We Acquire Profitable Businesses
AQUISITION STRUCTURE:
Offer: Full asking price.
Must have real estate.
Our LOI is NON BINDING so the seller may entertain other offers.
In order to offset our risk sellers must retain 30% equity for one year. Sellers co-sign for bank financing and receive the proceeds of the acquisition loan. Sellers must sign a 10 year non compete agreement. 3 year earnout. We will purchase an additional 10% of the company per year for 3 years: 30% equity retention year one, 20% year two, 10% final year. Seller does not have to operate the business if employees are capable of running the business or we will hire a GM from outside the company. All employees and particularly key employees will receive equity. If the owner stays to operate the business they will receive a generous salary in addition to their equity share of profit. All employees will receive working capital bonuses including the seller.
Total seller compensation:
- 70% of full asking price
- Profit split: 30%, 20%, 10%
- Annual Earnout Buyout
- 30% of Working Capital Bonus
- Generous salary (If applicale)
Please confirm the above with the seller in order to proceed.
INITIAL DUE DILIGENCE QUESTIONS:
- PRICE? (NO BIDDING OR STALKING HORSES. NO PRICE: NOT INTERESTED)
- GROSS?
- EBITDA?
- Owners staying or going? We like if owner stays as we are absentee owners but owners staying is not necessary.
- Why selling?
- Are they absentee owners?
- Can any of the employees run the business? We will give the key employees 5%-10% equity and the rest of the employees share in an equity pool of 5%-10%.
- How many employees FT/PT, contractors FT/PT?
- Current Debt? Liabilities?
- Cash on hand?
- Real Estate? If yes - We prefer lease to own for 5 years. If yes - Value? Mortgage Balance? Assumable mortgage?
PROCEDURE:
-NDA
-CIM
-PRELIMINARY LOI NON BINDING
-DUE DILIGENCE DOCS:
LAST 3 YEARS TAX RETURNS
LAST 3 YEARS FINANCIALS
YTD
LAST 12 MONTHS BANK STATEMENTS
CURRENT SERVICE CONTRACTS
A/R REPORT
-INITIAL BOARD VOTE
-REVISED LOI NON BINDING
-FINANCING APPROVAL
-SELLER CONFERENCE CALL
-NON BINDING PSA
-SITE VISIT
-FINAL BOARD VOTE
-FINAL BINDING PSA
-CLOSE