Barry/Benjamin Presentation - 10 2011
-
Upload
greenearth-cleaning -
Category
Documents
-
view
216 -
download
2
description
Transcript of Barry/Benjamin Presentation - 10 2011
![Page 1: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/1.jpg)
![Page 2: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/2.jpg)
Growing Your Business
![Page 3: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/3.jpg)
I. Acquisitions II. New Locations III. Organic Growth
![Page 4: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/4.jpg)
Acquisitions
“the purchase of known assets and cash flow”
![Page 5: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/5.jpg)
Sellers Motivation
• Desire to retire.
• Loss of key executives.
• Inability of top management to keep up with competition.
• Loss of key personnel by death.
• Desire to be associated with a larger firm.
• Anticipation of decline in value.
![Page 6: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/6.jpg)
Sellers Motivation
• Desire for greater diversification and marketability of investment holdings.
• Provide liquidity to the principal estate.
• To avoid investment of substantial capital for modernizing an older plant.
• To sell at a price that seems greater than the present value of business.
![Page 7: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/7.jpg)
Buyers Motivation
• Greater economics of scale and productivity.
• Advertising • Insurance
• Increased profitability.
• Increased penetration of the market.
![Page 8: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/8.jpg)
Buyers Motivation
• Elimination of a competitor.
• Possibly creates a situation where prices can be raised.
• Creation of cash through the sale of unneeded assets.
![Page 9: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/9.jpg)
Tax Related Matters for Seller
• Capital gains vs. recapture or ordinary income.
• Asset evaluations / book value.
• Non compete income.
• Long term cash vs. carryback.
• Asset purchase vs. stock purchase.
![Page 10: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/10.jpg)
Tax Related Matters for Buyer
• Interest paid on debt eats away at reported taxable income.
• Asset values are written up – thus increasing depreciation or amortization.
• Cash vs. carryback.
• Asset purchase vs. stock.
![Page 11: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/11.jpg)
Steps in a Successful Acquisition
• Approach strategy theme of mutual benefits.
• Devise contact plan.
• Initial contact.
• Begin negotiations.
![Page 12: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/12.jpg)
Reach Agreement on Price & Terms
![Page 13: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/13.jpg)
Information Needed to Reach Final Agreement • Company data
• Description of product or services
• Company employee breakdown
• Equipment list (age & book value)
![Page 14: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/14.jpg)
Information Needed to Reach Final Agreement • Facilities
• Marketing / Advertising
• Expansion plans
• Financial data
![Page 15: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/15.jpg)
Information Needed to Reach Final Agreement • Leases
• Outstanding debt
• Tax information
• Insurance coverage
![Page 16: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/16.jpg)
Information Needed to Reach Final Agreement • Contingent liabilities
• Litigation
• Contracts
![Page 17: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/17.jpg)
Financial Evaluation
• What is MAX price that should be paid?
• What are principal areas of risk?
• What are the earnings cash flow and balance sheet implications?
• What is the best way to finance the acquisition?
![Page 18: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/18.jpg)
Cash Flow Analysis
EBIDTA
![Page 19: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/19.jpg)
The cash flow contribution of the to be acquired company by itself
may be less than the merged result. This is because the
acquisition may be able to achieve operating and managing
economics of scale.
![Page 20: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/20.jpg)
EBITDA Acquired Company Before Merge CASH FLOW as presented by Owner
OPERATING INCOME $141,617.00
ADD BACK AMORTIZATION $40,000.00 DEPRECIATION $77,647.00
TOTAL CASH FLOW AVAILABLE TO SERVICE DEBT $259,264.00 CASH NEEDED TO SUPPORT PAYOFF OF $1,035,000.00 $230,810.00 CASH REMAINING $28,454.00
![Page 21: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/21.jpg)
EBITDA Anticipated After One Year of Combined Operations
CASH FLOW PROJECTION AS ANTICIPATED FOR THE FIRST YEAR
OPERATING INCOME $178,841.00
AMORTIZATION $218,520.00 DEPRECIATION $100,320.00
TOTAL CASH FLOW $497,681.00 LESS DEBT SERVICE $230,810.00 POSITIVE CASH FLOW PRODUCED YEAR ONE $266,871.00
![Page 22: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/22.jpg)
Asset Purchase Agreement
![Page 23: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/23.jpg)
II. New Locations
![Page 24: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/24.jpg)
• Lease a new location • Purchase an existing building • Purchase ground and build
![Page 25: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/25.jpg)
New Location
• Demographic study.
• Competitive analysis.
• Market rent analysis.
![Page 26: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/26.jpg)
Lease Issues
• Top dozen lease issues.
![Page 27: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/27.jpg)
Lease Issues
• Terms / Options
• Percentage Rent
• Permitted Use / Exclusivity
• Calculation of Common Area Charges
![Page 28: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/28.jpg)
Lease Issues
• Maintenance and Replacement Responsibility of the Landlord
• Security Deposit
• Late Charges
• Payment in a Marketing Fund
![Page 29: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/29.jpg)
Lease Issues
• Waiver of Claims and Indemnification
• Casualty Damage or Taking By Condemnation (Eminent Domain)
• End of Lease Issues
• If Perc on Premises
![Page 30: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/30.jpg)
Purchase Existing Building • Property + building Xray.
• Zoning restrictions.
• Architect.
• Lawyer.
• Contractor
• Estimated remodel costs.
• All studies similar to new locations (Demographic, competition, market).
• Financing
![Page 31: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/31.jpg)
Purchase Ground & Build
Similar in all respects to purchasing building w/additional
complication of constructing complete facility.
![Page 32: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/32.jpg)
Lease vs. Purchase
Financial Implications
![Page 33: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/33.jpg)
III. Organic Growth
![Page 34: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/34.jpg)
• Additional Services
• Marketing • Price increase • Community involvement
![Page 35: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/35.jpg)
![Page 36: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/36.jpg)
![Page 37: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/37.jpg)
![Page 38: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/38.jpg)
![Page 39: Barry/Benjamin Presentation - 10 2011](https://reader031.fdocuments.in/reader031/viewer/2022020423/568c33e11a28ab02358e5ff3/html5/thumbnails/39.jpg)