Canadian Association of Movers December 2007 Selling Your

Canadian Association of Movers December 2007 Selling Your Business Eric Castonguay Managing Director Pricewaterhouse. Coopers Corporate Finance Inc. Pricewaterhouse. Coopers LLP 1

Agenda I. Overview of a “Typical” Sale Process II. Preparing for Sale III. Finding the Right Buyer IV. Getting the Deal Done V. Case Studies Pricewaterhouse. Coopers LLP 2

Overview of a “Typical” Sale Process Pricewaterhouse. Coopers LLP 3

The Sale Process Phase One – Setting the Strategy Define Shareholder Objectives: • Price • Structure • Timing Initial Value Analysis. Phase Two – Executing the Strategy Contact Potential Purchasers with Confidentiality Agreements Consider the unique positioning of your Company for each potential purchaser. Create competitive environment and respond to queries Engage in Final Negotiations. Provide preliminary due diligence. Final Detailed Due Diligence Preparing Marketing Selecting Closing for the the Sale Company Purchaser Transaction Market Strategy Develop list of potential purchasers. Prepare “teaser” document that summarizes acquisition opportunity. Finalize the go-to market strategy Prepare a Confidential Information Memorandum Solicit and assess expressions of interest. Coordinate Management Presentations. Negotiate letters of intent. Select final purchasers. Advise on structure: Tax & accounting ramifications Ensure all closing matters are dealt with promptly. A sale process should have two distinct “phases” - setting & executing the strategy. The critical steps of this process will be discussed in our presentation today. Pricewaterhouse. Coopers LLP 4

Preparing for Sale “Getting your house in order” Pricewaterhouse. Coopers LLP 5

Preparing for Sale Getting your house in order A successful sale process requires a disciplined approach: - Address management succession issues - Tax planning and structuring - Develop value expectations - Real estate appraisals - Updating business documents • • • Board of Director minutes Compliance filings Website material Key contracts Business plans and procedure/quality manuals - Engage advisors - Vendor due diligence Pricewaterhouse. Coopers LLP 6

Preparing for Sale Getting your house in order A successful sale process requires a disciplined approach: - Develop marketing strategy and prepare marketing materials • ‘No-names’ information teaser • Confidentiality agreement • Confidential Information Memorandum (“CIM”) • Management presentation Pricewaterhouse. Coopers LLP 7

Finding the Right Buyer “How to focus the sale process” Pricewaterhouse. Coopers LLP 8

Finding the Right Buyer Possible Acquirers • Target potential acquirers based on your objectives: - Strategic Acquirers - Financial Acquirers (Private Equity) - Management Buyout • Creating and validating the potential acquirer list: - Financing capabilities - Acquisitiveness - Cultural fit - Strategic and competitive risk Pricewaterhouse. Coopers LLP 9

Finding the Right Buyer Strategic Acquirers Strategic Rationale - Complementary product or service - Access to new customer base - Purchasing synergies - SG&A synergies - Ability to rationalize locations and unlock real estate value - Access to new geographic markets - Vertical integration - Leveraging brand name and reputation Pricewaterhouse. Coopers LLP 10

Finding the Right Buyer Financial Acquirers • Private equity investment continues at record levels - Private equity has accounted for 24% of overall transaction volume for the first nine months of 2007 • Funds are getting larger and more numerous - Blackstone Group recently closed a US$21. 7 billion fund - The number of private equity funds in North America has more than doubled in the past five years • Due to the large amounts of capital invested in private equity, these funds have become a significant factor in mid-market M&A Pricewaterhouse. Coopers LLP 11

Finding the Right Buyer Financial Acquirers Typical Acquisition Criteria • $5 million of EBITDA with sweet spot of $10 million or more –Smaller funds and individuals focus on companies with less than $5 million of EBITDA • 20 -30% IRR threshold • Clearly defined exit strategy • Strong management team • Growth potential to meet return expectations • 3 to 7 year hold period • Typically prefer control investments Pricewaterhouse. Coopers LLP 12

Finding the Right Buyer Financial Acquirers Other Considerations - Typically not involved in day-to-day operations - Attractive opportunities for management through equity incentives - Provide flexibility for retained equity stake - Provides access for growth capital or industry consolidation strategy - Generally less concern sharing sensitive information with financial acquirers Pricewaterhouse. Coopers LLP 13

Finding the Right Buyer Management Buyout • Viable alternative where high comfort levels exists between management and ownership • Eliminates risks associated with sharing confidential information with competitors • Can be staged over time or combined with a recapitalization to increase cash proceeds to the selling shareholder • May require VTB financing due to limited management financial resources • Owners can be placed in a difficult situation negotiating against management if advisor is not used • Can have a negative impact on the business if deal is not completed Pricewaterhouse. Coopers LLP 14

Getting the Deal Done “Don’t bring a knife to a gun fight…” Pricewaterhouse. Coopers LLP 15

Getting the Deal Done The Importance of Planning • Selling your business will likely be the most significant financial transaction of your career • Most often the acquirer will have significantly more dealmaking experience than the seller • A poorly planned or unsuccessful sale attempt can have a lasting negative impact on your business • Creating competitive tension and preserving options for the shareholders throughout the sale process is fundamental to achieving a superior result Pricewaterhouse. Coopers LLP 16

Getting the Deal Done Why use an advisor? • Expert and independent advice • Market credibility to process • Maximize value through structured process • Allows management to focus on the business • Provides a “buffer” between management/shareholders and investors • Established contacts with strategic and financial buyers • Global reach • Integrated tax, accounting and corporate finance advice Pricewaterhouse. Coopers LLP 17

Getting the Deal Done Approach to Common Deal Issues Sell Side Issue Confidentiality. Sell Side Approach • • Getting the right people to the table. • • • Maximizing value. • • • Pricewaterhouse. Coopers LLP Rifle vs shotgun Staged approach Confidentiality agreements Controlled information dissemination Identify financial wherewithal, acquisitiveness and potential strategic fit prior to contact. Use of Pw. C network to identify international buyers. Use of Pw. C relationships to introduce opportunity to appropriate level of management. Ensure seller’s value expectations are reasonable up front. Create Confidential Information Memorandum and sales strategy that plays to acquirer’s strategic rationale. Maintain competitive tension and options for shareholders. 18

Getting the Deal Done Approach to Common Deal Issues Sell Side Issue Losing focus on the business. Sell Side Approach • • • Last minute “surprises”. Anticipating the buyer’s next step is a key to successful negotiations. Pricewaterhouse. Coopers LLP • • Pw. C leads process and acts as information conduit. Meetings and due diligence review held offsite where possible. Leverage Pw. C knowledge if existing client. Pw. C pre-sale due diligence to identify and mitigate possible deal issues before the sale process commences. Assumption of a buyer’s perspective. 19

Getting the Deal Done Managing Deal and Business Risks Competitive Tension Demonstrating the potential of the business will be key to value Cross-selling Overhead Elimination Consolidation Opportunities Experienced Management + Pw. C CF’s role is to maximise value through focus on positive issues Service Lines Stakeholder value Customer Relationships Current Business Proforma EBITDA Strong Market Position Labour Cost Increases Competition Threat Foreign Exchange Sensitivity _ …and to minimise impact of potential risks Management Succession Customer Concentration Opportunities / Threats = Buyer specific Pricewaterhouse. Coopers LLP 20

Case Studies “Creating Value by Targeting the Right Buyer” Pricewaterhouse. Coopers LLP 21

Case Studies Non-expedited Transportation Company Overview • Non-expedited parcel delivery company focused on business to business deliveries with sales of approximately $145 million • Pw. C Corporate Finance acted as lead advisor in the sale of the Company to a large, publicly traded trucking company Acquirer Rationale • Stable, consistent cash flow • Strong management team • Cross selling opportunities • Momentum for Income Trust Conversion Pricewaterhouse. Coopers LLP 22

Case Studies Beverage Company Overview • Manufacturer of private label and branded fruit juices and drinks with sales of approximately $65 million • Pw. C Corporate Finance acted as lead advisor in the sale of the Company to a leading, publicly traded beverage company Acquirer Rationale • Facility rationalization • Access to new brands • Increased presence in the Ontario institutional market • Increased PET packaging capabilities Pricewaterhouse. Coopers LLP 23

Case Studies Precision Manufacturing Company Overview • Manufacturer of precision molded plastic components with sales of approximately $30 million • Pw. C Corporate Finance acted as lead advisor in the sale of the Company to a private equity fund Acquirer Rationale • Strong management team • Highly profitable with attractive growth opportunities • Consistent cash flow • Consolidation platform Pricewaterhouse. Coopers LLP 24

Case Studies Automotive Parts Manufacturer Company Overview • Manufacturer of highly engineered automotive components with sales of $80 million • Pw. C Corporate Finance acted as lead advisor in structuring and financing a Management Buyout of the Company Transaction Rationale • Met shareholder’s desire to provide management with an opportunity to acquire the business • Refinancing met shareholder’s short-term cash requirements • Provided structured income stream for shareholder while maintaining appropriate safeguards • Avoided disclosure of sensitive information to competitors Pricewaterhouse. Coopers LLP 25

Thank you. Eric Castonguay Managing Director Pricewaterhouse. Coopers Corporate Finance Inc. (416) 815 -5094 eric. castonguay@ca. pwc. com © 2007 Pricewaterhouse. Coopers LLP, Canada. “Pricewaterhouse. Coopers” refers to Pricewaterhouse. Coopers LLP, Canada, an Ontario limited liability partnership, or, as the context requires, the network of member firms of Pricewaterhouse. Coopers International Limited, each of which is a separate and independent legal entity. *connectedthinking is a trademark of Pricewaterhouse. Coopers LLP. Pw. C