Kenyon Group LLC - Mergers & Acquisitions

"The process to market a company and realize the upper valuation must be handled with a predetermined strategy. Ours is not a cookie cutter approach, but a methodology designed to produce the best results consistent with your goals."

The flow chart illustrates the methodology we follow in order to produce the best results for our clients. Click on any of the process steps in the flow chart for more information.

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Step 1: Confidentiality Agreement
We execute a Confidentiality Agreement, which allows the seller to feel comfortable providing the necessary information to properly market the business.

Step 2: Determining Ownership's Objectives
Is seller intending to continue to work through a transition period, if so, for and how long? Are there significant employee, vendor, or customer relationships that need to be accommodated?

Step 3: Information Gathering
We need a variety of information to best present the business. We provide a comprehensive questionnaire to make it easy to gather the information buyers want to know. This information includes:

Year-to-date income statement and balance sheet
Last two year-end income statements
The most recent business plan or private placement document that describes the company's vision and differentiated competitive advantage
Any additional promotional and marketing materials not on your web site that describe the company's target markets and value proposition for each

Step 4: Determining Value Ranges
With this information, we discuss with the seller a value range we think can be achieved. It is important that Kenyon understands the sellers' expectations and believes that they can be met. Valuation methods vary depending on the company's development stage. Mature, profitable companies are traditionally valued based on a multiple of EBITDA (earnings before interest, taxes, depreciation and amortization) plus net assets. A company in an investment/growth phase where it is not producing a profit will be valued based on top-line growth, its position in targeted markets, proprietary technology, synergies with potential buyer types, and other forward-looking elements.

We recast historical financial statements to normalize owners' compensation and perquisites, remove non-recurring charges, and reflect other post-sale adjustments to calculate EBITDA which can be supported under due-diligence. It is important to remember that valuing a firm is not an exact science and, ultimately, the marketplace will set the price and terms. After a mutual understanding of expectations and after Kenyon has demonstrated its ability to perform, we sign an engagement letter.

Step 5: Confidential Marketing Process:

Create a Blind Profile and Confidential Information Memorandum (CIM) for the company
Develop a potential buyer list by cross-referencing the business characteristics with potential buyers in the Kenyon database supplemented by our specific research and seller's suggestions
Distribute Blind Profile and Non-disclosure Agreements to agreed-upon buyer list
Call all respondents to qualify operational and financial consistency and to generate interest for further review
Obtain signed Non-disclosure Agreements from all qualified respondents, disclose name of company, and forward CIM
Answer all questions/issues associated with the business
Schedule buyer/seller meetings in person or via conference call
Participate in the exchange of information leading to Letters of Intent

Step 6: Negotiation and Due Diligence
We manage the process to receive Letters of Intent (LOI) from buyers and negotiate the terms of the LOI. The executed LOI provides the foundation for exclusive negotiation, due diligence, and definitive documentation of the terms and conditions of the transaction. We work with the selected buyer's due diligence team to ensure a smooth and timely process and with your legal and accounting advisors to move the LOI to definitive agreements.

Step 7: Close
Close the transaction and work with the seller on transitional issues.

Timing
Kenyon's goal throughout this process is to work with as many buyers as possible in order to create a competitive environment that finds the best buyer that is willing and able to complete a transaction most favorable to the seller. Throughout, we are focused on confidentiality, integrity, and regular communication with all parties. The time it takes from start to finish is very difficult to estimate, but sellers should anticipate a six to nine month range.