Larry OToole This mornings PURPOSE. Thinking about the right - - PowerPoint PPT Presentation

Larry O’Toole

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Thinking about the “right combination of things” Actions you could be starting now This morning’s PURPOSE….

….can you point to who owns building your sales and is there a plan? ….who owns delivering my product and is there a plan? ….who owns the quality of your financial controls and is there a plan? ….who owns driving your Enterprise Value and IS THERE A PLAN?

Preparing to Exit Decide to sell Engage a professional Develop a CIM Prep for due diligence Contact target acquirers Manage the process to conclusion Preparing to Maximize Value at Exit Identify early “what good looks like” Identify gaps Identify acquirer EV priorities Link business strategy with EV creation Build the right team, right culture Align business decisions with EV Build ways to excite future buyers Monitor the cycle of exit multiples Decide to sell Engage a professional Develop a CIM Prep for due diligence Contact target acquirers Manage the process to conclusion

Playing Defense Playing Offense

 Economic measure reflecting the market value of a business. It

is a sum of claims of all claimants: creditors (secured and unsecured) and equity holders. Trailing Twelve Months (TTM) EBITDA X Multiple - Debt

• By driving revenues and profits, you’re maximizing EV
• When I decide to sell…it’s time to focus on EV
• The “multiple” is whatever the market will dictate

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Timeline 4 Years 2 years

High buyer interest Buyers impressed w/readiness Above market multiple Met Sellers $200M Target!! 2 Successful events

Identified What Good Looks Like – advisors gathered Starting point valuation $120M range Set the Reward Maximization EV target versus a date Bridged Strategy to EV Plan

• Training/aligned team with EV supporting targets
• Linked the value drivers into our strategic plan
• “Coffee chats” to identify acquirer value drivers

Monitored Market, Timing, Players Prepared the Organization 2.5 years Formed the Deal Team

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Where We Focused On What We Did Benefit to Acquirer

Financials Build upward trend. Ensured integrity of #’s. Sees scalability. Provides confidence. Sales Pipeline Show access to key customers. Show robustness. Shows professional tracking. Future runway to enjoy. Platform Tracking Targeted attractive programs. Earlier stage vs mature. Shows professional tracking. Future runway to enjoy. Customer Contracts Central controlled/tracked. Clear of onerous clauses. Willing to accept. Sticky Plotted customers on a scale. Identified opt’ies to increase. Critical area for exciting them! CI Pipeline Show culture of productivity. Shows runway for them to enjoy. Organization Strengthened pedigrees of team. Ease of assimilation. Complement of talent. Due Diligence Prep Readied for the “exam”. Including Voice of Customer. Supported ease and speed of doing a deal.

 Build to Print to Build to Model

• Design ownership, defacto spec, name on drawings

 Innovate

• Invest in the R&D to create unique IP, achieve customer certs

 Create innovation in the supply chain

• Eliminate/reduce customer production concerns & costs

 Innovate eco-friendly product and/or supply

chain

• Reduce production carbon footprint
• Re-purpose a product for reuse

 Move from parts to kits/assemblies

• Remove swim lanes for the customer

What Does Good Look Like

Start Early – Minimum 2 to 3 years

Know Your Environment Bridge Strategy With Your EV Enable the Organization

Secret Sauce The Right Combination of Elements

Assemble the Right Deal Team

What Does Good Look Like Secret Sauce The Right Combination of Elements Owners personal plan upon exit Dollar target versus date Deal Structure, Facilities, People, Brand

Know Your Environment Secret Sauce The Right Combination of Elements “Coffee chats” Monitor multiples & deal activity for learnings Build relationships…suitors, bankers

Bridge Your Strategic Plan with Your EV Creation Plan Secret Sauce The Right Combination of Elements Link Coffee Chat learnings in to strategic plan Work a typical due diligence check list EV plan is effective with key stakeholders

EV Enablers Description

Buyer A Buyer B Buyer C Status

Financials/Reporting Performance trends. Integrity/quality of

3 3 3

Sales Pipeline Tracking/trending. History of good hit rate

3 2 2

Customer Platforms Tracked, growth projections, annuity bus.

3 3 3

Customer Contracts All clean. No IP loss. No first right of refusal

2 3 3

Customer concentration No customer more than 15% of revenue

1 3 3

Vendor Contracts No sole source reliance, no IP sharing

1 3 3

Stickiness Customer reliance on us

3 3 3

Pricing Management Good policy, oversight & control of

3 3 3

Industry Mix Desired mix – higher margin segments

1 2 2

Access to IP Company developed & controlled

2 2 2

Cost Out Pipeline Robust cost out history & pipeline

3 2 3

Facility/Capacity/Equip. Utilization/ability to support growth

1 3 3

Team/organization Right people, structure, culture

3 1 3

IT/systems Enabler to the business

1 1 3

Mission/Vision/Values Consistent across organization - lived

1 3 3

Value Proposition Identified & articulated

3 3 3

Availability of key people Willing to transition to work with owner

3 1 3

Access to customers Want to leverage your relationships

3 3 3

Geographic penetration Want to leverage your access

3 3 2

Enterprise Value Creation – Priority Setting

Enable the Organization

Secret Sauce The Right Combination of Elements Ensured structure could be assimilated Identified critical positions…ensured transferability Strengthened “pedigrees” in core competence areas Ensured Culture would be attractive

Secret Sauce The Right Combination of Elements Assemble the Right Deal Team Identified “deal” professionals Established experienced “point person” Identified “negotiations” team

What Does Good Look Like

Start Early – Minimum 2 to 3 years

Know Your Environment Bridge Strategy With Your EV Enable the Organization

The Right Combination of Elements To EXCITE the buyer(s)

Assemble the Right Deal Team

Thank You! Larry O’Toole

Email: Larry.OToole@YosemiteAssociates.com Mobile: 949.874.0787

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