1. How To Sell Your Business Bob Brady, BLR Founder Dan Oswald, BLR CEO

2. How To Sell Your Business Introductions: Bob Brady Dan Oswald

3. How To Sell Your Business BLR—Tale of Three Entrepreneurs BLR (Stage 1)—founded late 1970’s by Bob Brady Early 1990’s, sales $20 million, value +- $25 million 2000, sales $30 million, value +- $35 million – Bob rebuffs offers to sell 2010—sales tank, value plummets (maybe $10 million) MLSP—founded 1975 by Lee Smith State employment law and legislative reporting 2005, value $25 million Dan Oswald acquires, partially seller financed Dan recapitalizes, taking some cash, pays rest owed to Lee – Dan has cash and minority ownership, no personal liability – Lee retires to golf

4. How To Sell Your Business BLR—Tale of Three Entrepreneurs HCPro— founded 1980’s by Jennifer Cofer and Jim Flanagan – Health Care coding and revenue cycle – 2002, sold to private equity for +-$30 million Sales, $30 million range Flanagans retire to sailing and golf – 2008, Re-sold and value plummets Failed SaaS strategy Big debt – 2013, BLR Acquires

5. How To Sell Your Business BLR (Stage 2): Putting the three companies together 2011 BLR/MLSP merger; cashless, 50/50 – John Brady got BLR cash; Bob “rolls” – Savings create value 2013 Re-cap – Private Equity exits – Bob “rolls”; share – 80% plus 2013 HcPro Acquisition – Additional debt with options – 2015 Bob’s happy, but humbled exit Finances: Sales $55 million; debt low $20 million; value +- $48 millionNet value = +- $23 million; Brady share = 78% Nice, but less $$ than 2008

6. How To Sell Your Business “Coulda, Shoulda” Who would you rather be? – Flanagans on the sailboat, Lee Smith on the golf course; or Bob Brady here talking to you? – I regret not taking their route—and not just for financial reasons Why was I not as smart as them? – Not as financially sophisticated – “Liked what I was doing” – Felt obligated to employees – Thought the good times would continue forever Lesson learned – Be grateful, but not sentimental – Business is a business—not a child – Objective is to maximize your net worth – “Chapter two’s” are only possible if end chapter one

7. How To Sell Your Business For most entrepreneurs it’s not business…it’s personal! If you think selling your business is simply a business transaction you’re wrong and you need to be prepared for that. The $$$$ may be the most important factor in a sale but it’s far from the only one.

8. How To Sell Your Business Are you really prepared to let go? Here are some questions to consider: – Are you ready to leave the business you built? – If not, are you prepared to work for someone else? – Do you care what happens to your employees? – Do you care about what happens to your community? – Is your spouse, significant other, or partner ready to sell? – Are you prepared for someone to tell you your baby is ugly? – Do you have realistic expectations for valuation?

9. How To Sell Your Business Q: What do sellers look at first? A: The numbers! The Big 3: -Revenue -Profitability (EBITDA) -Growth

10. How To Sell Your Business Get Your Financials In Order EBITDA – Earnings before Interest Taxes Depreciation and Amortization Accrual financials with a 5 years of history Make sure your numbers are clean and accurate so the buyer doesn’t get surprised

11. How To Sell Your Business Types of buyers: – Strategic buyers – Financial buyers – Entreprenuerial buyers – Employees as buyers The best buyer depends on two factors: – The company’s dynamics – Your goals

12. How To Sell Your Business Other things to consider: – Be prepared for a lot of data requests (marketing, renewals, etc.) – Be realistic about expectations for value – Hire a professional to represent you

13. How To Sell Your Business The Million Dollar Question: What’s my business worth? Factors – “Normal world” Two Factors: Growth and EBIDTA 4-7 times EBIDTA – “Crazy world” SASS – Multiples of sales?? – Other factors Investment climate Super-growth or potential We speak to “normal world”

14. How To Sell Your Business “Normal World” Three things drive value: Revenue, Growth and EBITDA – EBIDTA= Earnings Before Interest Depreciation Taxes and Amortization – Other Factors – Size has some impact (bigger is better), but not as big a factor as growth and EBITDA – Recurring revenue (renewals) also a plus – Ability of buyer to take out costs

15. How To Sell Your Business “Normal” multiples of EBIDTA in the 4-7 range – 4 for a business with low growth, mid-range margins – 7 for a business with high growth, good margins Examples Sales EBIDTA Growth Multiple*Value: $10 million$1 million5%4$4 million $5 million$1 million10%5$5 million $10 million$2 million20%6$12 million These are, essentially, SWAGS, but they give an idea of rough ranges and buyers’ processes

16. How To Sell Your Business Questions?