1. 7 Key Strategies For Coaching a Business Owner Who Wants To Sell Presented By Susan Rosner

2. Copyright 2006 Rosner Resource Group, LLC THE OWNER WILL EVENTUALLY LEAVE There Is Only One Thing in Business That Is Certain

3. Copyright 2006 Rosner Resource Group, LLC Potential Exit Strategies Sell to a Third party Be Acquired Merge Go Public Have a family member take over Employee Buy-out Go out of Business

4. Copyright 2006 Rosner Resource Group, LLC Current Situation Only 25% of businesses that are For Sale actually sell Privately Held Business with Sales of $500K to $25M

5. Copyright 2006 Rosner Resource Group, LLC WHY? Unrealistic expectations Business isnt marketable

6. Copyright 2006 Rosner Resource Group, LLC 7 Key Strategies 1. Align Personal and Business Goals with the market reality 2. Educate the business owner on what drives a companys value and how they can control it 3. Conduct an in depth Business Analysis from the outside in 4. Quarterback the development and implementation of a realistic exit plan with key advisors 5. Implement value enhancement strategies 6. When the time is right-Implement a strategy for selling the business 7. Keep the business owner focused on whats important

7. Copyright 2006 Rosner Resource Group, LLC Strategy #1 Align personal and business goals with the market reality

8. Copyright 2006 Rosner Resource Group, LLC Key Alignment Areas Financial Does the owner know how much they have to net after taxes to support their lifestyle after the sale of the business?

9. Copyright 2006 Rosner Resource Group, LLC Key Alignment Areas Business Is the business ready to sell for premium value? Is the owner ready, willing and able to implement enhancement strategies to increase value?

10. Copyright 2006 Rosner Resource Group, LLC Key Alignment Areas Emotional Whats the After business plan? How will family/partner dynamics influence the decision to sell?

11. Copyright 2006 Rosner Resource Group, LLC Actions: Financial Review current personal financial plan Determine how important the sale of the business is to the personal financial plan Business Quick review of financials to determine potential range of value Emotional Develop options for transition and post-sale plans Uncover impact on sale to family and partners

12. Copyright 2006 Rosner Resource Group, LLC Take a Moment To write down your questions about Strategy #1

13. Copyright 2006 Rosner Resource Group, LLC 7 Key Strategies 1. Align personal and business goals with the market reality 2. Educate the business owner on what drives a companys value and how they can control it

14. Copyright 2006 Rosner Resource Group, LLC Case Study Revenues Company ACompany B 2005$12,000,000 Net Profit on Tax Return$ 225,000

15. Copyright 2006 Rosner Resource Group, LLC Case Study Revenues Company A Company B 2003 2004 2005 $6,000,000 $8,000,000 $12,000,000 18,000,000 15,000,000 12,000,000 Total Debt$1,000,000$400,000 Average age and value of equipment 3.5 years -$1,500,00010 years-$100,000 Owners vacation8 weeks1 week Owners Salary and Benefits$1,500,000$200,000 Net Profit on Tax Return$ 225,000 Adjusted Net Profit$1,725,000$425,000

16. Copyright 2006 Rosner Resource Group, LLC Adjusted Net Profit Net profit from Tax return Plus Owners discretionary income Plus non-cash deductions Plus rent (if owner owns the property) Less reasonable salary to replace the owner Less market rent

17. Copyright 2006 Rosner Resource Group, LLC Desirability Measures Financial health Industry Competition Local economy Management Employees Customer base Condition of FFE Reputation Customer Orientation Sales Management Ease of operation Technology Legal Requirements/Licenses Location/lease Product and Service Offered

18. Copyright 2006 Rosner Resource Group, LLC What this all means…… To drive value you must attend to those things which Builds revenue and profit Build long term desirability

19. Copyright 2006 Rosner Resource Group, LLC Actions: Calculate adjusted net profit for last three years Review financial trends for at least three years with the owner Look at year over year comparisons available from internal accounting system or their accountant Complete the business check-up assessment with the owner Use owners industry knowledge to benchmark performance Identify missing critical information and develop a strategy with the owner for collecting (internal or external) Explore areas that drive company value and how the business owner controls these areas

20. Copyright 2006 Rosner Resource Group, LLC Take a Moment To write down your questions about Strategy #2

21. Copyright 2006 Rosner Resource Group, LLC 7 Key Strategies 1. Align personal and business goals with the market reality 2. Educate the business owner on what drives a companys value and how they can control it 3. Conduct an in depth business analysis from the outside in

22. Copyright 2006 Rosner Resource Group, LLC Strategy #3 Conduct an in depth business analysis from the outside in Market valuation Marketability assessment

23. Copyright 2006 Rosner Resource Group, LLC Market Valuation 14 valuation methodologies Valuations may vary depending on the buyer Valuations for business sale are different than valuations for other purposes! Businesses over $1,000,000 in sales must have a business valuation

24. Copyright 2006 Rosner Resource Group, LLC In Reality Valuations are an art and a science Valuations are a critical negotiation tool Price must pass the test of reasonableness A buyer must be able to have an acceptable ROI after debt service and buyer requirements

25. Valuation Methodologies & Techniques

26. Copyright 2006 Rosner Resource Group, LLC Marketability Assessment Strengths Weaknesses Opportunities Threats

27. Copyright 2006 Rosner Resource Group, LLC Types of Buyers High Net Worth Buyer Strategic Buyer Synergistic Buyer Investment Buyer

28. Copyright 2006 Rosner Resource Group, LLC Actions : Complete a market valuation Complete an industry benchmark analysis Use a SWOT analysis to assess the company from different buyers perspectives Develop value enhancement strategies

29. Copyright 2006 Rosner Resource Group, LLC Take a Moment To write down your questions about Strategy #3

30. Copyright 2006 Rosner Resource Group, LLC 7 Key Strategies 1. Align personal and business goals with the market reality 2. Educate the business owner on what drives a companys value and how they can control it 3. Conduct an in depth business analysis from the outside in 4. Quarterback the development and implementation of a realistic exit plan with key advisors

31. Copyright 2006 Rosner Resource Group, LLC Strategy #4 Quarterback the development and implementation of a realistic exit plan with key advisors

32. Copyright 2006 Rosner Resource Group, LLC Exit Planning Getting the business owner started is the hardest part Exit Planning should be started at least 3 to 4 years before the owner wants to retire

33. Copyright 2006 Rosner Resource Group, LLC Exit Planning Select advisory team Facilitate a strategic exit planning meeting with advisory team Document the specific tasks to be required to achieve objectives agreed to Assign responsibilities for each task Set dates for completion Make sure everything gets done Review Yearly

34. Copyright 2006 Rosner Resource Group, LLC The Advisory Team Accountant Tax attorney Estate attorney Transaction attorney Business consultant/coach Business intermediary Business broker M&A advisor Investment banker Exit Planning Consultant*

35. Copyright 2006 Rosner Resource Group, LLC Actions : Review the importance of Exit planning with the Business Owner Research and Select Exit Planning team Initiate initial meeting

36. Copyright 2006 Rosner Resource Group, LLC Take a Moment To write down your questions about Strategy #4

37. Copyright 2006 Rosner Resource Group, LLC 7 Key Strategies 1. Align personal and business goals with the market reality 2. Educate the business owner on what drives a companys value and how they can control it 3. Conduct an in depth business analysis from the outside in 4. Quarterback the development and implementation of a realistic exit plan with key advisors 5. Implement value enhancement strategies

38. Copyright 2006 Rosner Resource Group, LLC Can the Business be Replicated?

39. Copyright 2006 Rosner Resource Group, LLC Value Enhancers Clear vision and plan Management depth International exposure Growth opportunities Competitive advantages Properly capitalized History of profitability

40. Copyright 2006 Rosner Resource Group, LLC Value Detractors Lack of management depth Lack of focus Personal goodwill Concentration risk (i.e. customer /geography) Over-leveraged Too small

41. Copyright 2006 Rosner Resource Group, LLC Actions : Review the SWOT analysis results Review Value enhancers and detractors Review the Business Check-up Assessment Identify priority actions Develop and Implement Plans for Implementation

42. Copyright 2006 Rosner Resource Group, LLC Take a Moment To write down your questions about Strategy #5

43. Copyright 2006 Rosner Resource Group, LLC 7 Key Strategies 1. Align Personal and Business Goals with the market reality 2. Educate the business owner on what drives a companys value and how they can control it 3. Conduct an in depth Business Analysis from the outside in 4. Quarterback the development and implementation of a realistic exit plan with key advisors 5. Implement value enhancement strategies 6. When the time is right-Implement a strategy for selling the business

44. Copyright 2006 Rosner Resource Group, LLC Ready To Sell

45. Copyright 2006 Rosner Resource Group, LLC Ready to Sell Pre-Due Diligence Third Party Valuation Advisory Team Alignment Marketing Package Development Offering Memorandum Prospectus

46. Copyright 2006 Rosner Resource Group, LLC Best Offer Marketing

47. Copyright 2006 Rosner Resource Group, LLC Partnering To Close

48. Copyright 2006 Rosner Resource Group, LLC Timeline ActivityTimeframes Ready to SellMonth 1 Marketing ImplementationMonth 2 Buyer VisitsMonth 3 thru 6 Due Diligence Period60 days from LOI Closing60 to 90 days from end of Due Diligence TOTAL TIME10 to 18 months Timeframes are estimates only

49. Copyright 2006 Rosner Resource Group, LLC Actions : Meet with Key advisors Help the owner select a business intermediary Align the advisory team

50. Copyright 2006 Rosner Resource Group, LLC Take a Moment To write down your questions about Strategy #6

51. Copyright 2006 Rosner Resource Group, LLC 7 Key Strategies 1. Align Personal and Business Goals with the market reality 2. Educate the business owner on what drives a companys value and how they can control it 3. Conduct an in depth Business Analysis from the outside in 4. Quarterback the development and implementation of a realistic exit plan with key advisors 5. Implement value enhancement strategies 6. When the time is right-Implement a strategy for selling the business 7. Keep the business owner focused on whats important

52. Copyright 2006 Rosner Resource Group, LLC Best Practices For The Entrepreneur Focus on Extraordinary Execution Demonstrate Adaptability Persuasion and Negotiation Open mindedness Ability to deal with set backs

53. Copyright 2006 Rosner Resource Group, LLC Critical Shifts From Making a living Working in your business Measuring Financials Working Hard Managing Self employed To Building an Enterprise Working on you business Measuring Strategic Value Working Smart Leading Business owner

54. Copyright 2006 Rosner Resource Group, LLC Actions : Coach the owner on Best practices Coach the owner to work on the business focusing on growth! Coach the business owner that the sale is not made until closing papers are signed and money is in the bank!

55. Copyright 2006 Rosner Resource Group, LLC Take a Moment To write down your questions about Strategy #7

56. Copyright 2006 Rosner Resource Group, LLC 7 Key Strategies 1. Align Personal and Business Goals with the market reality 2. Educate the business owner on what drives a companys value and how they can control it 3. Conduct an in depth Business Analysis from the outside in 4. Quarterback the development and implementation of a realistic exit plan with key advisors 5. Implement value enhancement strategies 6. When the time is right-Implement a strategy for selling the business 7. Keep the business owner focused on whats important

57. Copyright 2006 Rosner Resource Group, LLC Q & A

58. Copyright 2006 Rosner Resource Group, LLC Thanks For Attending! To request a link to this Presentation, Business Check-Up Assessment and Audio send me an email with your feedback about the session: susan@rrg-net.com Mergers and Acquisitions, Consulting, Exit Planning

59. Copyright 2006 Rosner Resource Group, LLC THANKS!