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Growing your business Buying, selling, financing

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Growing your business Buying, selling, financing

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    1. Growing your business Buying, selling, financing Scott Milne Director, KPMG Corporate Finance 15 September 2005

    2. Agenda The M&A market Planning for growth Buying Selling Financing Conclusions

    3. UK total M&A by value and volume

    4. Planning for growth Limiting factors Organic prospects? Focus of business/management Finance Alternatives Acquire Disposal of non core Raise money/change capital structure

    5. Buying Is acquisition the right strategy? How do I identify a suitable acquisition target?

    6. Tackling an acquisition Assessing value of target Maximum price? Funding? Structure? Understanding the Seller Minimum price? Partial or 100% interest? Evaluating the competition Pre-empt auction? Minority shareholder in partnership? Any aggressive competing bidders?

    7. The role of KPMG Corporate Finance in a typical acquisition process

    8. Will you succeed? Establish the key rationale upfront … and identify key value drivers “Most acquisitions fail to deliver value”……. but Have a clear synergy plan Integrate management Take account of cultural issues Play the game Understand the seller Understand competition Acquisitions can typically go wrong or perform much better than expected; this is not a decimal point game!

    9. Selling Why sell? How do I get the best price? ….and purchaser? How do I get my business ready for sale?

    10. Value issues – v – value drivers

    11. A typical sale process – potential risks

    12. How do you go to market? Applicability One outstanding bidder Seller with strong negotiating position Small number of obvious buyers Attractive assets Some uncertainty as to strongest buyers Desire to maintain confidentiality and… … reasonable chance of success Potential sale is already public knowledge Difficult to identify with bidders Financial sale a possibility Strong risk of public leak during auction

    13. Will you meet/exceed your expectations? Know your buyers understand their drivers Timing The key to a successful sale process is control release of information timetable negotiations maintain competitive tension Be prepared have a strategy!

    14. Financing Who and why? Private equity Mezzanine loans Bank loans and overdraft Vendor loans Invoice discounting/ factoring Leasing

    15. Identifying providers of finance Sources of finance

    16. Evolution of a buy-out company’s enterprise value and capital structure

    17. Presenting your business to banks

    18. Are you happy with your financing? Could I do more with additional finance? … should I do more? … can I do more? … what would it cost? Does the existing structure match the requirements of the business? …today! How involved do I want my funder’s to be? … how involved should they be? Do I understand my funders’ drivers?

    19. Concluding remarks Many businesses will have a business plan and a budget …do they have a strategy? …successful transactors don’t take unmanaged/unmeasured risks These transactions will change your business dramatically …there are many pitfalls …but getting it right can add significant value A good advisor can pay for themselves/many times over!

    20. This presentation does not carry any right of publication or disclosure to any other party. This presentation is incomplete without reference to and should be viewed solely in conjunction with the oral briefing provided by KPMG Corporate Finance. Neither this presentation nor its contents may be used, copied, quoted or referred to, in whole or in part, for any other purpose without prior written consent of KPMG Corporate Finance. The information in this presentation is based upon publicly available information and reflects prevailing conditions and our views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of any information available from public sources. Whilst the information presented and views expressed in this presentation and in the oral briefing have been prepared in good faith, KPMG Corporate Finance accepts no responsibility or liability to any party in connection with such information or views and furthermore KPMG Corporate Finance in providing this presentation is providing no advice and making no recommendation as to any course of action.

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