Investor Memorandum Franchise

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Investor Memorandum Franchise Powered By Docstoc
					  Liquidity – Finding the Right
        Strategic Partner

Money Mailer, LLC: A Case Study
  Money Mailer, LLC        Roark Capital Group
  14271 Corporate Drive    1170 Peachtree Street
  Garden Grove, CA 92843   Suite 1825      Atlanta, GA 30309
    Liquidity Event: Finding the
       Right Strategic Partner
The Company’s Business:

Money Mailer provides direct response and
interactive advertising services to businesses
through a national network of nearly 300
      Liquidity Event: Finding the
         Right Strategic Partner
• 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?
    Liquidity Event: Finding the
       Right Strategic Partner
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
    Liquidity Event: Finding the
       Right Strategic Partner

•   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
  Liquidity Event: Finding the
     Right Strategic Partner
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
   Liquidity Event: Finding the
      Right Strategic Partner
Some Questions to Ask Up Front
  Typical size of portfolio companies
  Industry Experience
  Involvement (Active or Passive)
  Investment Time Horizon
  Capital Structure Approach – Debt vs. Equity
  Willingness to invest additional capital in the future
  Values/Corporate Culture
   Liquidity Event: Finding the
      Right Strategic Partner
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
   Liquidity Event: Finding the
      Right Strategic Partner
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
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
   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

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