This is a presentation that will help business owners (and their advisors) who are thinking about a potential future sale event assess their readiness and better understand the market. Along with covering the topics listed below, there are also some practical tips to implement prior to a sale that will help make the transaction a success, because taking the right steps now to prepare for a future transaction will pay dividends down the road. Topics include: 1. Business Liquidity Planning + Goals- Kaz Unalan, Director, Tax & Business Advisory Services, GBQ Partners Kaz gives an introduction to liquidity planning and goals, talking about assembling a team of advisors, timing, and liquidity options. 2. Market Dynamics- John Herubin, Managing Director, Edgepoint Capital In John's part of the presentation, he discusses Valuation + the Current State of the Market. 3. Getting Your House in Order – Eric Duffee, Co-Chair, Mergers + Acquisitions Practice, Kegler, Brown Hill + Ritter In Eric's presentation he discusses common pitfalls as well as organizational and operational strategies to adopt prior to engaging in sale process. 4. Tools and Resources - Charles Jarrett, CFP, CPWA, CRPC, Sr. Vice President, Merrill Lynch Private Wealth Management Charles closes out the presentation will a few tools and resources to keep in mind following the presentation.

1. EXIT PLANNING +
Maximizing the Value of
Your Business: A Primer

2. Business Liquidity Planning
Exit Planning + Maximizing the Value of Your Business: A Primer
April 30, 2019

3. Director, Tax & Business Advisory Services
Member of the senior leadership team of GBQ Partners
Partner in GBQ’s Tax Practice and leads Succession Planning Services. Member of GBQ’s
Transaction Advisory Services group.
Serves closely held middle-market companies with a focus on partnerships, S-Corps and
high net worth individuals. Industries include real estate, restaurants, manufacturing,
distribution and service
614.947.5309
kunalan@gbq.com
Kaz Unalan, CPA, CEPA
3

4. GBQ By The Numbers
4

5. GBQ Transaction Advisory Services
5

6. • Often referred to as a Transition Plan, Succession Plan or Exit Plan – Liquidity Planning asks and answers all the
business, personal, financial, legal and tax questions involved in transitioning a privately owned business
• It includes contingencies for illness, burnout, divorce or death
• Its purpose is to maximize the value of the business at the time of exit, minimize taxes and ensure the owner is
able to accomplish all of his or her personal and financial goals in the process
What is Business Liquidity Planning?
6

7. • Maximize the value of the business
• Ensure the owner is personally and financially prepared
• Ensure that the owner has planned for life after the business
Key Objectives of Liquidity Planning
7

8. “Age Wave” is here
• First boomers turned 65 in 2011; 10,000 turn 65 everyday; the youngest are now 55
• Own > 50% of the private businesses in U.S.
• 80-90% of their wealth is tied up in their businesses
• Represents a transfer of 4,500,000 businesses and over $10 trillion of wealth
M&A Market is strong
• High valuations
• Relatively low interest rates
• Lots of capital available
100% of all businesses change hands
8
Liquidity Planning Headwinds

9. • Owners leave money on the table as they are focused on income generation and not enterprise value – income does
not automatically translate into value – many are “lifestyle” business
• Unreasonable valuation expectations
• Many businesses are not salable or do not make it to the 2nd generation
• Very emotional, difficult to get owners to plan for their exit and create additional value through proper planning and
execution
Challenges of Liquidity Planning
9

10. • Over 50% of exits are not voluntary
• Death
• Disability
• Divorce
• Distress
• Disagreement
Challenges of Liquidity Planning
10

11. Select Transaction Team
• CPA – tax/financial/consulting
• Investment Bank/Valuation Consultant
• Financial Planner/Investment Advisor
• Attorney
11
Keys to Success

12. Define your goals for a transaction
• Maximize Value
• Reduce Risk
• Family Legacy
• Philanthropy
Keys to Success
12

13. Personal Timing
• Owners energy level
• Owners age
• Owners personal involvement
• Owners health
• Owners passion about the business
• Owners willingness to stay on after the sale
Business Timing
• Growth stage
• Historic trends
• Future prospects
Market Timing
• State of M&A Market/Strength of the economy
• Tax environment
• Availability of debt/financing
Evaluate
Is there a right time to transition?
13

14. Evaluate
Is there a right time to transition? (continued)
14

15. “Inside” transition
• Family transfer
• Sale to employee (ESOP)
• Management buyout
• Partner buyout
“Outside” transition
• Sale to third party | Strategic buyer | Private equity sale
• Recapitalization
• Orderly liquidation
Evaluate
Assessment of Exit Options
15

16. Family Transfer
Pros:
• Business legacy preservation
• Planned
• Lower cost
• More control
• Less disruption
Cons:
• Family dynamics
• Illiquid buyers / lack of funding
• Lower sale price
• Key employee flight risk
• Tradition may outstrip good strategy
• Path of least resistance – but not always the path to growth or success
Evaluate
Assessment of Exit Options – Inside Transactions
16

17. Management Buyout
Pros:
• Business continuity
• Highly motivated buyers (pent-up desire)
• Preserves key human capital
• Planned
• Can be combined with private equity to access additional capital and resources for growth
Cons:
• Distraction
• Threat of flight (coercion of owner)
• Illiquid buyers
• Lower price and generally heavy seller financing (increases risk)
Evaluate
Assessment of Exit Options – Inside Transactions (continued)
17

18. ESOP
Pros:
• Business stays in the “extended family”
• Shares purchased with pre-tax dollars by the ESOP
• Taxable gain on the shares sold to the ESOP by the owner may sometimes be deferred (1042 rollover)
• ESOP is an employee benefit and may cause employees to act like owners
Cons:
• Can be complicated and expensive
• May not work for some entities (culture)
• Company compelled to buy-back shares from departing employees (repurchase obligation)
• Generally will not maximize proceeds (Fair Market Value standard)
Evaluate
Assessment of Exit Options – Inside Transactions (continued)
18

19. Sale to Third Party/Strategic Buyer/Private Equity
Pros:
• Higher price (generally highest of all options)
• More cash up front
• Walk away faster
• Stability of deal terms
Cons:
• Long process
• Distraction or loss of focus
• Privacy concerns
• Emotional for owner
• Complex
Evaluate
Assessment of Exit Options – Outside Transactions
19

20. • Contingencies for unplanned events
• Maximize value in good times and bad
• Harvest wealth tied up in the business
• Smooth transition to next generation, employees or management
• Minimize, defer or eliminate capital gains, estate and income taxes
• Family legacy
• Time to consider post transition life after activities
• More control over how and when you exit
Importance of Planning
Benefits of Transition Planning
20

21. M&A Market Dynamics
EdgePoint Capital
800-217-7139
www.edgepoint.com

22. M&A ADVISORY 22
 EdgePoint has closed 23 Cross-border M&A transactions
 An active member of AICA with the ability to leverage a global network of
international partners
 Provides global insight from multiple firms, ability to overcome cultural barriers
EDGEPOINT OVERVIEW
Global Capabilities
International Access
Sell-Side Advisory
Third Party Sale
Sale to Management
Recapitalization
ESOP
Buy-Side Advisory
Retained Search
Corporate Development
Execution and Financing
Management Buyouts
Financing Advisory
Senior & Sub Debt
Asset Based Lending
Mezzanine Debt
Private Placements
Firm Background
 Principals with business ownership experience
 International access
 Middle market focus
 Unbiased advice
 Proven process
 Senior level attention
Unique Capabilities
 Founded in 2000
 Senior professionals average 24 yrs. of M&A
experience
 Twenty-One M&A professionals
 FINRA registered broker dealer
 Average 15 closings per year
 Over 85% transaction closing rate
Services Overview Recent Industry Awards
Top 50 Award - Tom Zucker
(Founder)
Cross-Border M&A Firm of the
Year
40 Countries 41 M&A Firms

23. M&A ADVISORY 23
INDUSTRY EXPERTISE AND EXPERIENCE
The completion of more than 275 transactions over 18 years, combined with the multidisciplinary
backgrounds of our professionals, has positioned EdgePoint with intimate knowledge of the
dynamics driving trends in our chosen market focus.
EDGEPOINT INDUSTRY COVERAGE
Distribution
• Industrial Products &
Equipment
• Consumer Products &
Food
• Building Products
• Maintenance, Repair &
Operations
• Chemical Distribution
Industrials
• Engineered Products
• Precision
Manufacturing
• Industrial Technology
& Equipment
• Polymers & Chemicals
• Aerospace & Defense
• Automotive & Truck
Business
Services
• Business Process
Outsourcing (BPO)
• IT Services & Software
• Commercial &
Industrial Services
• Printing & Packaging
• Engineering &
Construction
• Healthcare Services
• Home Health &
Hospice Care
• Medical Diagnostics
• Medical Equipment
• Healthcare Technology
& Consulting
Healthcare
• Power and Gas Utilities
• Renewables & Clean
Tech
• Oil & Gas
• Energy & Infrastructure
Services
• Energy Equipment &
Technology
EnergyConsumer
• Consumer Durables
• Apparel & Accessories
• Food & Beverage
• Household Products
• Pet and Outdoor
Products
• Hobby & Leisure

24. M&A ADVISORY 24
WHEN IS THE RIGHT TIME TO SELL YOUR BUSINESS?
We often look to three critical factors when advising a business owner
on whether the time is right to consider selling their business:
Owner Ready?
Market Ready?
Business
Ready?

25. 25M&A ADVISORY
Is the Market Ready?

26. M&A ADVISORY 26
IS THE MARKET READY?
Drivers of favorable selling environment
• The terms of most PE funds require the money to be
deployed to purchase companies or it is returned to
investors. PE funds have a strong incentive to
make acquisitions!
• This dynamic, coupled with a shortage of quality
targets, has resulted in premiums paid for high-
quality businesses in the current “Sellers’ Market”
Private Equity Overhang by VintagePrivate Equity Funds ($/#)
• PE (Private Equity) fundraising remains vibrant and
strong as investors seek yields from private equity
investments
• New fundraising in combination with prior
undeployed capital is creating a much larger buyer
pool than there are available quality sellers

27. M&A ADVISORY 27
IS THE MARKET READY?
• Both publicly-traded and private companies retained
cash during the recession, as reflected on their
balance sheets
• Growth through acquisition can be equally attractive
as organic sales growth in today’s growing economy
Drivers of favorable selling environment
Financial Buyer Universe S&P 500 Cash Balances
• Unlike many traditional PE buyers, family offices or
individuals are generally not looking to “flip” or resell
companies within a 5-10 year time frame
• Many family offices or individuals are seeking returns
through the purchase of businesses as traditional
investment returns have become less attractive
• Search funds offer business owners the opportunity
to “hand over the keys” and walk away from the
business, as search funds back an operator to run
the business

28. M&A ADVISORY 28
IS THE MARKET READY?
Drivers of favorable selling environment
Debt Leverage
• Debt leverage from senior and subordinated lenders
is strong
• Banks are aggressively leveraging transactions at
favorable prices and terms
Debt and Equity Contributions
• Debt is the “fuel” for valuations
• Debt continues to comprise more and more of typical
deal structures as the lending environment expands,
enabling equity contributions to stretch further and
valuations to trend upwards
• The availability of additional financing facilities,
including seller notes and subordinated debt, has
translated into higher purchase prices for sellers

29. M&A ADVISORY 29
IS THE MARKET READY?
Drivers of favorable selling environment
Capital Gains Rate
• Capital gains tax rates remain historically low
• Recent tax law changes would seem to indicate that
capital gains tax rates will remain low for the
foreseeable future
• No impact from 2017 Tax Reform on capital gains
rates
• The price of borrowing is still at record lows. This
provides cheap money for buyers in the market
• Banks have stronger balance sheets and are lending
under favorable terms
Prime Interest Rates
Richard Nixon Takes
Office(1968)
Ronald Reagan
Takes Office (1980)
Bill Clinton Signs
Reduction in Capital
Gains Tax from 28%
to 20% (1997)
Sunset Provision
Expires (2012)
George Bush Signs Economic
Growth & Tax Relief

30. M&A ADVISORY 30
IS THE MARKET READY?
U.S. Deal Volume & Value Closed
• M&A deal volume ($) and number of deals
completed continues to grow
Drivers of favorable selling environment
U.S. Annual Deal Multiples of EBITDA by Deal Size
• M&A valuation multiples remain at historic highs as
numbers of deals completed continues to grow
• Be aware that size matters when analyzing
multiples.

31. M&A ADVISORY 31
IS THE MARKET READY?
How Long Will This Last – Headwinds on the Horizon?
 The “R” Word = Recession Question
 Inevitable statistically?
 Global recession?
 Geopolitical Events
 Tariffs
 Brexit
 Military Conflicts
 ???
 2020 Presidential Election
 Likely to create uncertainty and “pause” the market - question will be length and
depth
Punchline: For a “ready” seller it’s likely better to be in market May/June/July
of 2019 v 2020

32. 32M&A ADVISORY
Is the Owner Ready?

33. M&A ADVISORY 33
What am I selling?
core business | certain divisions | retain real estate | other (intellectual
property, licensing, etc.)
IS THE OWNER READY?
WHAT
HOW How should I sell?
asset sale | stock sale | contingent payouts
WHO
Who do I want to sell to?
strategic buyer | management | private equity
ESOP | family office | international buyers | other
WHEN
When do I want to sell?
market timing | owner readiness | pre-emptive offers
Why am I selling?
retire | cash out | industry consolidation
increased competition | quality of life | other
WHY
Key Questions to Ask

34. M&A ADVISORY 34
What are your priorities?
Every business owner has a different priority for their transition. What is
important to you?
“Keeping the sale of my
business confidential is
critical to me”
“I have dedicated my life
to building my company
and I want the highest
price”
“The company is very
important to my family’s
legacy within the
community”
“My employees helped
build the business. I want
my employees to share in
the success and preserve
their jobs”
Highest
Price
Employee
Friendly
Preserve
Legacy
Most
Confidential
IS THE OWNER READY?

35. M&A ADVISORY 35
IS THE OWNER READY?
• Strong Opportunity to
Grow Sales
• Recurring Revenue
• Capable Management Team
• Proprietary/ Patented Technologies
• Defensible Niche/ Segment
• Long Term Contracts
• Low Customer Concentration
• Acquisition Opportunities
• Buyer Competition from a
Disciplined Process
How do you get the highest price?
What Pre-Sale Preparation Most Impacts A Premium Value In Today’s Market?
Most
Confidential
Highest
Price
Employee
Friendly
Preserve
Legacy
Most
Confidential

36. M&A ADVISORY 36
SALE PROCESS OVERVIEW
Preparation
Offering
Docs
Buyers
List
Recast
Financials
10-20 Offers
1 Final Buyer
(Best Price/Terms)
5 Letters of Intent
125
Potential
Buyers
Contacted
4 - 8
Buyer
Visits
Broad Competitive Process Example
 Competition Drives Value: A broad outreach increases the likelihood of
finding a premier “outlier” valuation, while preserving the ability to evaluate
other important qualitative criteria; ensures sellers have “cleared the market”
 Minimize Disruption to Business: Minimizes time disruption to management
and shareholders and enables them to continue running the business
 Access to Premium Buyers: A tailored “high-touch” process to keep buyers
engaged, present opportunity as actionable – engaging strategic buyers who will
not play in an “auction” process
 Terms more important than price: Produces multiple actionable and well-
diligenced LOI proposals; providing competitive leverage to negotiate market
clearing price and terms
 Timing and Certainty of Closing: Maintains momentum and ensures timely
closing by holding buyers to pre-determined time schedule
 Confidential: Limits exposure to “tire-kickers” by limiting confidential
information distribution, requiring multiple bidding rounds and through rigorous
validation of proposals and data room / due diligence activities
Why hire an investment banker?

37. 37M&A ADVISORY
QUESTIONS?
A uniquely-focused investment banking firm
serving the merger and acquisition needs of
middle market businesses
www.edgepoint.com
John Herubin
Managing Director
(216) 342-5865
jherubin@edgepoint.com
2000 Auburn Drive, Suite 330
Beachwood, Ohio 44122

38. Presented by
Eric DuffeeGetting Your House in Order

39. HISTORY

40. Project ODYSSEY
Fragile relationships with disbursed group
of employees, who in turn had all of the
relationships with customers—all of them
could literally just drive away
Required significant and unpredictable
interactions with third parties
Deal team didn’t know all of the facts but
weren’t comfortable bringing others into
the circle of knowledge

41. Project WALRUS
Inefficient tax structure
Nobody knew who actually owned
the company
Significant delays to deal with issues that
could have been addressed prior to the
sale—by the time they were fixed, the 2008
recession hit

42. Project GAME OVER
Software company but didn’t have any
intellectual property protection or real
business continuity plan
Internal deal team didn’t have the
bandwidth to keep up
Compliance programs weren’t adequate for
the scrutiny of a big, public buyer

43. Ugly Financials
1

44. Wrong, Convoluted, or
Unknown Organizational
Structure2

45. Uncertain Relationships
with Customers, Suppliers
+ Employees3

46. Lack of Adequate
Intellectual Property
Protection4

47. Loose Lips Sink Ships
5

48. Cutting Corners
6

49. Third Parties
7

50. Unjustified Delays
8

51. Unwelcome Surprises
9

52. So what if my deal falls apart?
I still have my business!

53. Yes, but you may be
viewed as “damaged
goods” by:
Your customers
and/or suppliers
Investors and other
financing sources Potential suitors
Your employees
There is also a
physical and
emotional toll

54. Buyer’s view: Transaction price
depends largely on risk

55. All business have some warts!
The key is how you address them

56. What can you do to minimize
the chances of your deal going
down in flames?

57. Think like a buyer!
Choose an
organizational
structure that sets you
up for success
Financial clean-up:
audits or quality of
earnings (QoE)
analysis
Protect/incentivize
key employees
Pay attention to
ownership issues now
Identify and protect
intellectual property
assets (of all types)
before a deal

58. Protect key
customer/supplier
relationships
Control the flow of
information
Do your own due
diligence review
Prepare to do two
full-time jobs: run
and sell the
business
Strategically assess
risks and address
them
Identify warts and
determine how to
strategically disclose
them

59. Why not just wait to see what
happens when the buyer
shows up?

60. Maximize use of the
seller’s leverage
while you have it
Preserving credibility
Encouraging trust
Sending a positive
message about
how you’ve run the
business

61. Eric D. Duffee
Kegler Brown Hill + Ritter
eduffee@keglerbrown.com
keglerbrown.com/duffee
614-462-5433

62. Exit Planning Books
Exit Planning Books
Walking to Destiny: 11 Actions An Owner MUST Take
to Rapidly Grow Value & Unlock Wealth
Christopher M. Snider
For Business Owners. By a Business Owner. Walking to
Destiny is not only your essential resource to understand
what makes your business attractive and ready for
transition; it is a business owner's handbook to know HOW
TO rapidly grow value and ultimately unlock the personal
wealth trapped in your most significant financial asset: Your
Business.
Finish Big: How Great Entrepreneurs Exit Their
Companies on Top
Bo Burlingham
“No two exit experiences are exactly alike. Some people
wind up happy with the process and satisfied with the way
it turned out while others look back on it as a nightmare.
The question I hope to answer in this book is why. What did
the people with ‘good’ exits do differently from those
who’d had ‘bad’ exits?”
Burlingham interviewed dozens of entrepreneurs across a
range of industries and identified eight key factors that
determine whether owners are happy after leaving their
businesses. His book showcases the insights, exit plans, and
cautionary tales of entrepreneurs.
Exiting Your Business, Protecting Your Wealth: A
Strategic Guide For Owner's and Their Advisors
John M. Leonetti
Written by John Leonetti attorney, wealth manager, merger
and acquisition associate, and fellow exiting business owner
in his own right Exiting Your Business, Protecting Your
Wealth will guide you in thoughtfully planning out your exit
options as well as helping you analyze your financial and
mental readiness for your business exit. Easy to follow and
essential for every business owner, this guide reveals how
to establish an exit strategy plan that is in harmony with
your goals.

63. Exit Planning Books
Exit Planning Books
Built to Sell: Creating a Business That Can Thrive
Without You
John Warrilow
Most business owners started their company because they
wanted more freedom—to work on their own schedules,
make the kind of money they deserve, and eventually retire
on the fruits of their labor.
Unfortunately, according to John Warrillow, most owners
find that stepping out of the picture is extremely difficult
because their business relies too heavily on their personal
involvement. Without them, their company—no matter
how big or profitable—is essentially worthless.
But the good news is that entrepreneurs can take specific
steps—no matter what stage a business is in—to create a
valuable, sellable company. Warrillow shows exactly what it
takes to create a solid business that can thrive long into the
future.
Mergers and Acquisitions Playbook: Lessons from the
Middle-Market Trenches
Mark J. Filippell
The ultimate "tricks of the trade" guide to mergers and
acquisitions
Mergers and Acquisitions Playbook provides the practical
tricks of the trade on how to get maximum value for a
middle-market business. This book uniquely covers how to
prepare for a sale, how to present the business most
positively, and how to control the sale timetable.
Filled with empirical examples of successful-and
unsuccessful-techniques, this practical guide takes you
through every step of the M&A process, from how to
manage confidentiality, how to create competition (or the
impression of competition), to what to do once the deal is
closed.
Family Business Succession: The Final Test of
Greatness
Craig Aronoff, Stephen McClure, John Ward
Helps to prepare for passing the family business on to the
next generation. Leaders will learn how to create a
succession plan; how to develop opportunities for
succession candidates; how to build consensus with the
family and leaders on succession plans and finally leaders
will learn when and how to let go of their own role in the
business.

64. Exit Planning Books
Organizations
Aspen Family Business Group
An international consulting resource, helping families
successfully navigate change to achieve harmony and
prosperity.
We are a consortium of thought leaders and experts in the
family business field with decades of local and international
experience. Our expertise lies in our understanding of the
complex dynamics of families who share businesses and
other assets.
Through our ability to foster a shared vision and build trust
in the family, we guide our clients through a process of
addressing challenges and building sustainability. We
combine a professional approach to multigenerational
planning with attention to the delicate issues that arise in
families of wealth and families in business.
We provide safe environments and tools for families and
their advisors to assure effectiveness in succession planning
and other transitions.
Family Business Consulting Group
We serve families and the enterprises that they have built
by guiding them through the process of building structures,
systems and skills for comprehensive strategy, better
decision making, stronger competitive advantage, and
continuity of enterprises for future generations. With over
2,500 client families in 70 countries, our consultant team
has successfully led businesses across industries, family
structures, and cultures through the issues, both common
and uncommon, faced by families in business together.
Family Firm Institute
For its global network of professionals, educators,
researchers, and family enterprise members, FFI provides
opportunities to participate in multidisciplinary educational
programs and earn professional designations; enables
collaboration at conferences, seminars, and online; and
creates a single space for cross-pollination of ideas,
expertise, and perspectives to further the field of family
enterprise.