The document provides an overview of exit/transition planning for privately-held payday businesses. It discusses the importance of business valuation in planning an exit strategy and outlines Decosimo's three-phase strategic transition planning process. The phases include planning, preparing, and executing the transition of ownership to family, management, or a third party. Decosimo's valuation and transaction advisory services are also presented as resources to help owners maximize value in an exit.

1. Exit/Transition Planning for the
Privately-Held Payday Business
Presented by
Mike Costello
Kim Lawrence
Tom Decosimo
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2. “When we needed a business valuation, we
looked to Decosimo because of their Alternative
Finance industry knowledge and advanced
valuation credentials.” – Check ‘n Go

3. Today’s Agenda
• Business Valuation
• Strategic Transition Planning
• Sell-Side Advisory
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4. Business Valuation
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5. Why Get a Business Valuation?
Of the many reasons to get a business
valuation, many are related to exit or
transition planning:
• Mergers and acquisitions (“About how
much could I get if I sold my business?”)
• Buy-sell agreements (“At what price
should our ownership interests change
hands?”)
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6. Why Get a Business Valuation?
• Employee incentives including options,
phantom stock, and ESOPs (“How can I
incentivize employees and/or efficiently
transfer ownership to them?”)
• Estate, gift, and income tax purposes
(“How can I minimize my tax liabilities
while transferring ownership?”)

7. From BV to STP
• BV professionals with expertise and
experience in these areas naturally fit into
an advisory role in M&A, and buy-sell
decisions
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8. From BV to STP
• With combined experience of BV, estate,
and tax expertise, Decosimo are ideal
advisors for transferring ownership or for
preparing an exit strategy for the owner
• We call this all-encompassing shareholder
planning service “Strategic Transition
Planning,” or “STP,” others may call it “Exit
Planning,” “Succession Planning,” or
“Ownership Planning”

9. Strategic Transition Planning
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10. Strategic Transition Planning
1. Identify Owner Objectives
1. Planning 2. Identify Business and Financial Resources
3. Develop STP Plan (Details Strategies to maximize and
protect value of business and financial assets and
execute transition)
2. Preparing The Business Asset:
1. Retain and Incentivize Key Employees
2. Entity Selection The Personal Assets:
(Maximizing and 3. Business Continuity
4. Successor Training
5. Value Drivers
1. Estate Planning (Designing an Estate to Minimize Tax
Liabilities, Preserve Family Wealth, and Preserve Family
Continuity)
2. Wealth Planning (Performed by Outside Advisor)
Protecting Value) 6. Estate Planning (Transfer Tax Planning)
6. Other Management Consulting Items (Customer
Concentration, etc.)
3. Executing Execute Transition to Family, Co-Owner, Management,
or Third Party
Transfers Wealth from Business Asset to Personal Asset.
Continue with Estate and Wealth Planning
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11. Phase One
1. Identify Owner Objectives
2. Identify Business and Financial
Resources
1. Planning 3. Develop STP Plan (Details
Strategies to maximize and protect
value of business and financial assets
and execute transition)
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12. Planning Phase
• Identify, clarify, and prioritize owner
objectives:
– When do you want to transfer?
– To whom? (family, management, or third party)
– How much money does the owner need?
– Other objectives (charitable, rewarding ee’s)
• Identify and value resources:
– Personal assets (financial planner performs a
financial needs analysis)
– Business asset  perform a business valuation
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13. Planning Phase
Why a business valuation from the start:
• Are we there yet? ($ goal - $ personal assets = what
owner needs in value from the business)
– By comparing the valuation to the needed $ from transfer,
we can determine strategy for growth/maintenance of
business value (aggressive/ conservative)
• Food for thought to aid the “to whom” question:
– Different valuation methods can show relative value
achieved by transferring to different groups (family,
management, and 3rd party) and clarify these strategies
• Input data for tax strategies: value of nonmarketable
minority interests
• Identify value drivers of the business and what is
hindering value
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14. Planning Phase
• Work with current advisors (tax, legal) to
develop appropriate strategies to
accomplish goals
• Come up with an implementation plan with
specific time frames per task and assign
the tasks to the right advisor
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15. Phase Two
The Business Asset: The Personal Assets:
1. Retain and Incentivize Key 1. Estate Planning (Designing
Employees an Estate to Minimize Tax
2. Entity Selection Liabilities, Preserve Family
Wealth, and Preserve Family
2. Preparing 3. 1. Identify Owner Objectives Continuity)
Business Continuity
(Maximizing and 4. Successor Training 2. Wealth Planning
2. Identify Business and Financial
5. Resources
Value Drivers (Performed by Outside
Protecting Value) 6. 3. Develop STP(Transfer Tax
Estate Planning Plan (Details
Advisor)
Planning)
Strategies to maximize and protect
6. value of business and financial assets
Other Management
Consulting Items (Customer
ad execute transition)
Concentration, etc.)
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16. Preparing
• Implement the strategies developed in
planning phase designed to:
– Minimize tax liabilities (S vs. C-Corp, etc.)
– Increase cash flows and value (value drivers)
– Protect business and personal assets
– Motivating and retaining employees
– Set up estate to handle the size of the
business asset
– Create an ability to sell the business (if
necessary)
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17. Phase Three
Business Asset: Personal Assets:
Execute Transition to Family, Continue with Estate
Co-Owner, Management, or and Wealth Planning
Third Party
3. Executing
Transfers Wealth from $$$$
Business Asset to Personal
Asset.
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18. Family Transition
• Plan gifts or other appropriate methods of
transition to minimize tax liabilities
• Develop strategies to compensate current
owner for interest in business
• Prepare next generation for running the
business
• Utilize tax-exempt gifting, if necessary
• Transfer control to the next generation
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19. Management Transition
• Fund management transfer (get money to
management for purpose of buying out
current owner)
• Determine the best means of transition:
private equity-backed management buyout,
deferred compensation, or other
• Consider tax deferral strategies
• Prepare management for ownership and
running the company
• Execute the transition to management
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20. 3rd Party Transition
• Determine target pricing
• Develop sales materials and research
potential buyers
• Approach and negotiate with buyers
• Secure and evaluate offers
• Due diligence
• Closing
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21. DCF’s Three Phase
Sell-Side Process
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22. DCF’s Three Phase Process
• Phase One: Business Review
• Phase Two: Research and Preparation of
Marketing Materials
• Phase Three: Marketing the Company
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23. DCF’s Three Phase Sell-Side Process
 Discuss and identify objectives.  Prepare Teaser (1 to 2 page summary,  Engage and qualify potential buyers,
doesn’t disclose company name). send Teasers and NDAs.
 Review the Business’s performance.  Begin preparing the Data Room for due
 Prepare a Confidential Information diligence.
Memorandum (CIM, a detailed
 Identify market position, competencies,  Send the CIM and Procedures Letter to
description of company).
and priorities. potential buyers that execute the NDA.
 Prepare a Non-Disclosure Agreement  Field questions from interested buyers.
 Identify the business’s qualities that (NDA) and Procedures Letter.
make it an attractive investment.  Receive, assess, and negotiate
 Discuss and finalize Teaser, CIM, and Indications of Interest (IOIs).
NDA.  Arrange management interviews, visits,
 Review business’s performance and
and presentations.
broader economy.  Research universe of potential buyers.
 Receive, assess, and negotiate Letters of
Intent (LOIs).
 Determine target value for the
 Determine most probable potential
transaction.
buyers.  Select finalist.
 Assist due diligence and buyer financing.
 Prepare business and gather  Discuss potential buyers, determine
information for the sale. which to approach.  CLOSE.

24. Phase One – Business Valuation
• Perform a valuation, with particular focus
on:
– Assessing core competencies of the company
– Identify the qualities that make the company
an attractive acquisition target
– Determine a target value for the company
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25. Phase One – Business Valuation
• Why perform a business valuation?
– Presents all the issues concerning the sale up-
front
– Identifies concerns that may arise during Due
Diligence
– Identifies business’ key selling points
– Determines expectations for pricing of the
transaction (saves the advisor time and money)
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26. Phase Two
• Involves three steps:
– Research and determine potential buyers
– Prepare sales documents (valuation feeds into
these):
• Prepare a Confidential Information Memorandum
(CIM)
• Prepare a Teaser
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27. Phase Three –
Marketing the Company
• Sell-side stage:
– Qualifying buyers – Selecting finalists
– Sending out Teasers – Management interviews
– Preparing a Data Room – Assessing and
– Sending the CIM negotiating Letters of
Intent
– Assessing Indications of
Interest – Selecting the winner
– Negotiating with potential – Due diligence
buyers – Closing
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28. DECOSIMO CPA’s
• Accounting firm with nearly 150 CPAs
• Headquartered in Chattanooga, TN
• Offices in Cincinnati, OH; Atlanta and Dalton, GA;
Grand Cayman, USVI; Memphis, Nashville, and
Knoxville, TN
• Perform tax, audit, and/or business advisory for many
payday entities
• Expertise in multiple industries
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29. Decosimo Advisory Services
• A practice of Decosimo firm
• Provides business valuation, litigation support, and
transaction advisory services
• More than 35 years of transaction experience
• Professionals hold ASA, CBA, and/or ABV
credentials
• Significant valuation, litigation support, and
transaction advisory experience with payday firms
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30. Decosimo Corporate Finance, LLC
• “Maximizing Value for the Middle Market”:
– Sell-side and buy-side advisory,
– Debt and equity capital sourcing,
– Fairness opinions,
– Valuations,
– Due diligence, and other transaction advisory services.
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31. Decosimo Corporate Finance
• More than $17 billion in transactions
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32. Questions?
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