Some startups grow organically but many identify a complementary product or service that customers want, produced by a target company that seems to offer potential synergies through acquisition. Sometimes the companies’ Founders or executives know each other well and other times they require introduction. What is the best way to approach the target company? What are the steps needed to fully evaluate the target? Do you need audited financials? Are there key employees, relationships, or customers you must make sure stay in place? What is the appropriate negotiating strategy? How do you integrate the culture, products, processes and people to achieve the potential synergies? What are the most common areas of failure and how do you mitigate these risks? This webinar will help you be ready for your first (or next) acquisition. Part of the webinar series: Business Law Review 2022 See more at https://www.financialpoise.com/webinars/

2. 2
Practical and entertaining education for
attorneys, accountants, business owners and
executives, and investors.

4. Disclaimer
The material in this webinar is for informational purposes only. It should not be considered
legal, financial or other professional advice. You should consult with an attorney or other
appropriate professional to determine what may be best for your individual needs. While
Financial Poise™ takes reasonable steps to ensure that information it publishes is accurate,
Financial Poise™ makes no guaranty in this regard.
4

5. Meet the Faculty
MODERATOR:
Jason W. Rubin - Goldberg, Miller, & Rubin
PANELISTS:
Jonathan Friedland - Sugar Felsenthal Grais & Helsinger LLP
Lance Meilech- Fox & Fin/IBG
Rick Rosenbloom- Fuel Break Capital Partners
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6. About This Webinar: Buying a Business- 101
Some startups grow organically but many identify a complementary product or service that
customers want, produced by a target company that seems to offer potential synergies through
acquisition. Sometimes the companies’ Founders or executives know each other well and other
times they require introduction. What is the best way to approach the target company? What are
the steps needed to fully evaluate the target? Do you need audited financials? Are there key
employees, relationships, or customers you must make sure stay in place? What is the appropriate
negotiating strategy? How do you integrate the culture, products, processes and people to achieve
the potential synergies? What are the most common areas of failure and how do you mitigate
these risks? This webinar will help you be ready for your first (or next) acquisition.
Each Financial Poise Webinar is delivered in Plain English, understandable to investors, business owners, and executives without
much background in these areas, yet is of primary value to attorneys, accountants, and other seasoned professionals. Each
episode brings you into engaging, sometimes humorous, conversations designed to entertain as it teaches. Each episode in the
series is designed to be viewed independently of the other episodes so that participants will enhance their knowledge of this area
whether they attend one, some, or all episodes.
6

7. About This Series: Business Law Review 2022
While law school provides a great foundation, there are so many things it does not teach.
Looking to strengthen and condition your cross-disciplinary skills? Develop your flexibility by
increasing your familiarity with issues affecting a vast array of businesses? This series delves
into cutting edge issues in dynamic fields to help lawyers, business professionals, or anyone
interested in the law, with some specialized learning in seven distinct areas of law.
As with every Financial Poise Webinar, each episode is delivered in Plain English so that you
do not have to be a Business Law specialist to understand and benefit from them. And, as
with every Financial Poise Webinar, each episode brings you into engaging, sometimes
humorous, conversations designed to entertain as it teaches. Each episode in the series is
designed to be viewed independently of the other episodes so that participants will enhance
their knowledge of this area whether they attend one, some, or all episodes.
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8. Episodes in this Series
#1: Buying a Business- 101
Premiere date: 2/10/22
#2: Construction Defect Litigation-101
Premiere date: 4/7/22
#3: Defending White Collar Crime-101
Premiere date: 6/9/22
#4: Doing Business Abroad-101
Premiere date: 7/21/22
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9. Episodes in this Series
#5: Immigration Law for Business-101
Premiere date: 10/06/22
#6: Selling a Business-101
Premiere date: 11/10/22
#7: Zoning & Land Use 101
Premiere date: 12/8/22
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10. Episode #1
Buying a Business - 101
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11. Reasons to Buy a Business
• There are many reasons to purchase a operating business
✓ Impatient or Lack start up expertise
✓ You can improve its performance
✓ To acquire critical relationships (vendors, customers, etc.)
✓ Product or Service is complementary to your existing business (leverage
manufacturing or sales expertise; buy IP)
✓ Reduce Overhead via integration (synergies)

12. Reasons Not to Buy a Business
• There are also (potentially) bad reasons to buy a business
✓ You are a substantial customer
✓ You have free time & home equity to invest
✓ You are inexperienced but have great ideas for improvements to the
product / menu
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13. Self-Evaluation
• Carefully consider what you can risk / lose
✓ Your money (savings, IRA, 401(k), home equity)
✓ Your friends and family’s money
✓ Existing career (how marketable are you?)
✓ Time away from family, friends, studies, and relationships
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14. Threshold Questions
• Think about the following:
✓ Why is the business for sale?
✓ What has changed (competitors, employees, costs, customers)?
✓ Is the product a want or a need?
✓ Technology likely to replace the product?
✓ Barriers to entry?
✓ Does the business need your area of proven expertise, is training provided
(i.e. a franchise), or does this a stretch your skills?
14

15. Threshold Questions
• More things to investigate and analyze
✓ How many competitors are there / market leader?
✓ Cost to improve / “fix” it?
✓ Key customers (volume or strategic) a strength or weakness?
✓ Are there irreplaceable employees (sales or manufacturing)?
✓ Current owner fill a critical operational role?
✓ Will you be teaching or learning?
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16. Advantages of Buying
• Buying an existing business may provide advantages:
✓ Existing customers / brand loyalty
✓ Employees hired and trained
✓ Critical vendors in place, with credit terms (verify)
✓ Required equipment installed and operating
✓ Financing easier
16

17. The Traditional Sale Process
• The 7 Steps
✓ Review Teaser and Confidential Information Memorandum (NDA signed)
✓ Prepare Offer Term Sheet or LOI, negotiate and execute
✓ Analyze Data Room contents & Prepare Supplemental Document Request
List
✓ Participate in Management meetings
✓ Negotiate and Execute Definitive Purchase and Sale Agreement (Step 1)
✓ Seek Regulatory Approvals and Consents (Step 2 – if necessary)
✓ Post-closing matters (e.g. true up balance sheet, working capital
adjustment)
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18. Diligence Items to Consider
• Diligence is broad and deep – don’t miss the basics:
✓ Stable operations & customer base?
✓ Buying salable or seasonal / stale inventory?
✓ WIP current year items readily salable?
✓ Growth potential?
✓ EBITDA add backs – are they overstated
✓ Cost to run business as you envision it
18

19. Standard Diligence Topics
• Financial Performance
✓ Balance Sheet – annual (at least) for a couple years
✓ Income Statement – monthly, for at least 3 years
✓ Cash Flow Statement (examine unusual items)
✓ Tax Returns
• Corporate Governance
✓ Current filings (tax, regulatory, etc.)
✓ Litigation Search & Pre-litigation searches (EEO, etc.)
19

20. Two Types of Diligence
• More Information
✓ Customer concentrations, stability & quality
✓ AR quality & AP terms / history
✓ Detailed trends in financial statement line items
• Veracity of the Information
✓ Is the information fairly presented?
✓ Is the information complete?
✓ What is risk if picture isn’t that rosy?
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21. Diligence into Advantages
• Verify perceived advantages exist
✓ Employees – are key employees staying?
✓ Customers happy? Indications of unrest (decreasing orders)?
✓ Vendor contracts at market rates?
✓ Lease terms favorable or neutral?
✓ Equipment appropriate or obsolete?
21

22. Value Diligence
• Value
✓ How is the business valued (EBITDA, Gross Sales, IP, FF&E)?
✓ Is the seller “gaming” value by altering expenses or revenue to show positive
trends?
✓ Do seller add backs materially alter value?
✓ Did seller’s delay of Cap Ex shift risk (will expenses achieve results)?
✓ Are there signs seller neglected the business?
✓ Marketing and sales trends consistent?
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23. Corporate Formalities
• Check to make sure there are no hidden problems:
✓ Corporate records: in order and up to date
✓ Taxes current (returns filed) at close (IRS, FTB, BOE, Payroll, etc.)?
✓ Benefit plans in place and fully funded (401(k) or pension liabilities)?
✓ Deferred maintenance: “wants” versus “needs”
✓ Pending litigation
o Plaintiff – who gets proceeds awarded post-sale?
o Defendant – who pays costs / damages?
✓ Union shop?
23

24. Insider Compensation
• It is not unusual for an owner to run expenses through a company. Typically, owners
pro forma reverse this expense to increase the value of the business.
✓ What is reasonable compensation?
✓ Are expenses being classified as personal in contradiction to the owner’s
personal tax reporting?
✓ Relatives on payroll (salary and perks) – will you need to hire someone to
perform that task?
24

25. Understand Seller’s Motivations
• Acquisition Options
✓ Seller wants out: Buy it all
✓ Seller wants to diversify investments: Buy controlling interest
• Transition Agreements
✓ Interim / Transition Management
✓ Earn out (portion of purchase price is paid if company performs)
25

26. Negotiate
• Be thoughtful, strategic, and ask
✓ You never get what you don’t ask for
✓ Think about an earn out
✓ Will seller take back financing (putting their $ at risk)
✓ Pay less for A/R that is likely uncollectable
✓ Adjust for slow moving A/R
✓ Leave seller’s guarantees in place to keep “skin in the game”
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27. Letter of Intent
• Key Terms
✓ Price
✓ Exclusivity / Stand Still
✓ Assets Acquired
✓ Liabilities Assumed & Strategy
✓ Remaining Diligence
✓ Timing
✓ Contingencies
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28. Better Protections
• Several tools to protect value
✓ Covenant Not to Compete
✓ Cash hold back
✓ Releases / indemnity (scope)
✓ Earn Out
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29. Getting Help
• Professional Retention:
✓ Lawyers are critical part of diligence – don’t overlook them
✓ Accountants are needed to evaluate financial statements
✓ Business advisors help understand what is “customary” and identify when that is
an excuse
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30. About the Faculty
30

31. About The Faculty
Jason W. Rubin- JRubin@gmrlawfirm.com
Jason W. Rubin, a Goldberg, Miller & Rubin partner, concentrates his practice in products liability
and toxic torts and has managed the firm’s well-regarded mass tort department for two decades.
Jason represents several clients in their toxic tort matters filed in Pennsylvania, New Jersey, and
New York and has tried several cases to verdict. His success has been recognized by Thomas
Reuters which has designated him a Super Lawyer in products liability in 2016, 2017, 2018, and
2019.
Jason devotes a portion of his practice to mediation, arbitration, and pro bono service and is on the
Philadelphia Court’s Honor Roll for his pro bono service. He serves at least monthly as a Judge
Pro Tempore for the Philadelphia Court of Common Pleas Civil Trial Division and volunteers with
the Philadelphia Bar’s Fee Dispute Program as well.
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32. Jonathan Friedland– jfriedland@sfgh.com
Jonathan Friedland is a senior partner in Sugar Felsenthal Grais & Helsinger LLP’s Chicago office. He is
ranked AV® Preeminent™ by Martindale.com, has been repeatedly recognized as a “SuperLawyer”, by
Leading Lawyers Magazine, is rated 10/10 by AVVO, and has received numerous other accolades. He
has been profiled, interviewed, and/or quoted in publications such as Buyouts Magazine; Smart Business
Magazine; The M&A Journal; Inside Counsel; LAW360; Business Week.com; Dow Jones LBO Wire; and
The Daily Deal. Jonathan graduated from the State University of New York at Albany, magna cum laude,
in 1991 (after three years of study) and from the University of Pennsylvania Law School in 1994.
Jonathan is also an active angel, venture capital, and private equity investor, and is the founder and
publisher of DailyDAC and Financial Poise. Click here to see his full biography.
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33. About The Faculty
Lance Meilech– lance@ibgbusiness.com
Lance Meilech is a Principal at Eaton Square and a Managing Director at IBG/Fox &
Fin in the Phoenix Arizona office. His specialization is in the technology market and
has many strong connections to Silicon Valley. He has been extremely successful in
the Arizona market and has earned the reputation of being one of the top deal
makers in the State. His in-depth practical experience in multiple aspects of business
operations, financial background and educational credentials enables Lance to
understand the concerns of business owners and buyers. This unique combination
of experience and skills enables him to help clients through all aspects of the
business transfer process.
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34. About The Faculty
Rick Rosenbloom– rick@fuelbreakcapital.com
Rick Rosenbloom is the founding Partner of Fuel Break Capital Partners, LLC, a national special
situations investment and advisory firm. Rick has over 25 years of debt capital markets advisory,
bankruptcy and transactional law, restructuring and special situations investment experience. Rick has
extensive capital markets, restructuring advisory, M&A, corporate finance, distressed investment and
operational experience. Prior to Fuel Break Capital Partners, Rick served as General Counsel and Senior
Vice President of The Hilco/Great American Group (now Hilco Global and B/Riley Advisory Services),
C.O.O and head of M&A for an international brand marketing and specialty advertising firm, Principal,
General Counsel and Head of Origination of Continental Plants, an industrial focused distressed debt
investment firm, and as a Principal of and Head of Restructuring and Debt Capital Markets for Gemini
Partners, a Los Angeles-based boutique merchant banking firm. Rick started his career in Chicago with
Kirkland & Ellis and Schiff Hardin & Waite in their bankruptcy and restructuring practices. Mr. Rosenbloom
holds JD and MBA degrees from UCLA and graduated With Distinction from the Honors Program of the
University of Michigan.
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35. Questions or Comments?
If you have any questions about this webinar that you did not get to ask during the live
premiere, or if you are watching this webinar On Demand, please do not hesitate to email us
at info@financialpoise.com with any questions or comments you may have. Please include
the name of the webinar in your email and we will do our best to provide a timely response.
IMPORTANT NOTE: The material in this presentation is for general educational purposes
only. It has been prepared primarily for attorneys and accountants for use in the pursuit of
their continuing legal education and continuing professional education.
35

36. About Financial Poise
36
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