How to Prepare
to Sell Your Business
Presented by:
1800 Century Park East
Suite 600
Los Angeles, CA 90067
Tel: (310) 229-5709
David J. Iannini
Chairman, President & CEO
Cell: (602) 327-3803
diannini@williamhenryassociates.com
Gregory Andrews
Managing Director
Cell: (949) 351-2288
gandrews@williamhenryassociates.com
Sara Allen
Director
Cell: (760) 219-8840
sallen@williamhenryassociates.com
Matt Dawson
Senior Vice President
Cell: (205) 365-7643
mdawson@williamhenryassociates.com
Proprietary & Confidential © Copyright 2010, William and Henry Associates, All Rights Reserved, Including The Right Of Reproduction In Whole Or In Part In Any Form.
Securities products and services offered through Innovation Capital, LLC. William and Henry Associates and Innovation Capital, LLC are separate, independent entities.
William and Henry Associates
 William and Henry Associates (“WH” or “William & Henry”) was founded in 2001 to better meet the merger,
acquisition and corporate finance advisory needs of private, entrepreneurially owned and operated businesses
 WH focuses on arranging value-optimizing mergers & acquisitions for lower- and middle-market companies
 Maximizing both deal price and deal terms
 WH professionals have completed over 300 merger, acquisition and sale transactions with an aggregate
value of over $20 billion
 Also privately places equity and debt securities to finance expansion (e.g., new products, facilities, etc.),
management buyouts, corporate recapitalizations and restructurings, as well as performs business
valuations/renders fairness opinions
 WH professionals have raised over $5 billion of senior/subordinated debt, and preferred/common stock
in the public and private markets
 Typical clients are premier, entrepreneurially owned and operated, lower- and middle-market growth
companies
 Also experienced in issues surrounding the sale of publicly-held businesses, i.e., take-private transactions
 Extensive track record of creating significant incremental monetary value from M&A and financing
transactions
 Professionals are highly experienced professionals from a complement of backgrounds, including bulgebracket investment banks (Salomon Brothers, UBS, CSFB); middle-market investment banks (Wertheim
Schroder, Barrington Associates, Greif & Co., McGladrey Capital Markets); public companies (Channell
Commercial Corp. (NASDAQ: CHNL), VIAD Corp. (NYSE: VVI), Macquarie Americas Parking
Corporation (NYSE: MIC), American Medical International (NYSE: THC), Herbalife International (NYSE:
HLF) and Accounting/Consulting firms (Arthur Andersen & Co., Deloitte & Touche)
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When to Involve an Investment Banker?
Representative Scenarios In Which An Investment Banker May Be Helpful
 Owner expresses an interest in selling his business
 Owner nearing retirement age with no apparent successor in the family/management team
 Company represents significant portion of the owner’s net worth. Owner wants to diversify his
holdings and sell a portion or all of his company
 Owner desires a financial partner and wants to stay with the company, grow it and get a “second
bite at the apple”
 Owner desires a full sale to a strategic partner with a minimal role going forward
 Serial entrepreneur that built business to critical mass and is looking to “cash in” and move onto
the next venture
 Business partners/family members that have philosophical differences and some or all of the
owners want to cash out
 Owner needs expansion capital but does not have incremental debt capacity
 Owner death or divorce
 Owner is looking to acquire another company
 Good business with too much leverage that needs an equity investment to
strengthen/recapitalize its balance sheet
 Owner would like to transition ownership of the company to its management team/employees
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Unlocking Value
 William & Henry are experts at navigating the tangled web of complexities inherent in every M&A transaction
 Investment bankers have measurable report cards when it comes to the success of a transaction – particularly in the
case where there is an offer on the table prior to our engagement
 William & Henry has been in dozens of situations where a client has an existing offer from a potential buyer prior to
engaging William & Henry to conduct a market test or formal sales process
 In nearly every case, William & Henry was successful in creating incremental value for our client, over and above the
original offer value, as demonstrated on the next two slides
“Obstacles are those frightful things you see
when you take your eyes off your goal.” –
Henry Ford
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Why William & Henry?
Representative William & Henry Transaction Premiums
WH Value Increased vs. Prior Offer
($ in millions, except per share data)
$45
$35
$25
$20
$15
$8
$35
$28
$20
$15
$8
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Securities products and services offered through Innovation Capital, LLC. William and Henry Associates and Innovation Capital, LLC are separate, independent entities.
Why William & Henry?
Representative William & Henry Transaction Premiums
WH % Incremental Value vs. Prior Offer
900%
350%
200%
20%
29%
50%
50%
67%
50%
80%
88%
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Securities products and services offered through Innovation Capital, LLC. William and Henry Associates and Innovation Capital, LLC are separate, independent entities.
Preparing to Sell Your Business – Key Highlights
 Preparing an exit strategy is just as important as
preparing your business plan
 Don’t wait too long to sell
 But take your time –
don’t be in too much of a hurry
 Start the process early
 Get your house in order
 Try to see it from the buyer’s point of view
 Make yourself less central to the business’s success
 Meanwhile, keep focused on running
(and growing) your business
 Get professional assistance
 Even if a deal comes, be prepared to say no
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Consider Timing Sooner Rather than Later
 Don’t Wait Too Long To Sell
 Many business owners wait until the last minute to try and sell their business.
They wait until the business is stagnating, or until they are exhausted with
running the business.
 In fact, the best time to sell is when business is booming!
 But Take Your Time – Don’t Be in Too Much of a Hurry
 If you are in too much of a hurry to sell, you will probably leave a lot of money
on the table.
 Buyers – especially sophisticated larger corporations – will likely sense your
urgency and will take advantage of it in the negotiation period.
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What You Should ALREADY Be Doing
 Preparing for a sale of your business begins the same day you begin preparing your
business plan
 Getting your house in order from day one will facilitate a cleaner sale process later on
– and may add incremental value in the eyes of investors
 Considerations from DAY ONE should include:
 Structure of the organization – C-Corp vs. S-Corp vs. LLC
 Financial reporting – monthly, quarterly and annual reports
 Preparation of year-end reports – audited financials, reviewed financials or yearend inventory counts
 Personal expenses – it is not uncommon for privately-held companies to run
certain “personal” expenses through the organization. However, these expenses
should be carefully accounted for and separated so they may be “added back”
prior to any future valuation of the business.
 Surround yourself with a team of experts who have experience dealing with
issues you will no doubt encounter – everything from intellectual property
protection to tax and estate planning
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Valuation – What’s Your Business Worth?
 Most business owners have no idea what their business is worth
 Selling a business is both art and science, and in no other area is this more evident than the
valuation
 While every seller wants to achieve maximum value, setting an asking price that is too high
signals to buyers that you may not be serious about selling
 While there are a number of methods used to value a business, the most common formula for
smaller transactions is a multiple of earnings/EBITDA
 This type of market-based valuation involves recasting profit-and-loss statements —
adding back excess salaries, perks and nonrecurring expenses — to find the true earnings
(EBITDA) of the business and then using comparable data for similar businesses to arrive
at an appropriate multiple
 Comparable data comes from both publicly traded companies with easily accessible
financial information, or from similar transactions with publicly disclosed multiples
 Another common valuation methodology is based on the sum of two parts, using a discount rate
appropriate to the company in question:
1. Sum of the future cash flows, discounted back to present value
2. Multiple of a “termination” EBITDA, discounted back to present value
 Finally, financial buyers (a.k.a. private equity shops or financial sponsors) will value the
business by determining the amount of debt they can service with the company’s cash flow, and
then completing the capital structure with a reasonable equity component that will allow for an
acceptable return at exit in 5-7 years
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Avoid Common Pitfalls
 Insufficient Preparation
 Pricing Problems - Inexperienced sellers have a tendency to set
a price (usually on the high side) before they've determined
value
 Unwillingness to Leverage Professionals - You're an expert at
running your business--not selling it
 Failure to Pre-Qualify Buyers
 Breaching Confidentiality - A good investment banker will
know how to simultaneously market your business and maintain
strict confidentiality
 Misrepresentation - As a seller, you want to portray your
business in the best possible light. However, there is a big
difference between representing your business in the best light
and misrepresenting your business to prospective buyers
 Missing Numbers - There is nothing that destroys credibility
faster than missing numbers during the process
 Overconfidence - Portraying too much strength too early on in a
selling process can result in a “broken auction”.
 Failure to Address Transition Issues - Many owners are so
focused on selling their business that they completely neglect the
transition process that will occur after closing
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Securities products and services offered through Innovation Capital, LLC. William and Henry Associates and Innovation Capital, LLC are separate, independent entities.
Professional Background – David J. Iannini
“I never did a day’s work in my life. It was all fun.” – Thomas A. Edison
Mr. Iannini has over 25 years of investment banking/financial experience. He has held senior positions at Salomon Brothers,
Schroder Wertheim, Barrington Associates, a division of Wells Fargo Securities and Greif & Co. During his career, Mr. Iannini has
executed over 200 transactions for both large capitalization public companies such as Avon Products, Xerox, Eastman Kodak, Toys
R Us, Hilton Hotels and Textron as well as for small and medium-size entrepreneurial and private businesses.
David J. Iannini,
Chairman, President
& CEO
In terms of mergers and acquisitions, Mr. Iannini has worked on both domestic and cross-border transactions including the
sale/restructuring of Security Pacific Asia Bank Ltd. for Bank of America, the sale of Avon’s Direct Response Division, Textron’s
acquisition of Cessna and the sale of the Petrie stake in Toys R Us; among many others. He has expertise in completing transactions
in a variety of industries including consumer products, aerospace/defense, consumer services, manufacturing, distribution,
technology, business services, retail, hospitality, healthcare and financial services. Middle-market transactions completed by Mr.
Iannini include the sale/recapitalization of Intercontinental Art to Madison Dearborn, the sale/recapitalization of KBell Socks to
Compass Equity, the sale of Arrow Paper and Food to U.S Foodservice, the sale of Entertainment Data to AC Nielsen, the acquisition
of Bushman’s of Australia by Channell Commercial Corporation, the acquisitions of RMS Electronics, Standby-Electronics (Canada)
and A.C. Egerton Holdings PLC (United Kingdom) by Channell Commercial Corporation as well as the acquisitions of Meridian
Technology and Carbon Copy Ltd. by Microcom; among many others. In terms of financing, Mr. Iannini has worked on transactions,
which have raised over $5 billion of public and private common equity, preferred equity, senior debt and subordinated debt.
Mr. Iannini also has significant experience from the “client” side of transactions. He was treasurer and vice president of corporate
development at Viad Corp (NYSE:VVI), a $3 billion conglomerate, and directed a team of investment bankers from Lehman
Brothers and Salomon Brothers in the $1.8-billion spin-off of MoneyGram. At Viad, he was the Chairman of the Investment and
Acquisition Committees. His treasury duties included the management of the Company’s $7 billion securities portfolio, pension plan,
working capital/cash management in addition to his responsibilities for the Company’s capital markets activities including the
commercial paper program, medium term note program and the successful completion of a new $425 million revolving credit facility
with a syndicate of fifteen major domestic and international banks. In addition, he served on the Board of Directors of Channell
Commercial Corp (NASDAQ: CHNL) where he was a member of both the Audit Committee and Compensation Committee.
Mr. Iannini has also served as an adjunct professor of accounting at UCLA. He has spoken at various industry and trade show events
such as the Association for Corporate Growth and American Electronics Association. Prior to his career executing strategic
transactions, Mr. Iannini was a senior accountant with Arthur Andersen & Co. where he earned his CPA accreditation. He has a BS
in Accounting, Magna Cum Laude, from the Carroll School of Management at Boston College as well as an MBA, Summa Cum
Laude, from the Andersen School of Management at UCLA. Mr. Iannini is a Registered Principal of the Financial Industry
Regulatory Authority (FINRA). Mr. Iannini is an avid college football fan and in particular all sports relating to Boston College.
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Securities products and services offered through Innovation Capital, LLC. William and Henry Associates and Innovation Capital, LLC are separate, independent entities.
Professional Background – Gregory Andrews
Mr. Andrews is a financial and operational executive with over 25 years of experience maximizing the value of
organizations through strategic transactions, strategy development, improving processes, maximizing cash flows
and capitalizing on core business competencies.
He has a broad knowledge in retail, wholesale distribution, financial services, e-commerce, infrastructure services,
business services, and professional services. Mr. Andrews' areas of expertise include: Private Capital, Venture
Capital and Debt Financing / Strategic Planning / Business Integration / Process Improvement / Cost Recovery /
Human Resources / Financial Modeling / Zero-Based Budgeting / Forecasting / Consumer Finance / Accounting /
Finance / Internal Audit. Mr. Andrews has worked in both public and private companies and has completed several
financial turnarounds.
Gregory Andrews,
Managing Director
As CEO/CFO for Macquarie Americas Parking Corporation, the division of NYSE- listed holding company
(NYSE-MIC), expanded the company from eight locations to 30 through acquisitions totaling $130 million,
increasing revenues from $20 million to $80 million in three years. Mr. Andrews facilitated the successful IPO of
the holding company (MIC) in 2004 after integrating three portfolio companies into one operating unit and
reducing SG&A expenses by $1.5 million. As Regional Managing Director of a wholly- owned subsidiary of
Manpower, Inc., a $12 billion NYSE-listed company, he successfully turned around a regional office. He initiated
several new service offerings and participated on a National Task Force in the development of new profit recovery
methodologies that resulted in $500 million in savings. As Chief Financial Officer for a subsidiary of Guitar
Center, Inc., a $900 million NYSE-listed company, he spearheaded the integration of four Internet technology
businesses and raised three rounds of venture capital funding. As Chief Operating Officer of Hyett Corporation, a
closely held retail chain, he successfully completed the financial turnaround after ninety days and grew revenues
and profits by 300% in under three years. As Executive Vice President - CFO of Central TV Furniture and
Appliance, a closely held retailer, he formulated the strategy to leverage its captive finance company into travel,
insurance, rent to own and auto dealerships. The captive finance unit, Central Finance Acceptance Corporation was
later spun off and taken public.
Mr. Andrews earned an MBA from the Andersen School of Management at UCLA, where he graduated Summa
Cum Laude. He received a BS in Accounting from the Carroll School of Management at Boston College, where he
graduated Magna Cum Laude. He is a former Manager with Arthur Andersen & Co. and has earned his CPA
accreditation.
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Professional Background – Sara Allen
“I would rather trust a woman's instinct than a man's reason.” – Stanley Baldwin
Sara Allen has nearly a decade of experience in investment banking. She has participated in
dozens of corporate finance transactions including cross-border and domestic mergers &
acquisitions, corporate divestitures, leveraged buyouts and the sale of private and family-held
businesses. Prior to joining William and Henry Associates, Ms. Allen served as a Vice President
at Greif & Co. for more than two years. Prior to that, Ms. Allen was as an associate director in the
Los Angeles office of UBS Investment Bank. Ms. Allen joined UBS’s Mergers & Acquisitions
Group in 2002 and spent four years in its New York office before transferring to Los
Angeles. Within Mergers & Acquisitions, Ms. Allen was part of the Exclusive Sales and
Divestitures Group, focusing on middle market sell-side advisory.
Sara Allen,
Director
Ms. Allen has completed transactions in such industry verticals as consumer products, chemicals,
energy, oil & gas, paper & packaging, telecommunications, media, technology, real estate,
business services, automotive and general industrial. Representative transactions include the
divestiture of Alcoa's specialty chemicals division to Rhone Capital LLC; the negotiated sale of
Case Logic to Thule; the sale of Equis Corporation to United Group Limited; the divestiture of
United Rentals' highway technologies division to Oak Hill Capital Partners and Wynnchurch
Capital; the divestiture of CITGO Asphalt Refining Company to NuStar Energy; the sale of
Assessment Technologies Institute to Jones and Bartlett Publishing, a portfolio company of
Providence Equity Partners; and the sale of Arthur Dogswell LLC to TSG Consumer Partners.
Ms. Allen holds a BS from Cornell University’s School of Hotel Administration. Ms. Allen is a
licensed commercial fisherman and enjoys hunting, hiking, surfing, traveling and drinking fine
wine. Ms. Allen is a Registered Representative of the Financial Industry Regulatory Authority
(FINRA). Ms. Allen is an inducted platinum member of the National Association of Professional
& Executive Women (NAPEW).
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Professional Background – Matt Dawson
Matt Dawson,
Senior Vice President
Matt Dawson is a Senior Vice President with William and Henry Associates
and possesses over six years of financial advisory and corporate finance
experience. Mr. Dawson has participated in a variety of engagement,
including mergers and acquisitions, private capital placement and strategic
advisory services. Prior to joining WH, Mr. Dawson was a Senior
Associate with Barrington Associates, a division of Wells Fargo Securities.
Mr. Dawson has worked with companies in numerous industries, including
healthcare; consumer products; agriculture and food research; maintenance,
repair and overhaul (MRO) services and electronics. He lead the day-today execution on the sale of Nix Check Cashing to Kinecta Federal Credit
Union and was on the teams that completed the sale of Westbread to
Monsanto, the sale of Spencer N. Enterprises to Ancor Capital and the sale
of Pasternack Enterprises, Inc. to Windjammer Capital. Before joining
Barrington Associates, Mr. Dawson played professional football with teams
in the NFL and Arena Football League.
Following his freshman year the United States Naval Academy, Mr.
Dawson transferred to the Wharton School at the University of
Pennsylvania. While at Wharton, Mr. Dawson was a member of the varsity
football team and received a bachelor of science in management and
finance. Mr. Dawson is avid motorcyclist, outdoor enthusiast and licensed
pilot. Matt is a Registered Representative of the Financial Industry
Regulatory Authority (FINRA).
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Securities products and services offered through Innovation Capital, LLC. William and Henry Associates and Innovation Capital, LLC are separate, independent entities.