Serving Middle Market Companies Since 19541

MAKING A MARKET

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Serving Middle Market Companies Since 19542

AGENDA

• Brief Introduction

• Team and Roles

• Process, Timeline, Resources

• Private Equity vs. Strategic

• Fee Structure

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Serving Middle Market Companies Since 19543

YOUR GOALS

• Personal, Family, Employees, Customers

• Maximize your proceeds

• Minimize your effort

• Eliminate disruptions, focus on business

• Maintain confidentiality

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Serving Middle Market Companies Since 19544

OUR PHILOSOPHY

• Pay for performance

• Market driven approach

• Industry specialists

• Fiduciary responsibility

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• Founded in 1954

• Focus on manufacturing, distribution,

and other select industries

• Senior level professionals:

CEOs, Business Owners, Founders,

MBA’s, CPA’s, Engineers & Attorneys

ABOUT CHAPMAN

Serving Middle Market Companies Since 1954

Serving Middle Market Companies Since 19546

CHAPMAN MEANS PERFORMANCE

• No up-front fees or retainers

• No expensive seminars or costly appraisals

• Personal involvement end-to-end

• Focus on privately, family owned, single

owner businesses

• Our fee is based on the price we get for

you - this gives us the right incentive

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Serving Middle Market Companies Since 19547

CHAPMAN MEANS RESOURCES

• The exclusive BizMart service to match

buyers and sellers

• A proprietary database with over 9,000

registered buyers

• An operations center with the resources

to get the job done

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5%

10%

10%

10%

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15%

40%

Seller’s RevenuesKnows the buyers

Understands Client

Understands industry

Values, fit,

business model

Has done deals

recently

Can handle complexity

SUCCESS FACTORS

Serving Middle Market Companies Since 1954

Serving Middle Market Companies Since 19549

PROCESS

DUE

DILIGENCE

LETTER of

INTENT

INITIAL

DISCUSSIONSANALYSIS

PLANNING

CLOSING

FINAL NEGOTIATIONS

MARKETING

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Serving Middle Market Companies Since 195410

PROCESS: ANALYSIS

• Analyze and document personal objectives

• Analyze financials, strengths, synergy potentials, etc.

• Advice about appropriate market pricing and structure

• Reconfirm personal objectives and decision making

process

• Develop a structure that meets your financial and non

financial goals

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Serving Middle Market Companies Since 195411

PROCESS: PLANNING

• Create Memorandum (CDR); Seller Profile; Script;

Offering Letters; Client’s approval

• Seller’s due diligence

• Anticipate buyer questions, concerns, objections

• Create list of target acquirers

• Timing: 30 – 60 days, dependent on management

availability

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Serving Middle Market Companies Since 195412

PROCESS: MARKETING

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• Make a market for your company

• Chapman confidentially approaches targets

• Buyer screening

• NDA / Approval by management

• Staged delivery of information up to offering memorandum

• Timing: 30 – 90 days

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Serving Middle Market Companies Since 195413

PROCESS: INITIAL DISCUSSIONS

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• Targeted presentations to buyers

• Buyer visits

• Exchange of information with buyers

• Indications of Interest

• Screen, review and analyze offers

• Timing: 30 – 60 days

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Serving Middle Market Companies Since 195414

PROCESS: OFFERS

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• Negotiate multiple offers

• Represent you in pre-negotiation discussions

• Serve as a buffer between the parties

• Act as a creative problem solver

Serving Middle Market Companies Since 195415

PROCESS: LETTER of INTENT

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• Competitive Environment

• Market

• Auction

• LOI - MOU

Serving Middle Market Companies Since 195416

PROCESS: DUE DILLIGENCE

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• Somewhat intrusive

•We set the rules

•We coordinate the process to minimize impact

• Financial, legal and operations due diligence

• Involves attorneys, accountants, other experts

• Timing: 30 – 120 days

Serving Middle Market Companies Since 195417

PROCESS: CLOSING CHECK LIST

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•Help you analyze trade-offs and concessions

•Serve as a buffer

•Act as a creative problem solver

Serving Middle Market Companies Since 195418

PROCESS: CLOSING

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• Keep the buyer committed and on schedule

• Purchase agreement finalized

• Coordinate the closing with the lawyers and

accountants on both sides

• Analyze any last minute changes

• Total timing: 6-12 months

Serving Middle Market Companies Since 195419

PROCESS: POST-CLOSING

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• Post-closing follow ups

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PRIVATE EQUITY VS. STRATEGIC

Valuation

Post-closing CommitmentCulture, Legacy

Structure

Your

Goals

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• Contingency based

• 6% of the first $5,000,000 in Total Consideration, and

• 4% of the next $5,000,000 in Total Consideration, and

• 2% of the balance over $10,000,000 in Total

Consideration.

• Minimum Commission of $180,000.

FEE STRUCTURE

Serving Middle Market Companies Since 1954