3. Convergence Capital Partners, LLC
Summary
•Founded in 2004 by Alexander B. Kasdan
•Private middle-market advisory investment banking firm
•Big firm expertise and capabilities for the middle market
•Proven track record and commitment to client service
•Collective expertise: mergers and acquisitions, corporate finance,
restructuring, law, real estate
•“Senior Advisors for Senior Transactions”
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4. Industry Coverage
• Staffing • Petrochemicals
• Retail and Supermarkets • Healthcare
• Branded Consumer Products • Real Estate
• Apparel • Gaming and Lodging
• Business Services • Technology
• Food • Vitamins and Supplements
• Building Products • Publishing
• Industrial Manufacturing • Distribution
• Media and Telecommunications • Construction
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5. Baer & Troff LLP
• Baer & Troff, LLP specializes in corporate law and business litigation matters.
Our corporate practice includes restructuring transactions and corporate
securities issues, venture capital and other financing transactions, joint
ventures, licensing and corporate formation and governance. Our litigation
practice encompasses all areas of state and federal litigation, including
arbitrations, mediations and appellate work. Baer & Troff, LLP emphasizes
corporate, real estate, general business, unfair competition and construction
litigation.
• Baer & Troff, LLP was formed by partners of major law firms to provide the
highest quality corporate, litigation and other legal services to existing,
emerging growth and mid-market companies at reasonable rates. In addition
to our transactional and litigation practice, we regularly provide general
counsel to a wide range of clients and mediate complex business disputes.
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6. You have decided to sell your business.
This is likely to be the largest and most
important transaction of your life –
do it the right way!
Obtain the Best Deal Possible!
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7. Objectives for the Sale - Roadmap
• Money, liquidity, cashing out of investment
• Personal
Succession planning
Family
Changed circumstances – health, marriage, divorce, other
Are owners essential to running the business?
• Strategic growth
Need for greater management depth
Strategic partnership
Investment capital
Business expansion
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8. Pre-Transactional Planning
• Operational
Selling on the “uptick”
Are operations in light with historical?
Streamlining the business
• Management
Is there management in place?
Are owners essential to running the business?
• Financial
Are financial statements audited? For how many years? Accurate?
Outstanding indebtedness
Real estate owned or leased
• Personal
What is motivating the sale?
Time horizon?
Personal financial, tax and estate planning.
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9. Assembling the Working Group
• Investment Banker
Pre-engagement diligence – solid financials, reputation, etc.
Desirability of client – our reputation and time are on the line
Selling on the “uptick”
Identify all appropriate add-backs and adjustments to EBITDA
Recast historical financials
Projections and pro-forma adjustments
Knowledge of marketplace and process
Due diligence issues
Management issues
Investment banking fees – exclusivity, retainer, success fees
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10. Assembling the Working Group
• Transaction Counsel
Familiarity with M&A issues
Knowledge of various deal structures
Confidentiality of the sale process
Non-compete agreements
Stock sale v. asset sale
Employment and/or consulting agreements
Board and minority shareholder/passive investor issues
Legal fees
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11. Assembling the Working Group
• CPA
Financial statements and operating condition of the business
Are financial statements audited or reviewed by independent accountants?
Due diligence accessibility
Proper tax accounting methodology
Revenue recognition
Inventory valuation issues
Personal transactional tax implications
Due diligence issues
• Other “Trusted Advisors”
Sell-side due diligence advisors prior to the sale – identify problems and issues
Real Estate
Trusts & Estates Planning
Insurance
Pensions
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12. Illustrative Sale Process – Steps and Timeline
Company Marketing Receive Due Diligence Negotiations and
Preparation the Company Proposals and LOI Closing
5-7 weeks 6-12 weeks 3-4 weeks 4-6 weeks 4-8 weeks
•Information •Contact •Receive written •Solicit final bids •Evaluate LOIs
gathering targets indications of (LOIs) •Negotiate with final
•Prepare •Execute CAs interest •Distribute draft bidders
Company •Select “short agreements •Coordinate working
•Distribute IMs
Summary list” •Receive final group (counsel,
•Organize
•Prepare •Management offers accountants, other
Virtual Data
Information Presentations advisors)
Room
Memorandum •Initial due
•Address any •Final due diligence
(IM) diligence
other issues •Closing
•Finalize list of
targets
Total Time =
22–37 Weeks
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13. The main responsibility of selling
business owners and
management is to continue
running the business – need to
meet all projections and forecasts
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14. Types of Potential Acquirers
Strategic Financial
Likely price premium Abundance of private equity capital
Geographic considerations Eager for acquisitions
Product line and distribution Platform or add-on
Employment/consulting agreements Greater management concern
Potentially know the business Acquisition finance issues
Deal structure flexibility
Advisory/board opportunities
“Second Bite at the Apple”
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15. Selected Recent Transactions
• 2010 - toughest market environment in decades
• Sale to an East Coast-based strategic acquirer at above-market 7.5x EBITDA
• Employment contract and incentive package for seller-owner
• Owner continues to run the business for HowardBerger Company
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16. Selected Recent Transactions
• Sale to a strategic buyer
• Owner continued to run the business for SelectRemedy
• “Happy to serve as client reference in a win-win strategic acquisition.”
Patty DeDominic
Founder and CEO of PDQ Personnel
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17. Selected Recent Transactions
• Distressed company sale to a private equity financial buyer
• Strategic deal
• Section 363 bankruptcy sale
• Transaction completed in record time – 3 months
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18. Potential Issues with Real Estate
• Is corporate real estate owned or leased?
• If owned, is it in the name of the Company or a separate
entity?
• Is the Company lease above market?
• Is there real estate debt?
• Does the owner want to sell or keep the real estate?
• If keep the real estate, lease needs to be brought to market?
• Sale-leaseback?
• Real estate may trade at a higher multiple than the business.
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20. Post-Transaction Considerations
• Trusts and estates planning
• Insurance planning
• Pension planning
• Money management and investments
• Board advisory
• Starting a new business?
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21. Alexander B. Kasdan is a Founding Partner of Convergence Capital Partners, LLC and its
predecessor company, ABKC. He has more than twenty years of investment banking, real estate,
corporate law and corporate strategy experience. Since 1988, Mr. Kasdan has executed over 100
domestic and cross-border transactions totaling more than $10 billion in overall volume in a variety
of industries. Prior to founding Alexander B. Kasdan Company Limited, Mr. Kasdan was an
investment banker at Barrington Associates in Los Angeles, where he headed the restructuring
group, Peter J. Solomon Company, Credit Suisse First Boston and Merrill Lynch.
Mr. Kasdan practiced law with O’Melveny & Myers LLP (formerly O’Sullivan Graev & Karabell
LLP) and Paul, Hastings, Janofsky & Walker LLP (formerly Battle Fowler LLP), where he
specialized in mergers and acquisitions, private equity and corporate finance transactions. In
addition, Mr. Kasdan served as Corporate Counsel in charge of business development at
Schlumberger Ltd., a global oilfield and information services company.
Mr. Kasdan graduated magna cum laude from Middlebury College with a B.A. degree in Economics
and Italian and was elected to Phi Beta Kappa during his junior year. In addition, he holds a J.D.
degree from Columbia University Law School and has studied at the University of Florence in Italy.
Mr. Kasdan was admitted to the Bar in the State of New York in 1995.
Mr. Kasdan is a Senior Advisor to Governance and Transactions LLC, an advisory firm established
in 2003 by Mr. James L. Gunderson, former Secretary and General Counsel of Schlumberger
Limited, to assist boards, management and owners with corporate governance, compliance,
structuring and strategic transactions.
Mr. Kasdan is a frequent speaker on the subject of mergers and acquisitions, corporate finance and
restructuring, including as organizer of the Conference at the Anderson School at UCLA on "Buying
and Selling a Company in a Tough Economy - How to Optimize Price and Liquidity in a Buyers’
Market." Mr. Kasdan has published articles on the subjects of mergers and acquisitions and
corporate finance.
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22. Contact Information
Alexander B. Kasdan
Convergence Capital Partners, LLC
614 Palisades Drive
Pacific Palisades, CA 90272
1.310.770.1327 phone
1.310.496.2434 fax
www.cvgpartners.com
info@cvgpartners.com
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23. Jim Baer is a principal and founding partner of Baer and Troff, LLP. His legal practice
experience includes serving as outside general counsel and business advisor to numerous
companies and individuals, including as strategic advisor for managing and settling of
complex business litigation. His legal practice also includes venture capital financings for
both venture capital firms and portfolio companies, and advising business entities, boards
of directors and individuals on general corporate matters, loan transactions, mergers and
acquisitions, restructuring transactions and corporate securities issues.
A member of the American Bar Association and the Los Angeles County Bar Association,
Mr. Baer is also a past member of the Corporations Committee for the Business Law Section
of the State Bar of California and is a current member of the Los Angeles County Bar
Executive Committee.
In addition to his legal practice, Jim Baer has served as an executive officer and a business
advisor for various companies in a variety of industries.
Mr. Baer also has expertise as a mediator in a wide variety of matters. He is currently
President of CMBG Advisors, Inc., a firm specializing in business restructuring and
Assignments for the Benefit of Creditors (ABCs).
Mr. Baer was head of the Corporate Department in the Los Angeles office of Katten, Muchin
& Zavis, a Chicago-based firm. Previous to that, he practiced with Gibson, Dunn &
Crutcher, LLP, a Los Angeles-based firm.
Mr. Baer received his Juris Doctorate law degree from Loyola Law School in Los Angeles in
1983. He was admitted to the State Bar of California in 1983.
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24. Contact Information
Jim Baer, Esq.
Baer & Troff, LLP
1221 Ocean Ave. Ste 508
Santa Monica, CA 90401
t: 310/802-4200
Jim@btllp.com
www.btllp.com
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25. Anna Spektor is a Founder and Trusted Marketing Advisor of Expert Presence,
LLC, a consulting and professional advisory firm located in Los Angeles, CA.
Founded on a thought leadership approach, Expert Presence provides strategic growth
consulting and access to potential clients to attorneys, CPAs, financial advisors, real
estate professionals and many other professional service providers throughout the
United States.
Prior to founding Expert Presence, Ms. Spektor served as Director of Business
Development with Smart Marketing, Inc, an attorney and financial services marketing
firm, and Director of Business Development and Community Relations for Wachbrit
& Associates, PC., a Southern California estate planning firm, where she spearheaded
marketing, business development and public relations.
Ms. Spektor also held a position of Business Development / Commercial Lending
Officer with National Bank of California.
Ms. Spektor has a Bachelor’s Degree in Economics from California State University-
Northridge.
.
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26. Contact Information
Anna Spektor – Trusted Marketing Advisor
1999 Avenue of The Stars, Suite 1100
Los Angeles, CA 90067
Phone: 310-995-6579
anna@expertpresence.com
www.expertpresence.com
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