Giving Your Business ESPSM

Chris Andersen

President

425 Market St., #2200

San Francisco, CA 94105

415-648-5517

Chris@AtlasBA.com

What is Business ESPSM

Exit Strategy Plan

2

Business ESPSM Essentials

1. Determine When and Why to Sell.

2. Understand Valuation Drivers for Your Industry.

3. Prepare the Business for Sale.

4. Know Who Can Buy Your Company.

3

1. Why to Sell

Burnout Approached by Buyer Diversify Wealth Other Venture Reached Limit of Resources Retire Death, Divorce or Disability

4

2. Valuation Drivers

Buyers Competing for Your Company Differentiated Products or Services Outlook for Your Industry Transaction Structure Type of Buyer Strength of Your Business (Financial &

Operational)

5

Example: Little Things Make a Difference

6

Company A Business Services Revenue at $10.3M, +3%/yr. $1.25M EBITDA $950K assets (poor

controls) Loyal employees Limited management team

Company B Business Services Revenue at $9.7M, +12%/yr. $1.5M EBITDA $400K assets (good controls) Loyal employees Good management team

Valued at 4.0x EBITDA, or $5.0M

Valued at 5.5x EBITDA, or $8.25M

Company B Worth 65% more, or $3.25 million.

7

3. Prepare, Prepare, Prepare

Tell a Credible Story that Holds Up Through Due Diligence.

1. Makes the Process Easier

2. Leads to a Higher Price

3. Time the Market for Your Industry

8

Tell the Story

Good Growth Prospects Strong Key Performance Indicators - Industry Proven Trends & Profitability Good Management Team Repeat Customers w/ Low Concentration High Employee Retention

Prepare for Diligence

Well-maintained Financial Records & Controls Including Inventory or Materials

Strength of External and Internal Agreements Documented Policies and Processes Mitigate Litigation or Environmental Issues Compliance – Regulatory, Accounting, etc.

No Negative Surprises.

9

10

Build a Team

Advisors Merger & Acquisition (M&A) Advisors Transaction Attorneys Tax Planning Accountants Financial Advisors

Facilitate Meetings to Communicate

Your Goals with Entire Team

11

4. Types of Business Buyers

Financial Acquirer – Private Equity Group (Complete or Partial Sale)– High Net Worth Individual

Strategic Acquirer– Competitor– Company in Complimentary Industry

12

What Strategic Buyers Want

Sell All of Co. Innovation (New Products, Services or IP) Looking for Synergies Customers Grow Revenue or Cash Flow Geographical Expansion

Expect a New Culture

13

What Financial Buyers Want

Sell All or Part of Co.

Returns on Invested Capital (20+% irr) Strong Company with Growth Opportunities Continuity/Succession for Management

Culture Often Preserved

… And in Conclusion

1. Determine When You Want to Sell

2. Understand the Drivers (and Detractors) of Value

3. Prepare Your Business For Sale

4. Position Your Company to Appeal to the Right Buyer