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Selling Your Game Company Do’s and Don’ts

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  1. Selling Your Game Company Do’s and Don’ts

  2. M&A specialists since 1985. We only work with: Privately-held firms on the sell-side. Software and related tech companies. • M&A specialists since 1985 – only software/related tech • Only works on sell-side with privately held firms • Offices globally – 60% of transactions cross border • Developed the “Optimal Outcome” M&A process • Employs a team approach (5) to offloads clients • Senior negotiators are former CEOs – selling/results oriented • Largest educator in the world – helps build buyer relations • Largest proprietary buyer database – provides client advantage

  3. Offices globally – 60% of transactions cross border • M&A specialists since 1985 – only software/related tech • Only works on sell-side with privately held firms • Offices globally – 60% of transactions cross border • Developed the “Optimal Outcome” M&A process • Employs a team approach (5) to offloads clients • Senior negotiators are former CEOs – selling/results oriented • Largest educator in the world – helps build buyer relations • Largest proprietary buyer database – provides client advantage

  4. Optimal Outcome process Team approach Largest tech M&A educator Largest database Sold more software-related firms than anyone

  5. ACHIEVING ANOPTIMAL OUTCOME

  6. What is an Optimal Outcome?

  7. ValuationMaximization

  8. Creating the best transaction structure 8

  9. Minimizingpersonal liability/risk

  10. Reducing taxliability and holdbacks

  11. Structuring idealemployment/non-competes

  12. Providing forproper integration

  13. 1 8 Stages for anOptimal Outcome DueDiligence Preparation Integration Negotiation Research Discovery Contact Closing

  14. 1 Stage 1:Preparation • Set tasks, timeline • Allocate staff resources • Conduct internal due diligence • Compile business/marketing plan • Ready financials/projections • Ready presentation materials • Begin collecting due diligence materials DueDiligence Preparation Integration Negotiation Research Discovery Contact Closing

  15. 1 Stage 2:Research • Prepare buyers list (A&B level, financial, non tech) • Perform strategic analysis on each buyer • Prepare preliminary valuation • Determine proper contact (Execs, EA’s, advisors) • Outside advisor/board/investor influencers • Prepare position statement for each buyer DueDiligence Preparation Integration Negotiation Research Discovery Contact Closing

  16. 1 Stage 3:Contact • Create introductory correspondence • Draft/customize executive summary • Execute NDAs and non-solicitations • Screen initial interest, valuation expectations • Establish log on all communications • Refine position/process based on feedback DueDiligence Preparation Integration Negotiation Research Discovery Contact Closing

  17. 1 Stage 4:Discovery • Coordinate conference calls, site visits, and meetings • Establish technology review process • Prepare formal valuation report • Develop synergy and contribution analysis • Set up NDA with customers, contractors, etc. • Finish due diligence on buyer DueDiligence Preparation Integration Negotiation Research Discovery Contact Closing

  18. 1 Stage 5:Negotiation • Organize and host final visits • Provide structure & valuation guidance • Create an auction environment • Negotiate with top bidder(s) • Sign Letter of Intent (L.O.I.) • Inform other bidders of No Shop DueDiligence Preparation Negotiation Integration Research Discovery Contact Closing

  19. 1 Stage 6:Due Diligence • Verification of financial statements/ projections • Determine if outside advisors/opinions needed • Establish confidential data room • Technical/Legal/Ownership due diligence • Written explanation of business model/methodologies • Complete definitive agreement/ attachments DueDiligence Preparation Integration Negotiation Research Discovery Contact Closing

  20. 1 Stage 7:Closing • Final reps & warranties • Determine escrow hold-backs • Final opinion(s) • Sign contracts • Arrange payment/distribution • Regulatory filings • Disclosure Schedules DueDiligence Preparation Integration Negotiation Research Discovery Contact Closing

  21. 1 Stage 8:Integration • Advanced planning – during negotiation • Determine synergies • Best practices analysis • Interim transition team • Employee retention plan • Set up monitoring/reporting DueDiligence Preparation Integration Negotiation Research Discovery Contact Closing

  22. AVOIDING THEDEAL DISASTERS

  23. Workload, Value Destroyers, Deal Killers Top 60 Documents and Projects Top 5 Value Destroyers Top 10 Deal Killers This M&A process workload and pitfall analysis is based on data supplied by the World Technology Council (WTC), Corum’s 400-member advisory board of past sellers, industry experts, buyers and investors.

  24. Top 60 Documents & Projects (1-20) • Corporate Preparation • Business Plan • Marketing Plan • Org Chart • Staff Bios • NDA • Non Solicitation • Executive Summary • Introduction Letter • Financials (3 years) • Recast Financials • Financial Package • 3 Year Projections • Pipeline Analysis • Lead Process • Pricing Analysis • Market Research • Competitive Research • Buyer Research • Ind. Buyer Strategy Items in RED require professional skills, confidential M&A data, inside buyer knowledge, extensive transaction experience, or outside advisors

  25. Top 60 Documents & Projects (21-40) • Corporate Presentation • Comparable Transactions • Industry Comps • DCF Analysis • Replacement Cost • Terminal Value • Valuation Report • All Agreements • All Litigation – Threats • Shareholder Qualification • HR Needs • Audit • Activity Log • Terms Sheet(s) • Synergy Analysis • Dilution Analysis • Tax Analysis • Taxable Assets • Negotiation • LOI Items in RED require professional skills, confidential M&A data, inside buyer knowledge, extensive transaction experience, or outside advisors

  26. Top 60 Documents & Projects (41-60) • Stand Still Prep. • Outside Opinions • DD Checklist • DD Timeline • Merger Agreement • Asset Schedule • Fairness Opinion • Employ. Agreement • Non Competes • Patent Analysis • Customer Overview • Client Sign-off • Bulk Sale • Sovereign Approval • Proxies • Security Agreements • Registration • Shareholder Exp. Distr. • Announcements • Integration Process Items in RED require professional skills, confidential M&A data, inside buyer knowledge, extensive transaction experience, or outside advisors

  27. Top 6 Value Destroyers • Confidentiality—internal/external • Theft of technology • Loss of staff (non-solicitation) • Wear on CEO/management • Business drop-off—lack of focus • Going to market too late

  28. Top 10 Deal Killers • Dealing with only one buyer • Misalignment: shareholders/empl/mgmt • Contact at the wrong level • Improper research of potential buyers • Misunderstanding buyer process/models

  29. Top 10 Deal Killers • Inability to portray value properly • Improper due diligence preparation • Not qualifying buyers properly • Not orchestrating all buyers properly • Ego – Greed – Arrogance

  30. THE MOST IMPORTANT TRANSACTION OF YOUR LIFECLOSING THOUGHTS

  31. 80% What percentage of self-managed M&A transactions fail? You need a professional process to improve your odds Source: Corum Group Research

  32. Leverage using a Professional Intermediary I may not be the only bidder. Wonderful if I buy you, terrible if I don’t. This seller is serious. Intermediary Potential Acquirer Seller

  33. What is the average improvement from first offer to LOI (Letter of Intent) with a professional M&A process (i.e., creating an auction environment)? 48% Source: Corum Group Research

  34. Contact Information Corum Group InternationalS.à.r.l.Buechenstr. 9 8185 WinkelSwitzerland+41 43 888 7590 Corum Group Ltd. 19805 North Creek Parkway Suite 300Bothell, WA 98011USA+1 425-455-8281 Visit our website at: www.corumgroup.com