Seller Information Package

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Seller Information Package

Ready for Change?

Connecting you to the right buyer.

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Beacon Corporation, Brokerage I 5300 Yonge Street, Suite 205 Toronto ON M2N 5R2 | Tel: 416 228 1200 | Fax: 416 913 1912 www.beaconbrokerage.ca

Thank you for reaching out to us and inquiring about assistance with one of the most important business decisions of your life – the disposition of your company. As a business intermediary and a member of the International Business Brokers Association, our specialty is mediating transactions of privately-held companies with revenues between $1M and approx. $20M. On a daily basis we get involved in assisting business owners in the planning, valuation, confidentially marketing, negotiation and ultimately consummating of transactions of small to medium-size privately held businesses.

OUR FIRM

Beacon Corporation, Brokerage (Beacon) is a business intermediary and a licensed real estate brokerage in Ontario that exclusively specializes in marketing and facilitating transactions of small to medium-size businesses. As members of the International Business Brokers Association we pride ourselves on deploying highly sophisticated methods of preparation, valuation, marketing, and negotiation leading up to a successful business deal. We work on an exclusive representation terms with our partners and our listings are not available through public domains like the Multiple Listing Services (MLS). As the opportunities we represent are generally well-performing, established businesses, we are extremely careful in marketing them confidentially and without disruptions to current operations. Each seller that works with Beacon is required to provide an extensive list of company’s documentation and information prior to us valuing and marketing the opportunity. As part of our commitment to both sellers and buyers each business’ performance is summarized within a confidential memorandum that is made available to pre-screened buyers.

Since we execute a marketing plan and create a higher level marketing document to attract more sophisticated buyers, our model is in line with the Mid Market M&A firms, but at substantially reduced levels. Our staff has been advising large clients for most of their careers, which is a level of advisory service that the SME market typically does not see.

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OUR SERVICES Transaction Services

We accept mandates to execute the transaction to sell a company. Under this engagement, we would prepare the pricing estimate for going to market, and then prepare all the marketing documentation for the company. We would also prepare the Go To Market strategy and identify the channels that we would use to access the most appropriate buyer base. Once in the market, we manage the buyer reviews, due diligence process and the deal structuring.

Advisory Services

We accept mandates where business owners wish to prepare their company for a future sale. Under this engagement, we would undertake a structured approach to diagnose the saleability of a company through a diagnostic assessment. This assessment will result in a gap analysis identifying areas of improvement, with a focus on improving areas that will add to the value of the organization through a cost benefit analysis.

OUR GUARANTEE

In working with Beacon Brokerage we guarantee you that we will:

- Act ethically and represent the business for sale fairly and objectively;

- Provide you with an unbiased professional opinion on the value of the business;

- Pre-screen and pre-qualify buyer leads and only present to you real potential purchasers;

- Develop a plan and follow it thoroughly, checking periodically with you on its progress;

- Suggest professional advisors in any area that falls outside of our core competency;

- As members of RECO and the IBBA we are held to the highest ethical and professional standards and have

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OUR PROCESS

At Beacon we have developed a thorough 10-step approach in assisting business owners in their effort to maximize shareholder value during the sale of their business. This, combined with our rigorous pre-screening and pre-qualifying process of potential business purchasers and our proprietary buyer database, makes us uniquely positioned to serve the needs of small to medium-size businesses in Ontario.

1. Initial Meeting/Consultation:

a. Upon your invitation, we meet either at your or our offices during which we introduce our business brokerage services and discuss the selling process and our fee structure. At this point, we also ask you to give us an overview of the business, the reasons for selling and high-level financial information so that we can get an initial understanding of your business performance.

2. Enlisting of Beacon Brokerage:

a. When you decide to contract our services, we require that you sign the Beacon Fee & Listing Agreement and pay the agreed valuation fee before work commencement.

3. Business Valuation:

a. In order to carry out the business valuation, we need to receive the following documentation: i. Completed Seller Questionnaire (template to be provided by Beacon)

ii. 5 years’ of Financial Statements & Interim Profit & Loss / BS for the current fiscal year iii. Asset/Equipment List (list of assets included in the sale of the business)

iv. Lease Agreement (if applicable)

v. Franchise/Distribution Agreement (if applicable)

vi. Any other relevant documentation depending on type of business

b. Based on the information provided and after possible follow-up requests by email or phone, Beacon makes a recommendation to you on the Asking Price based on an estimated Fair Market Value. We will provide you with a rationale of how that FMV has been determined, and give you an estimate of the ultimate Proceeds to Seller after taking into account closing costs, brokerage commission, etc. Although we suggest taking up our experienced advice as business brokers, you as Seller have the final say in what Asking Price the business will be listed for.

4. Creation of promotional documents:

a. In parallel, our team will create two critical marketing documents that will entice prospective buyers to investigate your business-for-sale opportunity further. Both documents will be sent for your approval before they are used:

i. The Blind Profile (1pg) which is used to confidentially market the business to prospective buyers

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ii. The Confidential Business Profile (15-30pg) which will be distributed to pre-screened buyers after they have signed a Non Disclosure Agreement

5. Marketing the business:

A combination of marketing techniques is used to confidentially promote your business to prospective buyers. These include:

a. Solicitation to prospective buyers we have worked with before who were interested in a similar business in the past

b. Featuring of your business in our monthly Email Newsletter to our Proprietary Buyer Database

c. Solicitation letters to targeted buyer candidates in the same or complementary industries, often following your recommendations

d. Over 15 specialized businesses-for-sale websites, such as www.businessesforsale.com and

www.bizbuysell.com, as well as Beacon’s website www.beaconbrokerage.ca

e. Direct Mailer to relevant Industry Associations

6. Screening Prospective Buyers:

a. When we receive an inquiry for your business, the first prospecting step is to require a signed Non Disclosure Agreement (NDA) to ensure the confidentiality of any information released. This forms already a strong pre-screening test, as in practice many buyers are neither sufficiently interested nor wish to take the legal consequences of signing such an agreement. The willingness to sign the NDA already provides significant clues to the seriousness of the prospective buyer.

b. Once the NDA is received, the listing agent will hold an interview with the buyer to obtain background information, including his/her experience working in your industry, experience/willingness to be a business owner, and financial capabilities to fund the transaction. The broker will at this stage distinguish fitting prospective buyers, and send them the Confidential Business Profile for review.

7. Showing the Business:

a. If the buyer remains interested in your business, further discussions will take place both between the buyer and the broker, and between the broker and yourself to answer any immediate questions that the buyer or you may have.

b. At this point, we will also require a Buyer Financial Summary and if deemed necessary, a Credit Report to assess the Buyer’s financial capabilities.

c. We will facilitate a first Buyer/Seller Meeting at our offices or preferably at your company location to allow the buyer a first visit to the business. This may be followed by more meetings as required.

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8. Negotiating the Purchase Agreement:

a. The Letter of Intent to Purchase, or Conditional Purchase Offer is the formal document in which the buyer and seller agree on the major parameters of the deal. If after a period of due diligence, the buyer wants to finalize the purchase a definitive Share or Asset Purchase Agreement is prepared and signed by both parties. Beacon assists in the offer preparation & term negotiations by:

i. Suggesting support advisors (legal, accounting, financial) as required

ii. Reviewing the offer & drafting a Counter Offer, if required (with each party’s legal counsel) iii. Providing opinion and advice on various considerations to be made in the Offer

b. Once the Purchase Agreement has been signed, a 10% deposit of the Sales Price is put in an Escrow account by the buyer to signal his commitment to conduct the due diligence and finalize the purchase.

9. Conducting Due Diligence:

a. The Due Diligence period consists typically of 3 to 5 weeks in which the buyer gets unlimited access to the business and its records to ensure that the financial and other data provided is accurate and that the value of the business is as previously represented. Beacon will help compile Due Diligence Checklists and assist the seller in submitting the required documents to the buyer. We use Firmex, an online M&A data room to securely provide access of documents to the buyer.

10. Closing the Transaction:

a. At the time that the two parties have agreed on a definitive asset or share purchase agreement and the Due Diligence has been completed, it is time for the parties’ attorneys to lay the groundwork for the transfer of the business interest between the vendor and the purchaser. Beacon assists the seller in the process where applicable by proofing/revising closing documents, and coordinating the initial transitioning of the business to the new owner.

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Beacon Corporation, Brokerage is a member of:

CLIENT TESTIMONIALS

“Beacon helped our firm to complete the acquisition of a company in Toronto in a very professional and cost effective way. The level of work and expertise was adapted to our transaction with flexibility and reliability.”

Mr. Henri Biscarrat, Chief Financial Officer

“My wife and I have greatly enjoyed working with Beacon and we are pleased to say that they have successfully sold our business a lot quicker than we expected it to happen and at a price we are very happy with. This is obviously a positive reflection on all the effort Beacon put in on our behalf. As I sit here writing this note it is my 2nd last day as the owner of my company, but I could not let the moment pass without expressing on behalf of my wife and I our sincere thanks for helping us to sell our business.

Mr. Byron Faretis, Former CEO

“Beacon was hired by us to list and sell the business. The broker was thorough in his collection of facts and details, and prepared a well laid out outline and a detail report. He kept me informed thought the process and marketed the listing exceptionally well. Once an offer was produced he walked me along the process and kept me well informed and involved. For the closing Beacon found a good lawyer who represented both parties and was present for the inventory counting and prepared a detail excel sheet. The brokerage is extremely professional and very thorough in its work. I can highly recommend Beacon’s services should you be a small or medium sized business considering selling.”

Ms. Sue DeGrandis, Former CEO

Beacon has developed some of most advanced business assessment tools that I have ever seen. They also have amazing mechanisms to not only locate but screen buyers. Combine those with their negotiating skills and you will quickly see why you want Beacon behind you if you are selling your business.

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CERTTIFIED BUSINESS INTERMEDIARY (CBI)

All of Beacon’s agents have either completed or are working towards a CBI designation. A Certified Business Intermediary (CBI) is a trained and experienced business intermediary who possesses the necessary expertise to perform business valuations, confidential marketing, negotiations and the multitude of complex details involved in the sale or purchase of a privately held business. The CBI designation is a professional credential earned by Business Intermediaries who are members of the International Business Brokers Association and have satisfied the work experience and academic requirements in addition to adhering to the ethical standards of the IBBA.

CBI's have three distinct qualifications:

•A higher level of experience, training, and education necessary to handle the marketing, negotiations and complex details involved in the purchase or sale of privately held business.

•The most up-to-date industry data related to valuation, financing, contracts, taxes, legislation and other areas with respect to business transactions.

•Affiliation with hundreds of other intermediaries and professional partners (CPA's, Attorney's, etc) on a local, national, and international basis.

What are the CBI Requirements?

•Experience - A minimum of three years full-time business brokerage experience within the prior ten years, and must be actively involved in the deal-making process, or management of the process.

•Ethics - A thorough understanding and commitment to uphold the Association's high Code of Ethics.

•Education - CBI's must complete a rigorous advanced study curriculum involving a minimum of 68 class hours of business brokerage courses in addition to attending IBBA Conferences for professional development, continuing education, and periodic re-certification

•Examination - Once all requirements are met, CBI's must pass a difficult and comprehensive examination.

The CBI designation is awarded following rigorous education, testing and demonstrated superior working knowledge of business brokerage skills. This difficult to obtain designation has been awarded to less than 800 recipients internationally.