FREE Business Preparation Guide - Anil Puri

THINKING ABOUT GOING TO MARKET? Business & Deal Preparation I'll prepare your deal for success CALL NOW 1300 381 560 E: [email protected] www.nsw-business.allbizsales.com Anil Puri - Head of Business Deals NSW

A MESSAGE FROM THE FOUNDER Without a doubt, our business sales marketplace and deal rooms are the market-leading platforms for any commercial asset sale or investment in Australia. Our fundamental difference is how energetically we engage in producing a result for our clients by ensuring your deal is prepared in accordance with our strict checklist and pitched to suitable buyers and investors rather than waiting for them to find your deal. We take personal responsibility for developing a personalised marketing strategy and keeping you and/or your agents and brokers fully informed throughout the process so that you can make an informed decision on how to proceed. Transparency and personal accountability are essential components of how we operate. Add to that a cohesive local and national strategy, which is critical in driving the most competition and achieving the maximum price. This is a significant point of differentiation for us. We look forward to the opportunity of successfully partnering with you. MATTHEW HOLLAND Founder of the deal room and former head of Ray White Business Sales. In 2018, Ray White Business Sales developed the business sales and deal room platforms in collaboration with Mark Bouris' Mentored Platform and Channel 7 TV's \"The Mentor.\"

QUICK CHECKLIST TO MAXIMISE BUSINESS VALUE 1.Prepare your business accounts for a minimum of 3 years (actual and normalised versions) Accounts prepared by your external account or a specialist will carry far more weight than those prepared by in-house accountants. 2.Collect and prepare ALL of your associated business documents for due diligence. 3.Create a professional sales memorandum outlining everything about the business or deal on offer, point out the pro's and con's, sell the deal... 4.Reduce stock value where possible and remove dead stock. In most cases, the higher the stock value, the lower the multiple. 5.Ensure you have supplier agreements that can be transferred on the same or similar terms. 6.Where a customer represents more than 10%, consider a formal agreement or prepare a strong reply to the buyer; this is seen as a weakness and may reduce the value of the deal. 7.Where a lease is important to the business, ensure you sign a new lease and try to have any clauses removed that might prohibit an assignment of the lease, such as demolition clauses. 8.Itemise your assets and inclusions to avoid disputes and remove any assets not included by either noting them on the agreement or removing them completely from the premises, as this often causes disputes. 9.Will vehicles and other business assets, including finance agreements, be paid out or included for takeover? 10.Who will pay the staff entitlements, what are they, and will key staff remain? www.mentored.business

DETAILED CHECKLIST 1. General Details Information Technology Organisation structure chart Licences Certificate of incorporation Maintenance agreements Board minutes Software details - crm, apps, Company register Accounting software Commercial Contracts Real Property Sales, distribution, agency, licensing, manufacturing, Leases, assignments, options and licences including plans Franchise contracts Address and description Approximate area Supply or purchase agreements. Council use approval and zoning classification Contracts with subcontractors. Current rent Joint venture or partnership agreements Any mortgage or charge Distribution agreements Any notices from landlords or council that may impact the business Management agreements Trading Transportation agreements Contracts relevant to the business, not specified Major customers and annual historical spend vs financial year forecast Major suppliers Intellectual Property Outstanding quotations or tenders Patents Trade discount and credit terms Trademarks (registered and unregistered) Customer complaint disputes with suppliers Copyright Outstanding notices with may result in contract termination Registered designs SWOT Business names Trading names Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis Logos Customers Domain names Customer list - names redacted Any disputes Intellectual Property Ownership Any known reasons for major customers ceasing to trade Certificates of registration Review of major customers lost Registration applications Review the strength of relationships with key customers. Licences Accounting procedures for customer credits User agreements or other arrangements Customer correspondence Intellectual Property Infringement Review of aged debtor trial balance Against your company; or Review credit policy and procedures By your company. Review discount structure and procedures

DETAILED CHECKLIST 2. Suppliers Occupational Health and Safety Major suppliers Safety inspection reports Terms of trade. Accident reports Any deterioration in supply quality Investigations Aged creditor trial balance Any convictions or penalties Any loss or change of supply agreements going forward Independent Contractors Plant and Equipment Independent Contractors and Outsourcing Historic numbers, rate and utilisation of each category of details of any contract agreements internal facilities; Fixed assets register; Banking and Finance Current status of the plant and equipment; All financing documents, including Policy for capitalising the cost of writing off repairs and Material finance and operating leases continuing maintenance costs; Material hire purchase or purchase agreements Repairs and maintenance policies Finance rental agreements continuing Reviews of the adequacy of the depreciation Bank or corporate guarantees Abnormal write-offs Any breaches of the above arrangements Any capital commitments or new items of plant and Charges over business or business assets equipment Mortgages All plant and equipment not in satisfactory working order Guarantees and repair Comfort letters Any notices that may interfere with use of the assets. Insurance Employment Current insurance policies List all employees - initially by staff number is adequate. Details on all premiums Status of employment, i.e. full-time, part-time or casual Any claims Applicable awards or agreements Employment entitlements (e.g. commission, bonus or other incentive schemes) Employment contracts Employment policies, practices, or procedures Agreements or arrangements breaches Outstanding employee entitlements Unfair dismissal or unlawful termination Workers' compensation Occupational health and safety legislation Details of all superannuation arrangements

DETAILED CHECKLIST 3. Litigation Financials Note any item below that might impact a buyer Monthly board packs Any current material disputes, litigation, arbitration or Monthly budget packs proceedings including Historical audit files Parties to material contracts Debtors ageing profile Employees Statutory records Government or semi-governmental authorities (including tax Financial accounts authorities) Monthly management accounts Claims made or threatened Reconciliation of the historic statutory results Any judgment, order or settlement Accounting policy details Product warranties; Budget for the current trading year with assumptions Restrict business operations Year to date trading results comparison That may be terminated or varied if there is a change in the Management comment on actual trading to budget variance business and Budgeting explanation. Environmental Addbacks relating to last 2-3 financials years, the more detailed the better. All environmental, govt and council licenses, registrations, Taxation approvals, and permits; Group tax Any non-compliance; Management commentary on tax losses Any liability in respect of the contamination or remediation; Tax office or tax advisors correspondence Reports or inspections; Environmental management plans, environmental audits, or environmental reports and terms of reference; Work required to comply with licences, permits or approvals; Any known exposure of employees to hazardous materials, noise, vibration or dust; Any off-site impacts such as noise, dust or odour; and Any claims, proceedings or complaints.

20 TOP 20 BE PREPARED FOR THE TOP 20 QUESTIONS A BUYER SHOULD BE ASKING YOU... TIPS 1.Why is the current owner looking to sell the business? Let's take a 2.What kind of growth potential does this business have? look at this 3.Is the business in good financial standing or are sales or profits in decline? from the 4.Can I do this, will they help train me or run after settlement? buyer's or 5.Has the seller provided the most recent financial records? investor's 6.Examine the bank statements carefully to ensure they match the the sales records. point of 7.Review the tax returns for at least three years, preferably five. view. 8.Review all copies of all current contracts for the business, including leases, supply agreements, and customer agreements. 9.Is the business or has it ever been, the subject of an investigation by a government agency? If so, what is the current status. 10.Have they been paying employee benefits? And who will be held accountable in the future? 11.Is the company currently in a lawsuit, or has it ever been, and what is the status? 12.Is the company encumbered by any debts or liens? If so, what are they for, and how many of them are there? 13.What about the key competitors and suppliers? Who are they and where do they pose a risk. 14.Will key staff remain and will management remain if i'm investing vs. actively buying to work? 15.Payments, how are payments made? What does the debtors' list look like. 16.How much does the company write off for bad debts each year? 17.How many active clients does the company have and how many total. 18.Customers, What is a typical customer, where are they, and is it a community or a special arrangement that may or may not apply to me? 19.Is there a seasonal variation in the trading and stock requirements? 20.Is there a single customer who accounts for a significant portion of the sales volume? If this is the case, will the company be able to survive without this customer?

Next Steps Consider whether you have the time to prepare your deal and how much your time is worth in comparison to the amount of work involved aside from marketing. 01 02 03 Preparation Marketing Support & Tools Gathering and Using a confidential Dozens of business preparing the details digital platform, pitch documents, templates and in order to make a your deal to an tools plus support until your compelling offer to a established database of deal closes. No limitations, 7 buyer or investor. buyers and investors. days a week