Cvg Sale Of Business 3 21 12 Webinar Final
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Transcript of Cvg Sale Of Business 3 21 12 Webinar Final
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Impact Resource ManagementBliss
Maximizing Value in Selling a Business
Pre-Transactional and Transactional Considerations
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Alexander B. Kasdan, Founding Partner and President,
Convergence Capital Partners, LLC
Jim Baer, Esq., Principal and Founding Partner, Baer & Troff
LLP
©2012 Convergence Capital Partners, LLCOrganizer and host:
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Presenters
Anna Spektor, Founder / Trusted Marketing Advisor
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•Founded in 2004 by Alexander B. Kasdan
•Private middle-market advisory investment banking firm
•Big firm expertise and capabilities for the middle market
•Proven track record and commitment to client service
•Collective expertise: mergers and acquisitions, corporate
finance, restructuring, law, real estate
•“Senior Advisors for Senior Transactions”
Convergence Capital Partners, LLC Summary
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Industry Coverage• Staffing
• Retail and Supermarkets
• Branded Consumer Products
• Apparel
• Business Services
• Food
• Building Products
• Industrial Manufacturing
• Media and Telecommunications
• Petrochemicals
• Healthcare
• Real Estate
• Gaming and Lodging
• Technology
• Vitamins and Supplements
• Publishing
• Distribution
• Construction
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Baer & Troff LLP• Baer & Troff, LLP specializes in corporate law and business litigation
matters. Our corporate practice includes restructuring transactions and corporate securities issues, venture capital and other financing transactions, joint ventures, licensing and corporate formation and governance. Our litigation practice encompasses all areas of state and federal litigation, including arbitrations, mediations and appellate work. Baer & Troff, LLP emphasizes corporate, real estate, general business, unfair competition and construction litigation.
• Baer & Troff, LLP was formed by partners of major law firms to provide the highest quality corporate, litigation and other legal services to existing, emerging growth and mid-market companies at reasonable rates. In addition to our transactional and litigation practice, we regularly provide general counsel to a wide range of clients and mediate complex business disputes.
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You have decided to sell your business.
This is likely to be the largest and most important
transaction of your life – do it the right way!
Obtain the Best Deal Possible! 5
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Objectives for the Sale - Roadmap
• Money, liquidity, cashing out of investment
• Personal Succession planning
Family
Changed circumstances – health, marriage, divorce, other
Are owners essential to running the business?
• Strategic growth Need for greater management depth
Strategic partnership
Investment capital
Business expansion
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Pre-Transactional Planning• Operational
Selling on the “uptick”
Are operations in light with historical?
Streamlining the business
• Management Is there management in place?
Are owners essential to running the business?
• Financial Are financial statements audited? For how many years? Accurate?
Outstanding indebtedness
Real estate owned or leased
• Personal What is motivating the sale?
Time horizon?
Personal financial, tax and estate planning.
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Assembling the Working Group
• Investment Banker Pre-engagement diligence – solid financials, reputation, etc.
Desirability of client – our reputation and time are on the line
Selling on the “uptick”
Identify all appropriate add-backs and adjustments to EBITDA
Recast historical financials
Projections and pro-forma adjustments
Knowledge of marketplace and process
Due diligence issues
Management issues
Investment banking fees – exclusivity, retainer, success fees
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Assembling the Working Group
• Transaction Counsel Familiarity with M&A issues
Knowledge of various deal structures
Confidentiality of the sale process
Non-compete agreements
Stock sale v. asset sale
Employment and/or consulting agreements
Board and minority shareholder/passive investor issues
Legal fees
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Assembling the Working Group
• CPA Financial statements and operating condition of the business
Are financial statements audited or reviewed by independent accountants?
Due diligence accessibility
Proper tax accounting methodology
Revenue recognition
Inventory valuation issues
Personal transactional tax implications
Due diligence issues
• Other “Trusted Advisors” Sell-side due diligence advisors prior to the sale – identify problems and
issues
Real Estate
Trusts & Estates Planning
Insurance
Pensions10
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Illustrative Sale Process – Steps and Timeline
Company Preparation
Marketing the
Company
Receive Proposals
Due Diligence and
LOI
Negotiations and Closing
5-7 weeks 6-12 weeks 3-4 weeks 4-6 weeks 4-8 weeks
•Information gathering•Prepare Company Summary•Prepare Information Memorandum (IM)•Finalize list of targets
•Contact targets
•Execute CAs
•Distribute
IMs•Organize Virtual Data Room•Address any other issues
•Receive written indications of interest•Select “short list”•Management Presentations•Initial due diligence
•Solicit final bids (LOIs)•Distribute draft agreements•Receive final offers
•Evaluate LOIs•Negotiate with final bidders•Coordinate working group (counsel, accountants, other advisors)
•Final due diligence
•Closing
Total Time =
22–37 Weeks
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The main responsibility of selling business owners and management is to continue running the
business – need to meet all projections and forecasts
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Types of Potential Acquirers
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Strategic Financial
Likely price premium
Geographic considerations
Product line and distribution
Employment/consulting
agreements
Potentially know the business
Abundance of private equity
capital
Eager for acquisitions
Platform or add-on
Greater management concern
Acquisition finance issues
Deal structure flexibility
Advisory/board opportunities
“Second Bite at the Apple”
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Selected Recent Transactions
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• 2010 - toughest market environment in decades• Sale to an East Coast-based strategic acquirer at above-market 7.5x EBITDA• Employment contract and incentive package for seller-owner• Owner continues to run the business for HowardBerger Company
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Selected Recent Transactions
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• Sale to a strategic buyer• Owner continued to run the business for SelectRemedy• “Happy to serve as client reference in a win-win strategic acquisition.”
Patty DeDominicFounder and CEO of PDQ Personnel
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Selected Recent Transactions
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• Distressed company sale to a private equity financial buyer• Strategic deal• Section 363 bankruptcy sale• Transaction completed in record time – 3 months
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Potential Issues with Real Estate
• Is corporate real estate owned or leased?
• If owned, is it in the name of the Company or a
separate entity?
• Is the Company lease above market?
• Is there real estate debt?
• Does the owner want to sell or keep the real estate?
• If keep the real estate, lease needs to be brought to
market?
• Sale-leaseback?
• Real estate may trade at a higher multiple than the
business.
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The Closing!!!
“The Closing” by Jimmy Dyer
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Post-Transaction Considerations
• Trusts and estates planning
• Insurance planning
• Pension planning
• Money management and investments
• Board advisory
• Starting a new business?
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Alexander B. Kasdan is a Founding Partner of Convergence Capital Partners, LLC and its predecessor company, ABKC. He has more than twenty years of investment banking, real estate, corporate law and corporate strategy experience. Since 1988, Mr. Kasdan has executed over 100 domestic and cross-border transactions totaling more than $10 billion in overall volume in a variety of industries. Prior to founding Alexander B. Kasdan Company Limited, Mr. Kasdan was an investment banker at Barrington Associates in Los Angeles, where he headed the restructuring group, Peter J. Solomon Company, Credit Suisse First Boston and Merrill Lynch.
Mr. Kasdan practiced law with O’Melveny & Myers LLP (formerly O’Sullivan Graev & Karabell LLP) and Paul, Hastings, Janofsky & Walker LLP (formerly Battle Fowler LLP), where he specialized in mergers and acquisitions, private equity and corporate finance transactions. In addition, Mr. Kasdan served as Corporate Counsel in charge of business development at Schlumberger Ltd., a global oilfield and information services company.
Mr. Kasdan graduated magna cum laude from Middlebury College with a B.A. degree in Economics and Italian and was elected to Phi Beta Kappa during his junior year. In addition, he holds a J.D. degree from Columbia University Law School and has studied at the University of Florence in Italy. Mr. Kasdan was admitted to the Bar in the State of New York in 1995.
Mr. Kasdan is a Senior Advisor to Governance and Transactions LLC, an advisory firm established in 2003 by Mr. James L. Gunderson, former Secretary and General Counsel of Schlumberger Limited, to assist boards, management and owners with corporate governance, compliance, structuring and strategic transactions.
Mr. Kasdan is a frequent speaker on the subject of mergers and acquisitions, corporate finance and restructuring, including as organizer of the Conference at the Anderson School at UCLA on "Buying and Selling a Company in a Tough Economy - How to Optimize Price and Liquidity in a Buyers’ Market." Mr. Kasdan has published articles on the subjects of mergers and acquisitions and corporate finance.
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Contact InformationAlexander B. Kasdan
Convergence Capital Partners, LLC
614 Palisades Drive
Pacific Palisades, CA 90272
1.310.770.1327 phone
1.310.496.2434 fax
www.cvgpartners.com
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Jim Baer is a principal and founding partner of Baer and Troff, LLP. His legal practice experience includes serving as outside general counsel and business advisor to numerous companies and individuals, including as strategic advisor for managing and settling of complex business litigation. His legal practice also includes venture capital financings for both venture capital firms and portfolio companies, and advising business entities, boards of directors and individuals on general corporate matters, loan transactions, mergers and acquisitions, restructuring transactions and corporate securities issues.
A member of the American Bar Association and the Los Angeles County Bar Association, Mr. Baer is also a past member of the Corporations Committee for the Business Law Section of the State Bar of California and is a current member of the Los Angeles County Bar Executive Committee. In addition to his legal practice, Jim Baer has served as an executive officer and a business advisor for various companies in a variety of industries.
Mr. Baer also has expertise as a mediator in a wide variety of matters. He is currently President of CMBG Advisors, Inc., a firm specializing in business restructuring and Assignments for the Benefit of Creditors (ABCs).
Mr. Baer was head of the Corporate Department in the Los Angeles office of Katten, Muchin & Zavis, a Chicago-based firm. Previous to that, he practiced with Gibson, Dunn & Crutcher, LLP, a Los Angeles-based firm.
Mr. Baer received his Juris Doctorate law degree from Loyola Law School in Los Angeles in 1983. He was admitted to the State Bar of California in 1983.
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Contact Information
Jim Baer, Esq.
Baer & Troff, LLP
1221 Ocean Ave. Ste 508
Santa Monica, CA 90401
t: 310/802-4200
www.btllp.com
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Anna Spektor is a Founder and Trusted Marketing Advisor of Expert Presence, LLC, a consulting and professional advisory firm located in Los Angeles, CA.
Founded on a thought leadership approach, Expert Presence provides strategic growth consulting and access to potential clients to attorneys, CPAs, financial advisors, real estate professionals and many other professional service providers throughout the United States.
Prior to founding Expert Presence, Ms. Spektor served as Director of Business Development with Smart Marketing, Inc, an attorney and financial services marketing firm, and Director of Business Development and Community Relations for Wachbrit & Associates, PC., a Southern California estate planning firm, where she spearheaded marketing, business development and public relations.
Ms. Spektor also held a position of Business Development / Commercial Lending Officer with National Bank of California.
Ms. Spektor has a Bachelor’s Degree in Economics from California State University-Northridge.
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Contact Information
Anna Spektor – Trusted Marketing Advisor
1999 Avenue of The Stars, Suite 1100
Los Angeles, CA 90067
Phone: 310-995-6579
www.expertpresence.com
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