to be ongoing or expected to happen within the next 6 - 12 months

Anticipated deal A deal that you anticipate is likely within 6 - 12 months


Page 6 of 18


(but not known or rumored) given your knowledge and contacts in the industry

SECOND PRIORITY Owner introduction No specific near term transaction expected but you wish

to personally introduce the owner to Kamylon as you feel we could represent a good mutual fit in the future

Attractive business A business you know to be attractive in its space. No known transaction and no prior personal relationship with owner is necessary

Attractive space An micro-industry or investment thesis that you believe to be broadly attractive but with no specific target deals in mind

The Opportunity Submission Process

To keep the submission and evaluation process simple, organized and efficient we ask you to use the following method to submit all referrals:

1. Complete a 1-page summary describing the company or investment space using the ‘acquisition opportunity summary’ template available at https://kamylon.box.com/referdeals . Please make the summary as specific and free-standing as possible but avoid conflicts with any pre-existing confidentiality agreements.

2. Complete the web form at the following link to submit each opportunity to Kamylon’s database. Each company or opportunity should be a separate submission unless your investment thesis is to acquire and integrate several specific related businesses. Attach your 1 pager at the bottom of the web form:

o https://www.smartsheet.com/b/publish?EQBCT=227b7d1898504b468f29c303276d1ac1

3. Make sure to include your correct email address and phone number so that we may contact you for additional information or to discuss next steps. Please disclose on the form if you are subject to any written confidentiality agreement that impacts this opportunity. You should expect to hear from us within three business days to discuss next steps

4. After we pre-qualify an opportunity with you based upon the 1 page summary the next step is typically to arrange a 20-40 minute “Qualification call” with the business owner in which we discuss the business in more detail and the owner’s


Page 7 of 18


motivations and timing for considering a transaction. If you have a prior relationship with the business owner we would ask for your help establishing this call.

You can find additional resources, templates and examples at the link below:


Add-backs to EBITDA

The true underlying cash flow of many LargeLocal businesses can be substantially different to that reported in financial statements due to various owner-related or non-recurring expenses. It is customary to add back certain of these expenses to get to an Adjusted EBITDA or cash flow for the purposes of valuing a business. While evaluating the accuracy and reasonableness of these add-backs is a part of our diligence process we provide the directional guidelines below to help you in making an initial evaluation of Adjusted EBITDA before submitting your opportunity summary. If in any doubt about the validity of an add-back do not include it.

Type Typically Allowable Typically Not Allowable Compensation Owner’s comp in excess of

market for roles Market comp for roles

performed by owners Personal Expenses

Owner expenses run through the books that are in no way related to continuing the business

Owners’ vehicles provided vehicle would not be market for the role

Owner travel, dues and entertainment that have positive marketing/ relationship benefits to the business

Discontinued Business

Fully discontinued business lines that had a drag on trailing cash flow but no impact in future

Business in process of being discontinued that will still be a drag on cash flow in the future

One-time Truly one-time, non-recurring expenses

Periodic expenses that reoccur every so often, e.g. R&D for a new product


Page 8 of 18


Your Compensation

There are several ways you can get compensated under this program and the level of compensation varies depending on the type of deal and your relationship to that deal as depicted in the table below. The deal must be referred to Kamylon in writing using the submission process described herein and the relevant compensation trigger must happen within 12 months of the original referral date to be eligible for compensation.

Type Trigger Compensation Pre-deal Executed LOI $5,000 per LOI executed by both parties Success Fee on Closed Transaction*

An idea, not a personal introduction

0.5% of transaction value** For specific suggested attractive targets or rumored

industry transactions without any direct personal introduction to seller required. Also requires your reasonable support throughout the deal process (such support may be compensated based on an agreed scope of work)

Personal introduction & involvement

1.0% of transaction value** Subject to you having a pre-existing knowledge of the

target, a prior relationship with the seller, you making a personal introduction and arranging the initial qualification call as well as your ongoing support throughout the deal process to effect a transaction

Pre-packaged deal

Varies depending upon circumstances and your role during execution and post-close

Your Expert Input

First hour plus company qualification call

No additional compensation To present/discuss the opportunity and qualify

opportunity with seller Diligence & post

close support TBD, dependent upon fee arrangement and agreed

scope of work

* fee payable for any referral resulting in an acquisition of the referred company within the 12 months following the original referral, provided that the company had not previously been contacted by Kamylon as recorded in Kamylon’s internal CRM database.

** transaction value defined as total purchase proceeds to sellers to include cash proceeds at close plus any contingent/deferred or escrowed proceeds upon release of said contingency or escrow.


Page 9 of 18


About Kamylon This section is intended to give you a greater sense for who Kamylon is, our culture and how we operate so that you are better equipped to talk about us with business owners.

A Managerial Holding Company

Kamylon is not a private equity fund manager; it is not a conventional holding company; it is not a typical operating company. It is a managerial holding company that pursues managerial investing as its primary competitive strategy, investing in what we call LargeLocal businesses. We combine a world class investing operation with a tried and true management system that is applied consistently across all our business units. Public company analogues for Kamylon might be Danaher Corporation, Illinois Tools Works, Roper Industries, Berkshire Hathaway to name a few.

Kamylon is organized into several Strategic Business Unit (SBU). An SBU is a group of businesses that are acquired by Kamylon according to an approved SBU investment thesis. A senior leadership team manages a SBU as a cohesive group that pursues the investment thesis and largely sets its own strategic direction. The growth of an SBU comes from both acquisitions and organic business-unit growth. Within a SBU, the degree of integration of its business units may vary greatly.

The managerial holding company structure affords a number of advantages and benefits that are quite difficult to realize in any other structure that aims to acquire control of many LargeLocal businesses. These benefits include:

Greater efficiencies applying continuous improvement to acquired business units Compounding effects of reinvesting company cash flow Reduced risk of investing in a LargeLocal business Easier to attract and retain top talent Easier access to less costly leverage More flexible capital structure Better alignment of interests


Page 10 of 18


Our Strategy

As a managerial holding company investing in various markets Kamylon does not have a single industry or market that it serves. However, at the most general level, the Company’s business can be understood as serving efficiently and effectively three constituents:

For investors, Kamylon originates, executes, manages, and continuously improves investments in the LargeLocal segment of the U.S. economy. Kamylon’s strategy applied against this opportunity set generates above average risk-adjusted returns.

For business owners, Kamylon provides a fairly priced, trusted, personalized, and relatively efficient solution to the often idiosyncratic ownership transition needs of the LargeLocal owner. Kamylon’s solution has advantages over conventional exits, such as selling to a competitor, a larger strategic buyer, or a private equity/financial buyer.

For talent, Kamylon provides substantial opportunities and an uncommon culture where investors think like managers and managers think like investors™. Kamylon associates are attracted to the integration of these disciplines. We invest to recruit, train, mentor, and provide opportunities to talented professionals. This unusual culture helps to attract, develop and retain top talent, something that an individual LargeLocal business often struggles to do.

As a diversified company, each SBU has or will have its own specific strategy that addresses its respective market and industry context. However, Kamylon refers to its overall corporate strategy as managerial investing. Through proprietary high-volume deal origination, we acquire control of fairly-priced, LargeLocal business cash flow. We organize related businesses into SBUs and employ the Kamylon Management System to reduce risk, drive growth and expand margins that delivers superior risk-adjusted returns to our investors.


Page 11 of 18


Benefits to Business Owners

Professionals at Kamylon are both managers and investors, starkly differentiated from most private equity firms and strategic acquirers. We pride ourselves in growing Investors Who Think Like Managers and Managers Who Think Like Investors.

A key tenant of our strategy is to protect and enhance the legacy of LargeLocal business owners and create tangible value through investing for the long term and employing the Kamylon Management System to drive continuous improvement. Unlike many investment firms we do not merely rely on debt and financial engineering to generate returns -- excessive debt and short investment horizons can be risky and detrimental to a business legacy that may have taken a lifetime to build. In every investment we have made we left a business in better condition than when we arrived. For business owners Kamylon's unique approach has the following benefits when compared to other types of buyers:

Conservative capital structure. Kamylon prefers to invest with conservative leverage and often with all equity. We feel that a company’s prudent capacity for carrying debt cannot be properly understood by anyone but its management and with the benefit of time.

Flexible capital. Kamylon can use its capital to invest in many different types of transactions and in some cases across the entire capital structure. Owners may in some cases secure growth capital and retain sizeable minority positions.

Long term horizon. Kamylon does not operate under a "private equity fund" structure and its investors take a long term business building view. We have no specified holding period and intend to hold quality businesses for the long term.

Unique Company and SBU structure. Kamylon operates under a unique managerial holding company structure. By affiliating an acquired business with a parent strategic business unit (SBU) made up of similar businesses that business unit gets better access to capital, customers, channels, talent, technology, systems, best practices and shared resources.

Buy and build capability. Kamylon actively pursues opportunities to invest in companies with the potential to be “platform investments”. Kamylon has the talent and infrastructure to identify smaller, complimentary investment opportunities, evaluate them, and execute a successful transaction and integration. The end result is a larger, stronger business.

Performance improvement expertise. 1/3 of Kamylon's full time professionals devote all of their effort to assisting acquired businesses. They are deeply


Page 12 of 18


schooled in the tools and techniques of the Kamylon Management System, roll up their sleeves to help each business succeed and have collectively over 100 years of operating experience ranging from small businesses to multi-billion dollar companies and business units.

Talent management system. Kamylon provides HR, recruiting and talent management support to each business unit. Top talent is shared across business units affording the opportunity for talented individuals to grow and develop during a career with Kamylon.

A passion for LargeLocal business. LargeLocal is all we do. Kamylon's principals have focused on investing and building LargeLocal businesses for well over a decade. During that time we have grown to deeply appreciate the profound impact these businesses have on our economy, employment and well being. They are the life blood of our nation and we all share the utmost personal and professional respect for those business owners who have invested everything -- sometimes against all odds -- to build a lasting personal and business legacy.

Our Core Competencies

As a managerial holding company Kamylon invests in many different types of businesses each with its own challenges and opportunities. However, we are able to leverage the following core competencies across all of our businesses, helping to make the whole more valuable than the sum of its parts:

Core Competence How we Leverage M&A Quality deal flow

Buy and build strategies Rigorous investment discipline and practices Realizing integration synergies

Financing Pooled borrowing across BUs Fund acquisitions with operating cash flows Reduced leverage & risk

Kamylon Management System

Consistent language & tools Strong performance culture Downside risk mitigation Best practice transfer Continuous improvement


Page 13 of 18


Talent Management

Attract & retain top talent Get extraordinary things from ordinary people Motivate, develop & reward Provide rewarding careers

Capital Allocation Reinvest for greatest return Accelerate cash flow growth

Our Values & Cultural Practices

Kamylon is a values-based organization. We expect every associate to understand, embrace and live up to our values in their own way. Living up to our values is an explicit part of how we evaluate each associate’s performance.

At Kamylon we:

Value and seek out people of honorable character Live up to the highest standards of ethics and customer service Enjoy taking accountability and despise politics and excuses Are recognized and rewarded based upon performance Treat one another with genuine concern and respect Foster an open and nonhierarchical culture through teamwork Make fact based decisions and uphold the obligation to dissent Work safely and manage the company’s resources responsibly Strive continuously to learn, improve and be excellent at what we do Embrace change as the only constant Enjoy making our Customers, Colleagues and Company successful

We believe that success starts with having our associates embrace several healthy mindsets. It is these mindsets that shape our daily decisions, influence how we interact with each other and form a healthy and productive culture. The mindsets and cultural practices that we seek to embrace and model within each of our businesses are:

Have a Bias for Action – Usually Better to Act and Fail Than Do Nothing Be Accountable, Take Responsibility – Never Make Excuses Own Your Goals & Budgets – Then You Achieve Them Be Riskwise – Focus Equally on Mitigating Risk as Capturing Upside Aspire to Excellence – in Everything That You Do What is Good Today is Average Tomorrow – We Can Always Improve


Page 14 of 18


Uncover Problems & Own Mistakes – They Are Opportunities For Improvement Variation & Surprises Are Evil – Always Seek to Reduce Them Measure What Matters – Essential For Driving Improvement Open Your Door – Talk and Work Openly With All Levels Service, Service, Service – Focus on Supporting the Needs of Others Speed is Life – Time the Enemy of Improvement Embrace Change, Not Fear It – It is the Only Constant

Expectations of Kamylon Leaders

Business Unit leaders, supported by Kamylon’s experienced management partners, are the lynchpin of our success. These Kamylon leaders are expected to be:

Autonomous and Accountable Flexible and Energetic Capable and Open to Change Eager to Grow and Driven to Succeed

They are further expected to have strong skills in:

Problem solving and process improvement People leadership Communication Change management Customer/partner relationships

Like any business owner, we have certain expectations of our leaders. Specifically we expect Kamylon leaders, always and with unyielding integrity to:

Move mountains to achieve targeted operational and financial goals Innovate to improve the business and be open to ideas from anywhere Use KMS to drive cost, quality and speed for competitive advantage Have a passion for excellence and hate politics and bureaucracy Involve Associates and behave in an open boundary-less fashion Create and communicate a clear, simple, inspiring vision Possess enormous energy and the ability to energize others Invest in supporting, coaching and developing others


Page 15 of 18


Take accountability, set aggressive goals and always do what you commit to Avoid surprises with clear metrics and escalate bad news early and often See change as an opportunity not a threat and personally drive change Make fact based decisions and exercise your obligation to constructive dissent Understand, embrace and model Kamylon’s beliefs and values

Appendix

Appendix Page 16 of 18


Appendix

Useful Contacts

Kamylon Program Contact: Aaron Naisbitt at 781 263 7373 x227, [email protected] Please do not submit opportunities via email as they will not get logged into our opportunity database unless submitted using the web form: https://www.smartsheet.com/b/publish?EQBCT=227b7d1898504b468f29c303276d1ac1

Information Sources

Kamylon has subscriptions to several information sources (CapitalIQ, OneSource etc) that may prove helpful for researching opportunities. Please contact us if you think information from one of these sources would be helpful.

Suggested Reading

You can find several articles and reference guides at the link below that may be helpful in your evaluation of opportunities:


Appendix



Opportunity Submission Web-form

https://www.smartsheet.com/b/publish?EQBCT=227b7d1898504b468f29c303276d1ac1

Appendix



Acquisition Opportunity Summary - Example

Appendix



INTENTIONALLY LEFT BLANK

Date post:	16-Jul-2020
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

Acquisition Referral Program Guide Deal Referral Program... · This business plan contains...

Documents