John Horgan & Gokul Padmanabhan

2. Whys, Whens & How’s of Selling Your Restoration Business John Horgan & Gokul Padmanabhan

3. EXITING YOUR BUSINESS • Even if You Don’t Plan To Retire For Another 10 Years, Here’s Why You Should Listen To Me Now

4. Whys, Whens & How’s of Selling • Majority Of Business Owners I’ve Worked With Over the Years Have Confessed: • ‘I Wish I had Thought About Selling Sooner

5. REASONS WHY OWNERS SELL THEIR BUSINESS • Retirement • Health • Desire To Try Something New • Family Reasons • Industry Not The Same it Was When You Began

6. UNDERSTANDING THE PROCESS • Selling Your Home • Fresh Coast of Paint • De-clutter • Neat and Organized • Attractive to the Buyer

7. UNDERSTANDING THE PROCESS • Selling Your Business • Updated financials / tax returns • Clean AR • Family members • Clean office/warehouse

8. THINGS TO KEEP IN MIND • Most Owners get 30% Less Than the Value of the Business When it Sells • Sellers Tend to Think From Their Perspective Only • Most Buyers from Outside the Industry

9. THINGS TO KEEP IN MIND • Your business is only worth what someone will pay for it

10. TYPES OF BUYERS • Strategic Buyer • Looking to Add Your Company To Enhance Their Present Operation • Make up a Very Small Percentage of the Buyers • Generally Very Well Funded

11. TYPES OF BUYERS • Financial Buyer • Looking Strictly and Only at Financial Profitability Of Business • Makes up Vast Majority of Buyers • Often From Outside Restoration Industry

12. KEY IS TO APPEAL TO BOTH • Have A Proven Track Record • Strong and Loyal Customer Base • Experienced Staff • Skilled Management • Cash Flow and Proven Profitability

13. 8 PROVEN STRATEGIES TO IMPROVE BUSINESS VALUE • 1. Employ a Plan to Increase Cash Flow • Cash Flow is Strongest Indicator of Value • Generally Three Years of Financials Used • 1% Reduction in Expenses Generally lead to a 5% Increase in Net Profit • A Good Set of Books Increases confidence in the Business Among Buyers

14. 8 PROVEN STRATEGIES TO IMPROVE BUSINESS VALUE 2. Remove Yourself From The Business • Can Your Business Operate Without You? • Buyers Need to Know It Will Operate Without You • Train Your Personnel to Take Over Key Responsibilities

15. 8 PROVEN STRATEGIES TO IMPROVE BUSINESS VALUE 3. Develop A Strong Management Team • Quality of Staff Enhances Value • Inspire Key Staff To Take Initiative • Take Time To Explain To Buyer The Quality of Your Employees

16. 8 PROVEN STRATEGIES TO IMPROVE BUSINESS VALUE 4. Replace Family Members on Your Staff • Buyers are Uncomfortable With a Business Filled With Family • Buyers are Very Concerned if Employees will not Stay on After Sale

17. 8 PROVEN STRATEGIES TO IMPROVE BUSINESS VALUE 5. Reduce The Amount of Personal Perks • Only Have in the Business Easily Documented Personal Items • First-Time Buyers Often Have a Difficult Time Understanding Owner Perks

18. 8 PROVEN STRATEGIES TO IMPROVE BUSINESS VALUE 6. Sell Unnecessary Assets • Sell With The Business All Assets Needed to Produce the Volume • Lenders do not Consider Excess Assets in Value of Business • Present Your Business to Have Highly Productive Assets

19. 8 PROVEN STRATEGIES TO IMPROVE BUSINESS VALUE 7. Develop and Document Your Sales and Marketing • Do You Market? • Do You Have a List Of Names or a Data Base? • New Buyers Need to Know Business is Transferable

20. 8 PROVEN STRATEGIES TO IMPROVE BUSINESS VALUE 8. Diversify Your Customer Base • Does a Large Portion of Your Volume Come from One or Two Clients.

21. HOW IS VALUE DETERMINED • Items Needed • Three Years P&L’s /Tax returns • Balance Sheet • Items Run Through Business • Personal Insurance, travel, leases etc.

22. HOW IS VALUE DETERMINED • Sellers Discretionary Income (SDE) • What is SDE? • Items Normally Allowable to Be Used • Items Normally Avoided

23. HOW IS VALUE DETERMINED Multiplier of SDE • Growth or lack of Growth • Is The Business A Turnkey Operation • Condition of The Financial Statements • Is the Sale Part or All of The Company? • Employees Staying With Company

24. TALE OF TWO COMPANIES Dream Clean • Volume = $1,000,000 • Net Profit = $60,000 Perfect Clean • Volume = $1,000,000 • Net Profit = ($40,000)

25. TALE OF TWO COMPANIES Perfect Clean Volume • 2012 $800,000 • 2013 $920,000 • 2014 $1,000,000 Dream Clean Volume • 2012 $1,350,000 • 2013 $1,190,000 • 2014 $1,000,000

26. TALE OF TWO COMPANIES • Perfect Clean Add Backs Dream Clean Add Backs Net Profit ($40,000) Net Profit $60,000 Owners Salary 180,000 Owners Salary 40,000 Depreciation 30,000 Depreciation 5,000 Amortization 5,000 Amortization 0 Interest 7,100 Interest 2,000 Other Addbacks 71,000 Other Addbacks 10,000 Total $253,100 Total $117,000

27. TALE OF TWO COMPANIES • Perfect Clean Summary • 2014 $1,000,000 • SDE $253,100 • NET /NET 25% • Higher Multiple when setting price. • Dream Clean Summary • 2014 $1,000,000 • SDE $117,000 • NET/NET 11.7% • Losing Volume • Lower Multiple when setting selling price.

28. WHEN IS THE BEST TIME TO SELL Stages of a Business • Infancy • Child • Adolescent • Adult • Declining

29. WHEN IS THE BEST TIME TO SELL

30. WHEN IS THE BEST TIME TO SELL The Best Time to Sell is When Volume and Profit are Increasing

31. GOKUL PADMANABHAN • G.Padmanabhan@MurphyBusiness.com | 407-781-4596 • 4767 New Broad Street, Orlando, FL 32814 • www.sellmyrestorationbusiness.com • About Gokul: • MBA / Finance - from University of Central Florida • Value Transformation consultant for Fortune 500 companies • Extensive experience in global outsourcing, business development and business value • Over the last 15 years successfully launched and sold 4 businesses • Experience in all aspects of buying and selling businesses.

32. JOHN HORGAN • j.horgan@MurphyBusiness.com | 615-812-2450 • 4767 New Broad Street, Orlando, FL 32814 • www.sellmyrestorationbusiness.com • About John: • Consulting, management and sales background • Experience in restoration industry consulting restoration owners. • Extensive experience in growth strategies for restoration companies. • over 37 years in management and consulting • Experience in all aspects of buying and selling businesses.