DRIVE YOUR SME TO SUCCESS

OCTOBER 24, 2008

SME FINANCING OPTIONS

Silvio Marsili

Managing Director

Depth of Experience

Number of employees

Number of representatives

Number of offices

Years in business

Portfolio

Number of businesses served

170 staff

100 professionals

21 locations

46 years

1,100 investments

6,000 companies

Market Focus & Investment Criteria:

Revenues ≥ $2.0 million

EBITDA ≥ $0.75 million

Small & Medium sized Canadian businesses with proven management team

History of revenue growth and profitability

Average deal size----$2.2 millions

Roynat Financing Model

Financing Alternatives

Senior Debt WorkingCapital

Senior Debt WorkingCapital

Senior Term Debt

Senior Term Debt

Junior Debt

Junior Debt

MezzanineAnd

Equity

MezzanineAnd

EquityFinancingFinancing

Financing Alternatives

Internally generated cash flow -- CFIMITYM

Customers and Suppliers

Bank debt; ABLs and alternative lenders

Equipment Lessors

Mortgage Lenders

Subordinated debt/Mezzanine lenders

Private Equity Investors

Buy-Out Deal ProfileBackground

Buy-out by an entrepreneur/manager of a manufacturing division of a large public entity.

Purpose Source

Acquire 100% of Bank line $ 1,250,000ABC Company $6,250,000 Term 1,250,000

Mezzanine 1,750,000Vendor Note 1,000,000Buyer's equity 1,000,000

$6,250,000 $6,250,000

Finance Capital Expenditures

Purpose Sources

Refinance Debt $5,600 Term Loan A $9,000

Purchase Equipment 3,400 Term Loan B 4,000

Purchase Premises 4,100 Working Capital 100

Financing Tips

• Business Plan - well crafted, easy to understand, simple and concise

• Talk with more than one lender, but avoid “window shopping”

• Know products of various lenders; comfort zone and lending limits

• Be persistent, confident and knowledgeable – make a connection which will ensure investment staff is committed and working for you

• Get external help if you are looking at “complex and challenging” situations.

Financing Tips

• Don’t be too rigid - understand the need for mutual respect and compromise

• Soft spots - prepayment fees and conditions;

- loan amortizations

- personal guarantees - sunset

- performance milestones

The Lender’s Perspective

• What lenders look for - first impressions

• Key pieces of information required

• Specific credit criteria - ratios, etc.

• Commitment of Shareholders

The Commandents

• Ensure a good fit-know your partner• Be prepared• Good information systems• Management team in place• Focus on business issues• Do not over leverage• Use experienced professionals• Do not “over negotiate”

Lending Environment Today

• Uncertain Environment

• Banks and Investors are cautious

Silvio MarsiliManaging Director

5160 Yonge Street, Ste 1000Toronto, Ontario M2N 6L9

t: 416-229-2367email: marsilis@roynat.com