Whether you are a seller looking to retire or divest an unprofitable or poorly integrated business, or a buyer that realizes the value of growth through acquisition versus through organic growth, the goal is the same - to position your company for maximum perceived value. This seminar covers the entire gamut of your business from financials, communications, storefront, IT, and IP. In fact, every facet of your business can have some bearing on its perceived worth.

1. The Art of PRESENTERS:
Buying &
TOM MARX
CEO AND CO-FOUNDER
Selling an PAUL COOPERSTEIN
Aftermarket PRESIDENT & CO-
FOUNDER
Business

2. Marx Group Advisors
Mergers & Acquisitions Advisors with over 25 years
of experience in the Automotive, Performance,
Specialty, Heavy Duty, and Commercial
Aftermarket
Consulting Brokerage: Equity and debt
services Buy-Sell-Merge financing
© 2011 Marx Group Advisors 2

3. Marx Group Advisors
TOM MARX PAUL COOPERSTEIN
• Business growth & • Venture capitalist &
marketing focus investment banker
• Business lawyer &
• 25+ years industry mediation specialist
experience
DAVE BARBEAU CHRISTINE LEMAy
• Parts distributor & • Business development
aftermarket executive manager
• Industry management • International specialist
consultant
9 Associates in key regions:
Houston, Detroit, New York, Boston, Chicago, Northern California,
Southern California, Florida, Phoenix
3 © 2011 Marx Group Advisors

4. MORE THAN JUST MEMBERS…
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5. 1. Current state of the M&A
TODAY WE landscape
WILL 2. Factors for considering
selling or buying
COVER: 3. Deal structures
4. Typical steps in the buy/sell
process
5. Valuation methods
6. Perceptions of value – buyer
& seller
7. Why hire an intermediary?
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6. Understand Your Short,
Mid and Long Term Goals
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7. 70% of all small and midsized
businesses don’t sell after
they are put on the market
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8. • M&A activity increased
Current starting Q4 2010
State of • Transactions are being
hampered by low valuations,
the tight fisted banks and
cautious buyers
M&A • As competition for
Landscape acquisitions increases, prices
will rise
• We live in times of great
uncertainty
8 © 2011 Marx Group Advisors

9. Sellers
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10. When Do • You are tired of the hassles
• You want to do something
You Know else in life
• Nostalgia – “It ain’t like it
It Is Time used to be”
to Sell? • You aren’t sleeping at night
• You don’t want to talk with
your spouse – or even your
dog!
10 © 2011 Marx Group Advisors

11. What Do • Keep making profit
• Maintain adequate
You Need inventory, fill rates and
margins
To Do • Retain key people
During the • Keep customers happy
Sales
Process
11 © 2011 Marx Group Advisors

12. What • Up to date balance sheet
• Accurate inventory
Financial • Recasted P&L
Documents • Accurate EBITDA
Do You
Need to
Prepare
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13. Buyers
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14. Why Buy? • Take out a competitor
• Take out low price leader
• Organic growth isn’t enough
• Expand into regions or
markets that allow you to
grow your business
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15. Preparing • Have strategic plan in place
• Identify focused target
for the profile
• Have proof of financing lined
Purchase up
• Have experienced
management team available
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16. General
Frameworks
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17. Typical Deal Structures
Joint
Mergers
Ventures
Acquisitions
&
Mgmt.
Divestitures Buy-Out
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18. What Are The Typical Steps In
Buying/Selling Process:
STEPS IN BUYING: STEPS IN SELLING:
• Evaluation of Transactional • Pre-Deal Preparation
Assumptions/Marketplace
Assessment • Confidentiality Agreements
• Financing/Equity Partners • Create Offering Memorandum
• Target Selection • Identify Buyers
• Confidentiality Agreements • Letter of Intent
• Letter of Intent • Due Diligence
• Due Diligence • Definitive Agreement
• Definitive Agreement • Close
• Close and Integration • Post-Close Execution
18 © 2011 Marx Group Advisors

19. Why Hire an Intermediary or a
Succession Planning Expert
“I don’t do my own dental work.”
• Having someone else find buyers or sellers and
negotiate the deal reduces emotions and usually
results in higher sell price
• Focus on what you do best: running your business
19 © 2011 Marx Group Advisors

20. Reducing • Full disclosure of all positives
and negatives
the Stress • Timely review and response
• Carefully think through all
responses so they are
complete and accurate
• Have an intermediary do the
heavy lifting
20 © 2011 Marx Group Advisors

21. Cashing In • Stay on in some fashion
(if you choose)
Does Not – Employee
Always – Consultant
– Run the business for a
Mean defined period of time
• Grow the business with
Selling Out someone else’s
investment
• Join acquirer’s team/help
them build their business
21 © 2011 Marx Group Advisors

22. Valuation
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23. • Buyer vs. seller
The Value • Sale to company
Lies in the management
• Passing down to family
Eye of The member
• Sale to privately or publicly
Beholder held company
• Book value
• Industry standards,
benchmarks, trends
23 © 2011 Marx Group Advisors

24. Potential Factors That Increase
the Value
Strong revenue & profit growth = higher multiple
Above average margins= higher multiple
Strong buyer marketplace = higher multiple
Valuable assets = higher value
24 © 2011 Marx Group Advisors

25. Potential • Long term debt
• High level of goodwill
Factors that compared to assets and net
income
Reduce the • High percentage of aged
Value receivables
• Dominance of a few
customers
• Lower operating margin
than that of buyers
25 © 2011 Marx Group Advisors

26. Increase the Value
of Your Business
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27. How to Increase the Value of
Your Business if You Are a
Retailer
• Is your store front clean?
• Is your inventory current?
• Are your counter people customer centric and well-
informed about products?
• Are uniforms, signs, trucks in good shape?
• Is branding consistent?
27 © 2011 Marx Group Advisors

28. How to Increase the Value of
Your Business if You Are a
Distributor
• Have you cleared dead inventory?
• Are the financials up to date and accurate?
• Are margins sufficient to generate profit?
• Do you have a niche that separates you from other
distributors?
• Are counter people trained to develop relationship with
customers?
• Are your IT systems updated so you can process orders
online?
28 © 2011 Marx Group Advisors

29. How to Increase the Value of
Your Business if You Are a
Manufacturer
• Is the concentration of customers well-distributed (i.e.
not top-heavy)?
• Did you get obsolete equipment off your books?
• Do your marketing programs truly state your value
proposition
• Do you have competitive pricing?
• Do you continually introduce new and innovative
products?
29 © 2011 Marx Group Advisors

30. How to Increase the Value of
Your Business if You Are a
Repair Shop
• Do your service advisors have excellent customer service
skills?
• Are your technicians using the latest diagnostic
equipment
• Are waiting rooms and bathrooms clean and inviting (to
both men AND women)?
• Are repairs completed on time and on budget
• Are you able to green face your business?
30 © 2011 Marx Group Advisors

31. Getting Paid
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32. TYPICAL PAY OUT STRUCTURE
• Typically 50%+ paid at closing in cash, balance
debt/equity
• Earn-out based on multiples of earnings
• Earn-out based on revenues
• Additional payments over 2 – 5 years based on meeting
profit targets
• A kicker for revenue growth
• A hold-back if key customer is lost; key metric is missed;
or if AR is uncollectible
• Seller financing
32 © 2011 Marx Group Advisors

33. Getting • Management Buyout
• ESOP
Paid: • Mezzanine/Equity Partner
Other • Deferred Compensation
Payment
Options
for Owners
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34. Deferred • Company buys back stock –
resells to management
Payment • Payout over time – 5 to 10
years
• Secured by life insurance –
in case something happens
to principals
• Avoid bank borrowing –
hopefully, financed by
company cash flow
• Includes sale to family
members
34 © 2011 Marx Group Advisors

35. What to Look • Industry knowledge
For When • M&A experience
• References
Hiring a • Intelligent strategy
Broker or
M&A
Consultant
35 © 2011 Marx Group Advisors

36. Summary
• Preparation = Increased ROI
• Buyers & Sellers need to understand each others’
perceptions
• Make sure you understand the basics
• Don’t do this alone – get the support of professionals
WHO HAVE EXPERIENCE and KNOW YOUR INDUSTRY
36 © 2011 Marx Group Advisors

37. THANK YOU
If you would like a copy of this presentation or further information
on buying or selling, please contact us below:
TOM MARX Paul Cooperstein
415.453.0844 ext. 106 617.328.7333
tmarx@marxgroupadvisors.com pcooperstein@marxgroupadvisors.com
Marx Group Advisors are located nationwide:
SAN NEW
BOSTON HOUSTON DETROIT FLORIDA PHOENIX
RAFAEL YORK
www.marxgroupadvisors.com
37 © 2011 Marx Group Advisors