1. AFFINIA’S SUCCESSION PATHWAY
Leading the way to future proof your business

2. Key Succession Issues
Locum Services – who can look after your clients when you can’t?
Valuation basis
Facilitation of the sale or purchase of a business
Funding
Transaction basis – upfront, rise and fall, joint venture or annuity

3. Locum Services
A locum can be appointed to carry out ‘reactive’ client service work during a period of scheduled or unscheduled absence from your business. This would include;
A specific waiting period
Enacted in the event of death, disability of planned absence from the business longer than the waiting period
Pre-determined revenue share
Non-solicitation clause

4. Valuation Basis There are many different ways to skin a cat?
EBIT – How and Why?
Multiple of recurring

5. FACILITATION OF THE PURCHASE OR SALE OF YOUR BUSINESS

6. Business Broking in Affinia
The Affinia Key Accounts and Partnership Team has been established to support the Affinia family in succession and growth
Facilitates the selling and buying of business’
Conduit in the Macquarie Funding arrangement
Assist in finding new advisers/graduates (Griffith, RMIT, LaTrobe)

7. FUNDING Macquarie Partnership

8. Financial Planning Lending Policy

9. Transaction basis

10. 3 ways to transact
100% upfront payment: Can provide leverage to reduce multiple due to the risk to the purchaser regarding client attrition
70-30 rise and fall: 70% of the agreed purchase price is paid upfront with the remaining 30% paid at a specified period, usually 1 year – based on the revaluation of the client base (rise and fall method)
Annuity basis: allows the seller to remain involved in the business receiving an annuity income in exchange for succeeding equity to the purchaser. Pros – seller can stay involved and achieve a higher multiple, low cost of entry for buyer; would suit a graduate. Cons – no large upfront payment.

11. How does it work?
Case study – Business Valued at 3 times recurring = $1.0m
Annuity Model
Year
Seller
Income
Buyers
Equity 1
300000
10%
33333 plus NB rev 2
270000
20%
63333 plus NB rev 3
243000
30%
90333 plus NB rev 4
218700
40%
plus NB rev 5
196830
50%
plus NB rev 6
177147
60%
plus NB rev 7
159432
70%
plus NB rev
8 – Buy out of remaining revenue at 3 times
478296
100%
plus NB rev
Total purchase price
plus NB rev

12. Annuity model
By mutual agreement the remaining revenue can be purchased as an upfront payment