PREPARING YOUR CLIENTS FOR THEIR EXITMatt Register

Principal

Legal Notice

• This is not an offer to sell or a solicitation of an offer to buy securities.

• Securities are offered through Corporate Finance Securities, Inc.

• Corporate Finance Securities, Inc. is a member firm of FINRA and SIPC.

What are their options?

Not selling0% sale Selling

100% sale

What are their options?

Not selling0% sale Selling

100% sale

PartialSale

MinorityRecap

JointVenture ESOP

ManagementBuyout

What is success?• Full retirement?• Continued consulting?• Continue to run the business?• Transfer to the next generation?

Future Funding Needs

Wealth

Lifestyle

Charity Family

Future Business

Opportunities

WHAT IS THEIR NUMBER?

Who would buy their company?

Strategic• Usually not looking for partners• Your business solves a problem• Different math

Financial• Looking for return• Not interested in running a

business• Needs management team in

place

WHAT DO THEY REALLY CARE ABOUT?

Maximizing Value• Well document deal• Proven earnings• Replicable results• Growth potential / Scalability• Synergies• Minimize buyer risk

Minimize Buyer Risk• Audited financials

• Provable• Manage for taxes, but prove earnings

• Bench strength• Redundancy • Sustainability

• Systems in place• Less reliance on personality• More systems

Pre-transaction Planning• Legal

• Trusts• Non-profits• Gifts

• Wealth Management• Determining your number

• Strategic• Right business• Right clients

• HR• Knowledge management• Depth of leadership

The Cost of No Plan• Value of business• Risk to buyer• Stress for family• Uncertainty for customers• Uncertainty for employees• Uncertainty for vendors• Fewer options / Less control

Example 1

• Contract Machining• OEM Drilling equipment

• $16MM rev• Proven earnings• Management Team• Synergies with buyer

• Contract Machining• OEM Drilling equipment

• $5MM rev• Run on a “yellow legal pad”

• Customer concentration

• No plan• No team• No time

Company A Company B

Example 1

• 5 X EBITDA • 3 X EBITDA

Company A Company B

Example 2• $35MM in revenue• Out of favor industry• Non-standard business model• Very profitable• Limited interest from buyers

Example 3• $35MM rev• Well run / depth / systems• Solved a buyer problem

Example 3• 5.5 X EBITDA

Example 4• $30MM rev• Son is victim of own success• Asset light company

Example 4• Minority recap• Father retains some equity• Son gifted equity• Son earns equity from PEG

Company

PEG 45%

Father 25%

Son 30%

Your Transaction Team• Investment Bank

• Run an efficient auction• Generate interest• Negotiation

• Tax Accountant• Attorney

• Reps and warrantees• Contracts

• Insurance• Legacy liability coverage

• Wealth Manager• Make money with money

THANK YOUMatt Registermregister@cfaw-houston.com

713.302.3240