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DRIVE YOUR SME TO SUCCESS OCTOBER 24, 2008

DRIVE YOUR SME TO SUCCESS OCTOBER 24, 2008. SME FINANCING OPTIONS. Silvio Marsili Managing Director. 170 staff 100 professionals 21 locations 46 years 1,100 investments 6,000 companies. Number of employees. Number of representatives. Number of offices. Years in business. Portfolio.

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DRIVE YOUR SME TO SUCCESS OCTOBER 24, 2008

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  1. DRIVE YOUR SME TO SUCCESSOCTOBER 24, 2008 SME FINANCING OPTIONS Silvio Marsili Managing Director

  2. 170 staff 100 professionals 21 locations 46 years 1,100 investments 6,000 companies Number of employees Number of representatives Number of offices Years in business Portfolio Number of businesses served Depth of Experience

  3. 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

  4. Roynat Financing Model

  5. Financing Alternatives

  6. 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

  7. Buy-Out Deal Profile Background Buy-out by an entrepreneur/manager of a manufacturing division of a large public entity. PurposeSource Acquire 100% of Bank line $ 1,250,000 ABC Company $6,250,000 Term 1,250,000 Mezzanine 1,750,000 Vendor Note 1,000,000 Buyer's equity 1,000,000 $6,250,000 $6,250,000

  8. 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

  9. 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.

  10. 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

  11. The Lender’s Perspective • What lenders look for - first impressions • Key pieces of information required • Specific credit criteria - ratios, etc. • Commitment of Shareholders

  12. 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”

  13. Lending Environment Today • Uncertain Environment • Banks and Investors are cautious

  14. Silvio Marsili Managing Director 5160 Yonge Street, Ste 1000 Toronto, Ontario M2N 6L9 t: 416-229-2367 email: marsilis@roynat.com

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