Facts About Small Business & Lower Middle Market

1. There are 9.5 million small business owners in the United States and most are over 50 years old.
2. On average 90+% of the Owners net worth is tied up and they live and die with the success or failure or the said business.
3. Many small business owners are not creating or increasing value, they are just trying to maintain a life style.
4. Only 1% of business owners have an idea what their business is worth.
5. Small business is classified as having up to $5 million in revenue per year and sell on average for 2-3 times Normalized EDITDA depending on asset structure, cash-flow and value world.
6. Lower middle market companies range from $5-$150 Million in annual revenues and sell on average for 3-7 times Normalized EDITDA depending on asset structure, cash-flow and value world (Buyer).
7. Small business makes up about 15% of the annual GDP (gross domestic product).
8. Middle market companies are 300,000 strong and make up 40% of the annual GDP.
9. The value of a business depends on the transaction type and the value world in which it is valued (Asset, Financial or Synergy).
10. Every business has more than one value and it depends primarily on the transfer method chosen by the Seller (sell to family member, MBO, MBI, ESOP, Investment, Synergistic) & the available capital to the Buyer.
11. Very little planning has been done with regard to taxation, how best to transfer ownership, succession and how best to preserve the sales proceeds (limit taxation).

What Lone Star Investments Corp. Offers in an

M & A Transaction

• One person managing all the relevant parties used in the process from start to finish.
• Help preparing the business for sale.
• Advise on each relevant step to insure a smooth transaction, and allow the Seller time to continue operation of the business.
• Buy or Sell side representation.
• Someone to insure your goals are met in the transaction.
• Access to potential buyers and full service marketing.
• Access to the very best professionals available in the M&A World, a Seller will include their respective Accountant and Attorney in the process but for the most part they are not suited to handle the sale of a business in the most advantageous way, thus we offer:
1. M&A CPA’s to recast financial statements, perform audits, advise on tax strategy and prepare documents for buyer due diligence.
2. M&A Transaction & Tax Attorneys that handle all the Contractual & Tax issues throughout the sale process.
3. Business Valuation Firms when needed to perform SIC research and comparable sales searches using; Onesource, IBIS Reports, AM&AA Data, Edgar Online & Capital IQ.
4. Insurance Advisors when needed.
5. Wealth Preservation Advisors that help structure how best to receive the proceeds and what to do with them.  The main goal being to minimize taxation and maximize the retention of sales proceeds.

What the Seller can expect in an M&A Transaction

• Initial meeting with Lone Star Investments Corp. to discuss financial goals and expectations of the Seller.
• Both LSI & Seller sign a Non-Disclosure & Confidentiality Agreement.
• A retainer fee may or may not be required, depending on the deal.
• An Engagement Agreement is drafted and signed by Seller and LSI stating the agreement, commissions and terms of the transaction.  All responsibilities are clearly drafted and agreed upon up front.
• Preliminary valuation is done on the Company and findings are presented to the Seller, if in agreement and the findings meet the goals of the Seller we move forward.
• A full blown evaluation is produced and a detailed offering book will be assembled. Appraisals of personal property and real estate will be conducted.
• In conjunction with the evaluation being done, initial meeting will be held with the CPA, Attorney, Tax Advisors and Wealth Preservation Advisor to form a frame work on the expected transaction.
• A one page Offer Memorandum will be sent out to a group of potential Buyers to gauge the market and interest with intent to receive an offer back.
• Decide which offers to consider and conduct meeting with potential Buyers.
• Sign appropriate Non-Disclosure & Confidentiality Agreement.
• Issue buyer the full blown offer document including financials, appraisals, forecasts, inventories, management structure etc.
• Conduct due diligence with the Buyer and facilitate all their questions.
• Negotiate price, payment terms, structure, stock or asset sale, non-compete, employment agreement to stay on and manage business.
• Address any and all concerns, agree to any contingencies and draft final documents.
• Close the deal.
• This process can typically take from three months to as much as a year depending on the type transaction and the environment in which the deal is done.