1. Business Acquisitions, Ltd.

2. What does the pot of gold look like that your sellers are running to? ?

3. Let’s get a better look at what your clients are chasing. Now I can see it!

4. Who and when should a seller engage professional assistance? Attorney - establish the relationship now. Accountant - tax concerns prior to listing? Financial Planner - is the sale price enough? – If sale price today is not enough- time to get there? Business Broker - 3+ years prior to listing – The seller will need runway to tune the engine. – The bank requires 3 years of data. – Position of STRENGTH vs. WEAKNESS

5. What is the first question most owners ask when they are ready to sell their business? How much is my business worth? Most business owners believe that their company is worth more than the business is worth - while an underpriced business would of course leave money on the table, overpriced business simply do not sell! The first step is to recast information taken from the Seller’s Tax Returns and Financial Statements. Next the Seller’s Discretionary Earnings (SDE) are determined. SDE is defined as: pretax net income, plus owner compensation, salary, profit sharing, etc. (i.e., cash consideration) paid to all the owners, less the salary of any employee(s) needed to replace a 2nd or 3rd (etc.) owner, plus interest expense depreciation and amortization (non-cash expenses), adjustments for extraordinary, non-recurring expenses or revenue, and limited other add backs for expenses that are not related to the operation of the business. An analysis of similar businesses sold and a review of current business listings will develop a value range.

6. Why is three years critical in timing the sale? To finance the sale, banks typically require 3 years of tax returns. Buyers typically purchase businesses on an upward trend. It can take at least a year to correct issues that can affect both salability and price. Is the owner the Oracle? Is the business currently maintaining its profitability? —Will it sprint over the finish line or die in the process? —Are personal expenses being run through the business? -No Bronco tickets, cars, cell phones for a 3rd cousin twice removed, home remodels or family vacations! Banks will not allow any of these types of add-backs. -For every dollar spent on these expense…Seller should be able to receive at least $2.50 on the sale of the business. Is there customer or vendor concentration? How will key employees be managed? —Will they work for a new owner? —Will they be upset if they are not sold the business? —Non-solicitation? Bonus post close?

7. Fact vs Fiction Did you hear what they got to sell??

8. FACTS in Sales Less Than $3 Million Rarely, if ever, are revenues considered and in fact - can be a detriment. Multiples are not 5,6,7,8 or 10 x SDE - the higher the SDE, the higher the multiple. The value of most businesses is affected by what can be loaned to acquire it. Yes, the sales price includes your “brand”, your inventory and furniture, fixtures and equipment-think gas in the engine.

9. THANK YOU!! D. Erik Porter Business Acquisitions, Ltd. 3900 E. Mexico Ave, Suite 970 Denver, CO 80210 303-717-5458 303-200-6663