Investor%20Briefing:%20%20Reaching%20Liquidity

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Investor Briefing Reaching Liquidity
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Reaching Liquidity Through Acquisition

• DeFoor Services, Inc.
• Mergers Acquisitions Business Brokerage
• Exit Strategy
• Corporate Finance
• CPA, Controller/CFO, Real Estate Licensee
• Greg DeFoor, CPA has been involved in
  Acquisitions in some manner for over 20 years
• Former Controller/CFO in private industry
• Started DeFoor Services in January, 2002

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Reaching Liquidity Through Acquisition

• Two ways to reach liquidity
• Acquisition and public markets
• Acquisition remains number one way
• Activity in acquisitions has increased
• There are more people and more money in the
  market
• Types of acquirers
• Individuals, corporate acquirers and PEGs
• Does the owner stay as part of management
• Buy to keep or re-sell
• Role of valuationreal and perceived
• The higher the transaction price, the higher the
  multiple
• Have realistic expectations

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Reaching Liquidity Through Acquisition

• How process is handled.like buying a house?
• Selling a house is very public
• Selling a business is very confidential
• Internet, direct marketing, other methods
• When do share holders receive payment
• Closing
• Seller financing
• Earnout

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Reaching Liquidity Through Acquisition

• Asset vs. Stock
• Stock
• Assumption of contingent liabilities
• Easier to get done
• Capital gain for seller
• Asset
• Are there loan covenant restrictions?
• Assignment of contracts
• Step-up in basis
• Tax attributes do not follow assets
• Sec 1245/1250 depreciation recapture on
  installment sales in year of sale

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Reaching Liquidity Through Acquisition

• Other things to look out for
• Price shoppers
• Tire kickers
• Bargain hunters
• No money
• Wrap-up
• The acquisition market is strong for businesses
  with fair multiples and good financials
• The owner needs to shift focus from minimizing
  taxes to maximizing value
• The importance of well-maintained books and
  records cannot be over-emphasized