2. Background: David Patterson –Previously President/CEO of Ryan Herco Flow Solutions; $220M+ Industrial Distributor –Executed Three Separate Processes Ultimately Selling Business to Private Equity Groups –Lead the Merger of Ryan Herco & Flow Solutions/ Two Equally Sized Industrial Distribution Companies –Acquired 20+ Distribution Companies Over the Last Decade/ Evaluated Approximately 50 others. –Recently Acquired & Sold a Small Distribution Company for a 5X return on Cash Formed SBT (Small Business Transactions) to Help Small to Medium Sized Businesses Navigate the Process of Selling Their Business. SBT Consultants, LLC. 2

3. Overview Buyer Universe Preparation, “If I Only Knew” Valuation Models EBITDA/Value Pie Acquirers vs. Sellers Summary SBT Consultants, LLC. 3

5. 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 –Be on a level playing field with the buyer –You need to know how to maximize your value/return & minimize your risk Acquisitions seem simple enough – but they’re not. They are a complex process and buyers typically hold all the cards SBT Consultants, LLC. 5

6. Why am I selling: –Retirement/ Concerned for the Future/Strategic Decision/Lost Interest/ Succession Planning/Concerned About Consolidation in the Industry/ Take Some Chips Off the Table/Want to Cash Out All legitimate Who is my Buyer Universe –Strategic Buyer/Industry Consolidator –Competitor (Can be the most risk intensive option for a seller) –Private Equity Group (seeking control) –Private Equity Group (seeking participation/ seller keep control) –Merger within Industry Depending on the Buyer, there will be substantially different considerations to maximize value and minimize risk – assure you know them all! SBT Consultants, LLC. 6

7. Acquired Small – Medium Sized Businesses (Non-Financial) –Number that seemed prepared for process None –Number that had prior experience with acquisitions None –Number with real data on industry & business factors None –Number that were frustrated with process to sell business ALL –Number that ultimately paid back $, post close, from WC ALL –Number that ultimately accepted significant risk ALL –Number that left $ on the table ALL

8. Valuation DCFAsset Value EBITDA Multiple/ EBITDA $ +/- Industry & Business Factors EBITDA Multiple is important and usually falls into a tight range, specific to your business. You can have an impact on EBITDA $’s…and that will increase your Valuation.

9. Buyer Give-Away Add-Backs One-time/ Non-recurring Post Close Synergies & Operating Efficiencies Sellers Must Determine How to Get a Bigger Slice of the Pie Strategic Acquirers are hungrier than ever to get deals done. There is no such thing as a standard model or approach. Sellers are in a good position to increase their purchase price and take on less risk.

10. Strategic Unique to Each Business People Assets RelationshipsSynergies Increased Value Operating Expense Synergies Operating Efficiencies Increased Value Working Capital Opportunity Claw-Back Operating Efficiencies Reduction in Purchase Price Throughout the process acquirers are seeking out ways to increase the value of their acquisition. Additionally, within working capital accounts, there are opportunities to reduce purchase price

11. Strategic Unique to Each Business People Assets Opportunity Adjustment to EBITDA Increase in Purchase Price Operating Expense Opportunity Adjustment to EBITDA Increase in Purchase Price Working Capital Risk Prepare Early/ Take Action Avoid Reduction in Purchase Price $$ Capturing these $$’s can only be accomplished by preparing in advance. Once the process to sell your business is underway, it’s likely too late. $$

12. Become Knowledgeable of the Process to Sell Your Business Take Actions to Prepare in Advance Evaluate & Know Your Acquirer/ Have a Discussion with Prior Executives that sold a business to acquirer Access Valuation Statistics Within Your Industry; document the +/- Business & Industry Factors Specific to Your Company Fully Vet All Opportunities to Increase Purchase Price/ Get Used to Proforma Financials. Equally, Reduce Areas of Risk That Decrease Purchase Price If you want a valuation & process by the book, hire a Financial Consultant – they are plentiful. If you want to Maximize Value & Minimize Risk, Hire Strategic Consultant.

13. The following tools will be used when you engage with SBT: SBT Consultants, LLC.13 Tools –Step-by-step process (detailed outline for things to consider) –Advance Prep List (before you talk to a buyer) –Financial or Strategic Buyer/ Things to Consider –Add-Back Analysis/ An Important Value Driver for Sellers –LOI Should be a Complex Document Pre-LOI Term Sheet –Working Capital Accounts Inventories Accounts Receivable –Determining the Value of a Private Company The +/- impacting your valuation Valuation Modeling Worksheet/ Proforma Financials –Summary of Non-economic Purchase Agreement Terms Buyer Information Request List (example) –Tax Considerations –M&A Terminology

14. SBT 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. SBT 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. SBT has relationships and agreements with a number of Private Equity Groups that invest in distribution companies ($10-200M annual revenue range). Equally, SBT has developed similar relationships with Strategic Buyers of distribution businesses. SBT can provide you with advice on what these companies are paying for distribution companies and connect you with the right buyer who will best fit your profile & interests into the future. SBT Consultants, LL C. 14