Liquidity Finding the Right Strategic Partner. Money Mailer, LLC: A Case Study

Transcription

1 Liquidity Finding the Right Strategic Partner Money Mailer, LLC: A Case Study Money Mailer, LLC Roark Capital Group Corporate Drive 1170 Peachtree Street Garden Grove, CA Suite Atlanta, GA

2 The Company s Business: Money Mailer provides direct response and interactive advertising services to businesses through a national network of nearly 300 franchisees

3 Preparation: Team: CEO and CFO Investment Banker (Advisor) Merger and Acquisition Attorney CPA Have your house in order Prepare Confidential Investment Memorandum Consider Franchise Disclosure Obligations How will you keep your business growing during the liquidity process?

4 Selling Points: Turned-around company with strong, sustainable growth in revenues, profits and EBITDA #2 Company in industry with huge untapped potential for growth in revenues and profits A strong franchise system with satisfied franchisees and a compelling business proposition that is a win for customers, a win for franchisees, and a win for the Corporation A solid management team capable of taking the Company to its potential

5 Not just for benefit of shareholders It must work for other stakeholders (Employees, Franchisees, etc.) Must satisfy 3 Conditions 1. Sufficient Buyer s Liquidity 2. Buyer s Fit with Franchise System 3. Buyer s Fit with Management/Employees

6 3 Available Options Initial Public Offering Too costly for small cap Company Risks and investor short term focus not acceptable Sell to Strategic Partner May pay higher price Concerned about management/employee continuity Sell to Private Equity Investor Yes, if three conditions met

7 Some Questions to Ask Up Front Typical size of portfolio companies Industry Experience Reputation Involvement (Active or Passive) Investment Time Horizon Capital Structure Approach Debt vs. Equity Willingness to invest additional capital in the future Values/Corporate Culture

8 Roark s Approach Focused on franchise companies Micro Cap Companies ($3 million - $30 million of EBITDA) Listen to Customers, Franchisees and Employees Continued Management Role with Equity for the Team Encourage Creativity, Collaboration and Communication (Early delivery of bad news) Establish and Communicate Goals Align Incentives Provide Growth Capital

9 The Acquisition Process: Evaluate confidential investment memorandum Submit preliminary indication of interest Meet Senior Management and review more detailed information Submit letter of intent (price, structure, exclusivity) Begin detailed due diligence (legal, accounting, IT, insurance, customers etc.) Prepare and negotiate definitive acquisition agreement Arrange debt financing Complete diligence and credit agreement with lenders Negotiate management employment agreements Sign definitive agreement Close

10 Liquidity Event: Roark s Post- Closing Involvement Detailed announcement to franchisees and employees with question and answer sessions Management/Employee Continuity Roark accepted existing strategic plan Roark engaged but not intrusive Give guidance and counsel Extended roladex Provide funding for expansion

11 Liquidity Event: Funding Results to Date: Circulation growth per annum 15% Revenue growth per annum 18% EBITDA growth per annum 20% All parties are happy