Keystone Partners, LLC

The Keystone Method of Selling Businesses

The KEYSTONE METHOD is a PROCESS APPROACH designed to sell your business for maximum value. It consists of 15 separate activities, each one carefully planned and properly executed to ensure a smooth transition to the next activity.

Proper execution of each activity is crucial to the overall success of the sale of your company; it is for this reason that you will be able to be to monitor the progress and be engaged throughout the entire process.

Stage 1

Assessment Meeting

The program begins with a meeting between you and KEYSTONE at a confidential location of your choosing where the potential sale of your business is discussed frankly, openly and confidentially. Our objective is to begin to understand your personal objectives, listen, and learn about your business.

Stage 2

Marketability Assessment and Valuation

If we mutually agree to proceed, KEYSTONE will perform a confidential Marketability Assessment. This assessment analyzes the business and focuses on the probability and price range at which the business may sell in the current M&A environment. Understanding the value drivers, financials and performing a “real time” assessment on your business is an important step towards maximizing value. This step is intended for the seller's eyes only.

The Marketability Assessment consists of three essential components:

• Reviewing & recasting your financial statements

• Defining future assumptions

• Pro-Forma preparation

Stage 3

Sell or Hold

At this point, you the seller, make the decision to go forward. You are under no obligation at this point to sell.

Stage 4

Definition of Personal Needs

Your personal needs must be addressed early in the transaction. They need to be thoroughly thought out and documented to insure their satisfaction as the transaction proceeds. This important stage will provide a guideline for preliminary negotiations and the deal structure of the transaction.

Stage 5

Confidential Marketing Document

KEYSTONE will prepare the Confidential Business Review - the official selling document for your company. This document, sometimes referred to as the “deal book” is a comprehensive information package that contains much of the information a prospective buyer will need to make a decision on pursuing the acquisition of the company.

This comprehensive document includes factors that will add value and marketability to your company such as:

• Business history / description / profile

• Historical Financial Statements

• Potential new business areas

• Industry outlook

• Market conditions

• Asset list / hidden assets

• Pro forma and recast financial statements

• Reputation

• Organizational structure

• Employee & key employee Information

• Products, technology, patents

These issues are formatted and professionally written to appeal to the buyer's perspective as they address ROI, strategy fulfillment and synergy with their existing operations. Potential buyers will evaluate your company by projecting the results of future infusions of capital, technology and other resources. The Confidential Business Review will make these recommendations, and calculations for the buyer, and at the same time project your company's future in the most promising and influential manner.

Stage 6

Confidential Executive Summary

KEYSTONE will contact a large number of prospective buyers (just suspects at this point). The Confidential Executive Summary is a 1 or 2-page profile of your company, used as a lead generation marketing tool to create a preliminary indication of interest from prospective buyers. The profile includes a very short summary write up about your company highlighting some of the strengths; it also provides some basic financial information (3 year sales, COGS, EBITDA). The profile is written to be blind - it never discloses the identity or location of your company.

Stage 7

Prospective Strategy Meeting

This is a critical, extremely important meeting where you and KEYSTONE will create the basis for marketing your company. All the resources and experience of KEYSTONE and our affiliated networks are focused on the issues of who will be the best buyers for your company, and what factors might impede a sale. The KEYSTONE Proprietary Buyers' Database and the KEYSTONE Affiliates Buyers' Databases will be used to identify prospective buyers. Also, at this meeting a basic criteria is developed to identify other industries and potentially interested buyers.

Stage 8

Primary Step Marketing

Based on the decisions made at the Prospecting Strategy Meeting KEYSTONE will develop a "long" list of active and prospective buyers. Numerous sources are considered to create this primary list:

• KEYSTONE’S database of buyers

• KEYSTONE’S network affiliates databases

• Private Equity Groups / Private Equity Firms

• M&A specific publications

• Trade publications related to your industry

• Targeted mailing lists based on specific NAICS or SIC codes, size, and geographic location.

• If applicable, placement of "acquisition opportunity" type blind ads in selected publications.

After you approve the primary "long" list initial contact is then made with potential qualified buyers by providing them with the Blind Executive Summary. Interested parties are asked to sign our Confidentiality Agreement and (when appropriate) complete our Buyer Profile Questionnaire. These documents which must be signed and returned prior to receiving any confidential information on the business.

Stage 9

Confidential Marketing To All Respondents

Prompt response and proper follow up to all interested buyers with a copy of The Confidential Business Review is essential. The cover letter clearly outlines the manner in which the sales process will be managed, including time tables. Often the business is “brought to market” without a set asking price being placed on the business.

Stage 10

Negotiating And Deal Structure

The KEYSTONE Method is designed to bring multiple, qualified buyers to the table. Only by negotiating with several buyers under carefully managed guidelines can you be assured of getting maximum value for your company. Under ideal circumstances creating a competitive auction environment among multiple prospective buyers will maximize the selling price of the business.

Stage 11

The Letter of Intent

KEYSTONE will help assure you that this extremely important step is done thoroughly and thoughtfully. It is the "Agreement to Agree" with the buyer of your choice. It spells out the basic elements of the transaction; any further marketing activities normally stop at this point while the buyer performs due diligence on your company.

Stage 12

Financing

KEYSTONE maintains close ties with both debt and equity sources of financing. Often corporate buyers do not require financing assistance, but individual buyers frequently do. When it is necessary, we will provide introductions and assistance to buyer’s on various financing sources to facilitate the closing.

Stage 13

Due Diligence

This step involves a detailed investigation by the buyer into your business. KEYSTONE will coordinate and communicate with the buyer’s due diligence team and will be there to assist you through this entire critical phase of the transaction.

Stage 14

The Purchase Agreement

During this phase, all the documentation for the transaction comes together. We use our experience to review the purchase agreement, exhibits and related documents to make recommendations, and assist in resolving last minute differences. KEYSTONE will work closely with your team of professional advisors, attorneys, and CPA’s to finalize the agreement.

Stage 15

The Closing - Pay Day!

During this phase, all the documentation for the transaction comes together. We use our experience to review the purchase agreement, exhibits and related documents to make recommendations, and assist in resolving last minute differences. KEYSTONE will work closely with your team of professional advisers, attorneys, and CPA’s to finalize the agreement.