1. “ Maximize Your Value & Minimize Your Risk” Straight Talk & Valuable Tools to Assist Selling a Small to Medium ($2-50M) Sized Business SCBCONSULTANTS.NET

2. Most Business Owners Only Sell Once - Why Not Take the Appropriate Course to Maximize Value AND Minimal Risk For the Years of Investing In & Building Your Empire

3.  Overview  Why am I selling/Who is my Buyer Universe?  Preparation, “If I Only Knew”  Price & Structure….and Add-backs…and Claw-backs!  Make the LOI (Letter of Intent) Work for You  Diligence “Maybe One of the Most Unpleasant Experiences in Your Life”  Risk! Abundant & Usually Addressed Late in the Process  Buyer Approval, Seller Beware  Purchase Agreement – How Many Pages??  Transition/Integration and Your Role

4.  Buyer’s goal is to pay a fair, but lowest price for your business. And they often have knowledge & advantages that you don’t.  You should arm yourself with knowledge  You need to prepare in advance  You must know the process & rules of the game  You need to know how to minimize your risk, be aware of, and avoid the landmines  Be on a level playing field with the buyer Acquisitions seem simple enough – but they’re not. They are a complex process and buyers typically hold all the cards

5.  Why am I selling:  Cozy retirement/ concerned for the future/strategic decision/lost interest/ succession planning/concerned about consolidation in your industry/ take some chips off the table/want to cash out now  All legitimate  Who is my Buyer Universe  Strategic Buyer  Competitor (can be the most risk intensive option for a seller)  Outside Investor (seeking control)  Outside Investor (seeking participation/ seller keeps control)  Private Equity Group (seeking control)  Private Equity Group (seeking participation/ seller keep control)  Merger within industry Depending on the Buyer, there will be substantial different considerations to maximize value and minimize risk – assure you know them all!

6.  Majority of Sellers fret many months or years and finally decide a transaction is the right choice. Few do anything with their business before talking to a Buyer…and this can be a costly mistake. What a Seller should do to prepare for a transaction:  Detailed Tool Available at SCB Consultants, LLC. Once discussions commence with a buyer, a seller must represent/commit to a “Business in the Ordinary Course.” This will eliminate the chance to address issues & opportunities present in any business. These missed opportunities will be costly and impact Purchase Price. And now it’s too late to address them.

7.  Often purchase price determination comes from two theories – what the Seller needs (to retire, for example) or what the buyer is willing to offer. Neither is optimal.  Structure is fairly straight forward/but will impact many areas to come  Tax Considerations  Detailed Tool Available at SCB Consultants, LLC  Industry based EBITDA multiple measured against:  Buyers multiple  +/- of Sellers Attributes /Weaknesses (and there are many of both)  There are some VERY unique approaches to valuation. None are alike.  Add-backs: a potentially big opportunity to increase purchase price  Detailed Tool Available at SCB Consultants, LLC.  Claw-backs are a popular (and often misunderstood by the seller). Typically, it’s a buyers’ approach to reduce risk, but it can also reduces purchase price Sellers often don’t realize it, but there are many opportunities before the purchase price is agreed upon. You must anticipate and minimize your risk and maximize your opportunities

8.  Create a Pre-LOI Term Sheet  LOI Should be a Comprehensive Document; Be Weary of Simple Documents  Biggest Opportunity is Now: Put it in the LOI…  Each of these require much thought and detail:  Detailed Tool Available at SCB Consultants, LLC. LOI’s are non-binding expressions of interest. If buyers are serious in your business, they will respect your drive to include these areas in the document. If they refuse, it May be time to find another buyer. Take extraordinary time & effort to build a robust Pre-LOI Term Sheet & LOI Document. This is your one opportunity to minimize your risk & increase purchase price. Most buyers may resist this approach – because they are accustomed to working with less knowledgeable sellers.

9.  One simple guideline: the better prepared, the better the experience.  Know your buyer. After checking multiple references, their approach will be known:  Diligence Light  Diligence Heavy  Diligence NUTS  Lists, lists, lists…then more lists:  General company overview  Employee/Employee benefit  Legal  Supplier  Revenue/Customers  Contractual  Finance & Accounting  3 rd Party Accounting If the buyer is a competitor. Protect your information, know what to give them & when.

10.  Most sellers get surprised by issues they didn’t see coming. Often, late in the process at the worst position to negotiate and/or back- track.  Some issues are:  Detailed Tool Available at SCB Consultants, LLC. Many buyers do work in good faith; But let’s face it; buyers want to pay as little as they can for the company AND take on as little risk as possible. If you didn’t prepare & didn’t address many of these issues in the LOI stage, you may find yourself in a tough position.

11.  Depending on the type of buyer, this can be a big issue or a non-issue:  Board Approval is required; usually in the last 1-2 weeks of the process  Bank Approval is required; usually in the last 1-2 weeks of the process  Senior Management Approval; usually in the last 1-2 weeks of the process The deal is not done until the funds flow

12.  Purchase agreement allows you to set forth the terms & conditions of sale  Terms tend to be more sensitive to sellers and more important to buyers (not limited to):  Detailed Tool Available at SCB Consultants, LLC. Most sellers focus on the purchase price previously agreed to, but serious focus should be given to non-economic Purchase Agreement terms.

13.  Confidentiality  Pay-Outs  Earn-Outs  Non-solicitation  Competitive Process/ No shop  Break-up Fees  Reps & Warrants  Indemnification  Employee & Supplier Communication Plans  Employee Stay Plans  Supplier/Customer Contracts  Purchase Price Allocation/Tax Considerations  Employee/Supplier/ Customer Communication Plans

14.  Flexible Fee Services  3-Hour Consultation  A good overview/Tools  Teleconference  2-Day Consultation  Dig into the details of your company/Wider range of tools  On-site  Transaction Partner  With you from start to finish  Presentation Preparation for Perspective Buyers  Increase your Professionalism  Assistance in Finding a Buyer  SCB has extensive relationships with several PE Groups & Industry Consolidators  Tools  Full Detailed Selling Process Presentation  Step-by-step process (detailed outline for things to consider)  Advance Prep List (before you talk to a buyer)  Pre-LOI Term Sheet  “Should be in the LOI”  Seller Risks & Buyer Claw- backs  Valuation; the +/- impacting your valuation  Summary of Non-economic Purchase Agreement Terms  Know the buyer, increase purchase price

15.  SCB Consultants, LLC. was formed to address a void – Offer a trusted, non-commissioned, straight-talking source to help small to medium sized business owners Maximize Value and Minimize Risk when selling their business. Having worked extensively on both sides of the table, David Patterson is uniquely experienced to increase the knowledge & skills of business owners as they venture down this challenging path.  Most Sell-Side Brokers or Investment Bankers charge up to 10% of Purchase Price for arguably limited service & advice. Like most commissioned professionals, they are motivated to get the deal done – the sellers experience, risk considerations and final take home is not their ultimate concern.  SCB does not employ a commissioned approach. Rather, there are Flexible Fee Services, a substantial tools offering and, most importantly, Total Focus to Get the Deal Done Right – delivering Maximized Value & Minimized Risk for the Seller.  Additional background attached