Information Memorandum - MAUS€¦ · Reseller and Distributors Abco Company has a number of affiliate partners and higher margined distributors. The respective margins offered are

Information Memorandum Prepared for: Abco Company

Confidential Information Memorandum Sample Consultancy Practice Business Agent Licence # 122781

Date: Wednesday, January 15,

Phone: 02 9907 1669

Fax: 02 9939 5993

Web: www.maus.com.au

Email: [email protected]

Information Memorandum Prepared For: Abco Company

Copyright. All Rights Reserved. 1 1

Table of Contents

ONE PAGE PROFILE ...................................................................................................................... 3

PURPOSE OF THIS DOCUMENT ................................................................................................... 4

CONDITIONS OF ISSUE OF MEMORANDUM ................................................................................................................................ 5

EXECUTIVE SUMMARY ................................................................................................................. 7

BUSINESS OVERVIEW ........................................................................................................................................................... 7

QUICK FACTS ABOUT THE BUSINESS .......................................................................................................................................... 7

TURNOVER & PROFITABILITY ................................................................................................................................................... 7

REVENUE ............................................................................................................................................................................ 8

PROFIT .............................................................................................................................................................................. 8

BUSINESS HISTORY .................................................................................................................... 11

KEY STRENGTHS .................................................................................................................................................................. 12

ORGANISATION, MANAGEMENT AND CONTROL ........................................................................ 14

COMPANY PHILOSOPHY ....................................................................................................................................................... 14

MANAGEMENT AND EMPLOYEES ............................................................................................................................................ 14

SHAREHOLDERS .................................................................................................................................................................. 15

BUSINESS ANALYSIS ................................................................................................................... 16

EXECUTIVE SUMMARY ............................................................................................................... 16

BUSINESS OVERVIEW ......................................................................................................................................................... 16

QUICK FACTS ABOUT THE BUSINESS ........................................................................................................................................ 16

PRODUCTS ....................................................................................................................................................................... 16

SALES BY PRODUCT CATEGORY ............................................................................................................................................... 17

SOURCE: ABCO COMPANY MANAGEMENT ACCOUNT.

REVENUE BY MAJOR PRODUCT SUMMARY............................................................................................................................... 18

CUSTOMERS AND DATABASES ................................................................................................... 19

CUSTOMER ACQUISITION AND PROCESSING .............................................................................................................................. 19

DISTRIBUTION CHANNELS ........................................................................................................ 20

RESELLER AND DISTRIBUTORS ................................................................................................................................................ 20

DISTRIBUTION CHANNELS ................................................................................................................................................... 20

Source: Abco Company management accounts ......................................................................... 20

MARKET ANALYSIS .................................................................................................................... 21

SEASONAL FLUCTUATIONS .................................................................................................................................................... 22

SEGMENTATION ANALYSIS .................................................................................................................................................... 23

COMPETITIVE POSITIONING .................................................................................................................................................. 24

COMPETITIVE ANALYSIS ............................................................................................................ 25

COMPETITIVE STRATEGY COMPARISON ................................................................................................................................... 26

KEY PERSON OVERVIEW ............................................................................................................ 27

THE OPPORTUNITY .................................................................................................................... 28



FINANCIAL HISTORY .................................................................................................................. 29

FINANCIAL PERFORMANCE.................................................................................................................................................... 29

FINANCIAL PROJECTIONS ........................................................................................................... 31

REASON FOR SALE ..................................................................................................................... 34

WHERE WE ARE NOW! ......................................................................................................................................................... 34

WORKOUT PERIOD ............................................................................................................................................................. 35

SALE MATTERS .......................................................................................................................... 36

SALES PROCESS .................................................................................................................................................................. 36

INDICATIVE OFFER .............................................................................................................................................................. 38

KEY TERMS OF SALE ............................................................................................................................................................ 39

DUE DILIGENCE .................................................................................................................................................................. 39

FORMAL SALE AGREEMENT .................................................................................................................................................. 40

SUBMISSION OF OFFER ........................................................................................................................................................ 40



One Page Profile Insert Logo

Name of Business: Abco Company

Business Category: Publisher

Website Location Metropolitan NSW

Business Description Abco is one of the leading publishing, consulting and training firms that specialise in "step-by-step" profit improvement programs. The company has a range of self help software, videos and resources.

Actual 2011/2012

Revenue $250,000

EBIT $50,000

Profit Margin before tax 20%

Profit plus Addbacks $250,000

Leases and Premises The business has a 3 year lease with a two year option. They are one year into the lease.

Assets and Stock The business has no major capital equipment. Cost of goods is minimal and is written off each year.

Employees There are 8 employees working with the company. Apart from the Directors of the company there is an organised team structure and an operations manager in place.

Owner involvement and workout

The Directors work on a part time basis at the moment. They would be available to help support and nurture the new owners for up to 12 months after sales completion

Other Notes

Quick Facts about the business

Joe is a good bloke Good strong management team in place.

The company has acquired over 5,000 customers and a 10,000 mailing list.

Growth Market with lots of opportunity.

No debt, profitable business. Technology funded through organic growth.

The business is highly systemised and growth driven.



Purpose of this Document

The major shareholders of Abco Company ("Abco Company") have decided that they wish to sell the Abco Company business and has appointed 1 ("1") to be the communication avenue for this process. This Confidential Information Memorandum ("Memorandum") has been prepared for selected parties with a preliminary understanding of the business of Abco Company and to assist the recipient of the Memorandum ("Recipient") in making their own independent appraisal of Abco Company before preparing an indicative non-binding offer. The Memorandum does not purport to be complete or contain all of the information which a prospective purchaser may require. No representation or warranty is made (or will be made in any sale agreement) as to the accuracy, reliability or completeness of any information contained in this Memorandum by the Abco Company Directors, Abco Company or 1 The Recipient named at the bottom of this page agrees by receiving this Memorandum that it shall not copy, reproduce or distribute to others this Memorandum, whether in whole or in part, without the prior written consent of Abco Company. Further, the Recipient of this Memorandum will keep permanently confidential all information contained herein not already public and will use this Memorandum only for assessing Abco Company. On request, the Recipient will promptly return all material received from the Abco Company Directors, Abco Company and 1, including this Memorandum, without retaining copies. All projections in this Memorandum have been prepared by Abco Company for internal use and are for illustrative purposes only. They do not constitute, and should not be regarded as, a representation that the projected results will actually be achieved or that the underlying assumptions are valid. The projections are subject to uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of Abco Company. Abco Company has not independently verified the projections. All currency amounts are expressed in Australian dollars unless otherwise stated. All inquiries in connection with this Memorandum or the sale process in general should be directed to 1 as detailed below. All contact between the Directors and employees of Abco Company and prospective purchasers will be arranged by 1. Under no circumstances should prospective purchasers contact management or staff of Abco Company directly.

Sample Consultancy Practice Business Agent Licence # 122781

At: Recipient:

Ph: 02 9907 1669

Fax: 02 9939 5993 Email: [email protected]

Copy No:



Executive Summary

Business Overview

Abco is one of the leading publishing, consulting and training firms that specialise in "step-by-step" profit improvement programs. The company has a range of self help software, videos and resources. The Company was founded by John Tolden in 1995. John is a successful entrepreneur that is a specialist in the area of Widget production. John built his last company from a one man business to a multi-million dollar operation.

Quick facts about the business

Joe is a good bloke Good strong management team in place.

The company has acquired over 5,000 customers and a 10,000 mailing list.

Growth Market with lots of opportunity.

No debt, profitable business. Technology funded through organic growth.

The business is highly systemised and growth driven.

Turnover & Profitability For the previous 2013/2014 financial year Abco Company earnt $1,100,000 in booked revenue, a growth of 76.3% over the immediate preceding year. The profit margin for this period was 14%, resulting in a final net profit position of $150,000. The graph below shows the sales and profit for this period.



Revenue Abco Company is forecasting for the 2014/2015 financial year revenue growth of 465% over the previous financial year. This equates to a forecast of $4,000,000 in booked revenue. (The previous year was $1,100,000).

Actual Actual Actual Actual/Proj

2011/2012 2012/2013 2013/2014 2014/2015

($'000) ($'000) ($'000) ($'000)

Revenue $250,000 $624,000 $1,100,000 $4,000,000

Sales Growth 150% 76% 465%

Profit Profit for the previous (2013/2014) year was $150,000 which represents a 14% net profit margin on our revenue base of $1,100,000.

Actual Actual Actual Actual/Proj

2011/2012 2012/2013 2013/2014 2014/2015

($'000) ($'000) ($'000) ($'000)

EBIT $50,000 $126,000 $150,000 $200,000

Profit Margin before tax 20% 20% 14% 5%

Growth Rate 152% 19% 33%

PLUS ADD BACKS

Profit plus Addbacks $250,000 $326,000 $350,000 $400,000

ROI to Associated persons 100% 52% 32% 10%





This demonstrates the high technology components

involved in the business

This is the production area that is ISO 9000 certified.



Shareholders Abco Company as at June 2008 had 2 major shareholders. The Major Shareholder Table breaks down all major shareholders and the percentage and class of shares. Table – Major Shareholders

List of Major Shareholders % holding

John Smith 80%

Maria Smith 20%



Distribution Channels

Reseller and Distributors Abco Company has a number of affiliate partners and higher margined distributors. The respective margins offered are as follows::

Referral Partners : Receive a 30% margin

Dealer Resellers: Receive a 40-50% margin (based on their monthly sales volume)

Other

Distribution Channels The graph below demonstrates that approximately 55% of Abco Company’s sales are derived through Direct channels and 23% is derived from Direct channels. We sell mainly direct to the public. However we do have a few resellers and alliance partners.

Percentage sales by distribution channel

Source: Abco Company management accounts



Market Analysis The major market that Abco Company operates in is the SME market. This market consists of all small to medium sized business and is currently estimated to be $10,000,000. We expect that the market will remain at the same level from $10,000,000 for the year 2013/2014 to $10,000,000 for the year 2014/2015. Over the next 5 years the market is expected to stay at same level 100%. The forecast market size in 2017/2018 is estimated to be $20,000,000.



Seasonal Fluctuations Like most businesses the level of sales is strongly influenced by the following seasonal fluctuations. Sales normally slump over the December January holiday period. Sales normally improve dramatically at the end of each financial year and then start to taper

off during the fourth quarter. Description of seasonal

Internet Marketing Strategy Management have adopted an aggressive product focused internet strategy. The company maintains the following ongoing initiatives to maintain its dominance in the marketplace.

The maintenance of its own web site

Regular search engine submission and optimisation for all websites

Competitor ranking analysis and keyword evaluation

Creation of strong links with online business partners

Newsgroup and internet forum postings

PR releases through the internet

Affiliate and reseller programs

Email marketing and monthly newsletter distribution



Segmentation Analysis The company targets the following segments

SME Market

Segment 2

Segment 3

Segment 4 The table below provides a breakdown of the major segments that the company is targeting and an estimate of the proportion that this segment accounts for total revenue. We have indicated in the table the major benefit or solution that the segment requires and how we intend to position our products to meet their needs.

Segmentation Analysis

Market Segments SME Market Segment 2 Segment 3 Segment 4

Est Revenue 35% 0% 0% 0%

Is this segment market size

increasing?

It is estimated to grow quite

strongly

It is estimated to remain at the same

level

This segment is estimated to decline

moderately

This segment is estimated to grow

quite strongly

Major benefit or solution

that this segment requires

We offer the best value for money

product

The segment would like a product

that will

The segment would like a product

that will

The SME market will buy primarily

on price

Our product positioning

We will position our product as

being the best value. (Not the

cheapest)

We will position our product We will position our product We will position our product

General Comments about

this Segment

This segment is This segment is This segment is This segment is



Competitive Positioning The graph below indicates where we are positioned in relation to our competitors. We have chosen to position our products based on the following parameters, Price and Quality.

Hig

h

Q

ua

lity

Lo

w

High Price Low



Reason for sale

Where we are now! Abco Company is currently in Growth Phase.

The graph above shows that the company is currently in Growth Phase. At this stage the company is in growth mode. Repeat business and contracts have been secured. Expansion of the business model to new geographical

and product areas..

The company recognises that in order to achieve its full growth potential, it requires expertise and resources to build its new service and training based divisions. The company has exceptional technical capabilities and has proven that with a succession of profitable products. The company however does lack the expertise in terms of training and service management. The company considers that the launch of its service based division has been key to the company’s strategy in moving forward. To successfully maintain this division the company will need to either find an external investor to fund a planned rapid growth path or merge with a larger company that has experience in “service and subscription management”.

Documents

Information Memorandum - MAUS€¦ · Reseller and Distributors Abco Company has a number of affiliate partners and higher margined distributors. The respective margins offered are