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Quality Bike Products Frostbike 2011 Friday February 18, 2011

Quality Bike Products Frostbike 2011 Friday February 18, 2011. Building Enterprise Value. How much is it worth?. Square footage Layout City School district Neighborhood Unique features Upgrades needed Décor Seller motivation Interest rates Housing market. A simple view of home value.

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Quality Bike Products Frostbike 2011 Friday February 18, 2011

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  1. Quality Bike ProductsFrostbike 2011Friday February 18, 2011 Building Enterprise Value

  2. How much is it worth? • Square footage • Layout • City • School district • Neighborhood • Unique features • Upgrades needed • Décor • Seller motivation • Interest rates • Housing market

  3. A simple view of home value Environment: Fundamentals: Buyer’s Perspective: • Seller Motivation • Interest rates • Housing market • Square footage • Layout Location: Move-in Ready: • City • School district • Neighborhood • Unique features • Upgrades needed • Décor

  4. Example Environment: Fundamentals: • Low interest rates • Very motivated seller • Terrible economy • 4,000 square feet • 5 brdm, 5 bath Location: Move-in Ready: • Detroit • Kitchen outdated • Old electric & heat Asking Price: $170,000

  5. Financials • Strong earnings • Consistent earnings • Working capital mgmt Markets & Customers • Growing markets • Concentrations • Wide moat Translating to Enterprise Value Environment: Environment: Fundamentals: Buyer’s Perspective: • Seller Motivation • Access to Capital • Economy • Seller Motivation • Interest rates • Housing market • Square footage • Layout Location: Move-in Ready: • City • School district • Neighborhood • Unique features • Upgrades needed • Décor Infrastructure Buyers • Management team • Asset maintenance • Operating System • Family • Management • Strategic Buyers • Private Equity Groups

  6. What is My Business Worth? • Sale of a retail bicycle shop can be a tricky business • No certain formula • Rule-of-thumb • 1 x gross sales • (2 x earnings) + inventory • EBITDA example

  7. EBITDA Example

  8. Operational Excellence

  9. What are you Selling? • Consistent Revenue • Higher Margin • Cash Flow • Strong Brands • Location • Established Events • Great Staff • Building

  10. How do you Sell? • Investment banker • Business broker • Trade publications • Internet • Other

  11. The Sale Process • Letter of interest • Letter of intent • Due diligence • Closing

  12. Questions?

  13. THANK YOU FOR JOINING US! Contact Information Dudley Ryan 612-376-4710 dryan@larsonallen.com Virginia Harn 612-376-4718 vharn@larsonallen.com Sandy Young 612-376-4517 syoung@larsonallen.com Craig Arends 612-397-3180 carends@larsonallen.com

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