Presentations

Presented to the New England Financial Technology Network

• The Malibu Group has significant experience providing sales & acquisition, valuation, financing, and due diligence services for technology companies
• The number of technology transactions and the valuation multiples for technology has both decreased significantly since their peak in 2000. The lower valuation multiples present an excellent opportunity for acquirers.
• The Discounted Cash Flow Approach is commonly used to estimate the value of a technology company. This approach considers the normal level of cash flow, the expected growth of the cash flow, and the risk of not achieving the cash flow
• Buyers/Sellers depend on experts such as The Malibu Group to ensure; 1) they get the deal done; 2) they obtain the best price; and 3) they maintain confidentiality from employees and competitors

Presented to the World Presidents’ Organization
The Importance of Succession Planning for Business Owners and Practical Suggestions on Getting the Process Started

Summarizing the key points on business succession planning:

• Experience gained from working with small and medium-sized business owners indicates that many in the business community are woefully unprepared to pass on the ownership of their businesses
• If the desire of every business owner is to pass on a legacy to one’s family and one’s community, the cost of failing to adequately prepare for passing ownership of a business is enormous in terms of wasted money and resources
• There are several practical steps that one can take – and should take – to protect the years of hard work that built the business and created the value that can be successfully transferred through proper succession planning, and this presentation explains those practical steps

The World Presidents’ Organization (www.wpo.org) is a global organization of more than 3,000 current and former CEOs who are dedicated to promoting corporate responsibility as well as a high level of personal service activities in order to bring about significant returns to the communities in which they live and work.

A Short Primer on Financing Alternatives

Presented to the Circuit

This presentation describes financing alternatives and ranks them according to degree of difficulty to obtain. The range of alternatives includes:

• Easily-accessible private sources such as family and friends
• Sometimes overlooked sources such as seller financing and earn-out arrangements
• Organized equity investment groups such as angel investors and venture capital firms, and
• Debt options that range from traditional bank financing to more costly and more complicated subordinated debt arrangements

The Circuit (www.thecircuit.net) is an organization that serves the Cincinnati metropolitan area’s technology community. With 175 member companies, the Circuit assists technology-related businesses as well as promoting the overall development of technology resources in the Greater Cincinnati area.

Co-sponsored by Greater Cincinnati Chamber and Strategic Eight

A Guide to Understanding and Negotiating Through the Process of Buying A Business

Presented to the Cincinnati Chamber of Commerce

The topics covered in this presentation include:

• An overview of M&A trends and activity in the US
• Some lessons learned from successful acquirers
• An outline of the fundamental questions that need to be answered BEFORE deciding to grow through acquisition
• Guidance on preparing your firm to be an acquirer of businesses
• A discussion of the important steps in the acquisition process that make buying successful
• Lists of the Top 10 “Deal Making” and “Deal Breaking” scenarios
• A case study highlighting a successful acquisition

• The reasons for needing a valuation include the following typical scenarios: business sales & acquisitions, gift & estate planning, implementing buy/sell agreements, resolving shareholder disputes, income tax issues, divorce cases
• There is no standard method of valuation for every business situation
• “Fair Market Value” – the definition of value used in most valuations – explained
• An overview of the three primary approaches to business valuations: the market approach, the cost approach and the income approach
• The best way to select a quality business appraiser is to look for credentials such as AM, ASA, CFA and MBA and to inquire about methodologies and experience

Presented to the Probate Specialty Section of the Cincinnati Paralegal Association (www.cincinnatiparalegals.org).

This seminar highlighted the material aspects of performing a valuation of closely-held businesses for gift and estate planning:

• Estate planners should hire business appraisers to avoid Section 6662 penalties to the client triggered by asset undervaluation (40% additional penalty if value claimed is less than 25% of value finally determined).
• The key variables affecting a business value include: 1) the normal level of net free cash flow; 2) the expected long-term growth of net free cash flow; and 3) the magnitude of the risk of achieving the expected net free cash flow
• Noncontrolling interests (less than 50% ownership) do not have the power to set compensation levels for managers, declare dividends, initiate a sale of the business, and/or hire and fire personnel. A significant discount may be appropriate for noncontrolling interests.
• Unlike public securities, which can be converted into cash in several days, it may take months or years to convert a closely held business interest into cash. A further discount from the value of the non-controlling interest may be appropriate.

Presented to Comstock Valuation Advisors
This presentation outlines recent M&A trends and highlights The Malibu Group’s expertise in enhancing acquisition results for growing and upper middle market businesses.

• M&A deal volume and value has been in decline for the past 2 years.  However, the middle market is poised for generational change as the number of  business owners planning to retire continues to increase.
• Liquidity is still high.  Private Equity Funds are still flush with cash commitments and have over $1.3 trillion currently available for
  new deals. 
• Both buyers and lenders are doing more extensive due diligence because of an increased focus on risk.  Because of the increased
  risk, PE Funds are in a Catch-22 of wanting to use higher benchmark returns in ROI models, but being forced to put more equity into
  deals because of reduced leverage ratios.  
• Lower leverage ratios mean lower EBITDA multiples and more complicated deal structures.  Given the current economic environment, 
  businesses can trust The Malibu Group to make sense of it all and optimize business investments and exits.