Sale of Midwest Retail Services Presentation by Ken Pritchett Selling a Business Sale of Midwest Retail Services Presentation by Ken Pritchett

Background Started working for Streater Store Fixtures in 1984 10 years later I decided to start my own company

Today 15 years old 15 Employees Represent 25+ Manufacturers $5 Million in sales

Thoughts on Selling Reasons why I should sell Reasons not to sell Tired of the responsibility of being the owner Lost the passion and drive to run the business at its best Fairness to the employees Fairness to the business and to myself Reasons not to sell My Family

Decided to sell (What did that mean?) No Broker No Acquisition No big time consuming process No disruption of business No secrets and gossip around the office Seamless Transition Employee Protection Easy Transaction

Who was I going to sell to Our sales rep from our 2nd largest supplier Been in our industry for 10 years Had been calling on our company for 5 years I felt he was the perfect fit and had the ability to do the job and the deal

My Plan What I felt I needed in the way of money was in the same ballpark as what I felt the company was worth Made an outline of what it would take to retire Confirmation that this made sense…..Dinner with Tim Gase Contact my prospect………Lunch with Matt Ray Presented my intent

The Process 5 years of company tax returns 5 years of personal tax returns Several questions along the way

The deal itself 20% down payment 10 years of monthly payments Interest on the financing Employee contract to age 65 for health insurance Sign 10 year lease to stay in my building Closed on December 30, 2008 My cost was about $10K Committed to help and mentor in any way I can

Acquisition of Midwest Retail Services Presentation by Matt Ray Buying a Business Acquisition of Midwest Retail Services Presentation by Matt Ray

Buying a Business Personal evaluation Professional valuation Assembling an advisory team Financing Keys to successful sales

Purchase Structure 20% down payment Cognovit note with 10 year term Life insurance to guarantee loan 10 year lease in current building Consulting contract with owner Sizeable working capital (defined amount) left in business Accounts Receivable, Inventory, & Cash Accounts Payable zeroed out (seller’s resp.)

Personal Evaluation Long term personal fit? Ten years of experience within the industry Hands-on working experience with prospective business and staff Full spousal support “Chicken Little” economic environment

Professional Valuation Hired professional valuation firm $3,000 Fee Acquired financial data from owner Determine if asking price was fair market value

Advisory Team Professional valuation firm Accountant Attorney Asset versus Stock purchase Assisted in acquiring financing Attorney Specializing in small business & acquisitions Financial Planner Company retirement program

Financing Down payment financing SBA loan option Small local banks Denied due to rules involving seller’s future participation in business Small local banks Ongoing banking requirement

Keys to Successful Sale Familiarity of all parties involved Owner’s willingness to share information Owner financing long term note Quality support team for both parties Open communication between buyer and seller

Buying & Selling a Business Midwest Retail Services Ken Pritchett & Matt Ray