financing m&a opportunity - bolton...
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SkyView Partners | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
FINANCING M&A OPPORTUNITY
SkyView Partners | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391 2
M&A Consultant and Correspondent Lender:
Dedicated to creating M&A deal
structure that is eligible for bank
financing and providing timely and
cost effective bank financing for
owners of independent and registered
financial advisory practices.
SkyView Partners | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391 4
Bankers and Advisors: An Awkward Courtship
• 98% of advisors have never entered into a commercial loan• Lack experience and relationships in commercial banking
• 97% of banks have never entered into an advisory loan• Lack experience and knowledge of how to evaluate an advisory practice
Problem: Advisors lack experience on how to present their application. Banks lack understanding of how to evaluate advisory practices.
Result: Historically, minimal financing has been available to advisory loan market.
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Supply and Demand Dislocation
Valuations: 2.43 X Annual Gross Revenue
SkyView Partners | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
5
100,000
advisors set to retire by 2025
98%
of independent advisors never retire
50
buyers for everyadvisory practice seller
Crafting the Conversation: Buyers and Sellers
Today’s Buyers: Approaching sellers with a Seller’s Note:
• What sellers hear: “I do all the work and take all the risk.”
Re-Crafting Buyer Messaging: Revisit prospective sellers with bank financing:
• What sellers hear: “I can finally retire, receive a fair value for my practice, and not take on the risk.”
6SkyView Partners | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
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Valuations
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Actual FP Transitions Valuation Data
© 2019 FP Transitions
SkyView Partners | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
SkyView Partners | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
DRAG ON VALUATION
• Recurring Revenue
• Revenue Growth
• Client Growth
• High $ Clients
• Enterprise Strength
• Location
• Poor Demographics
• High Concentration Risk
• Transition Risk
• Low Enterprise Strength
• Restricted Niche
DRIVE VALUATION
© 2019 FP Transitions
2018 Market Data
What you need to know…
• Avg. Recurring GRM: 2.45 (Range 2.18-2.68)
• Avg. Non-Recurring GRM: 1.08 (Range 0.26-1.35)
• Avg. Down Payment: 37.0% (Range 20% -40%)
• Length of Seller Financing: 3 to 6 Yrs.
• Avg. Client Retention Rates: 95%
© 2019 FP Transitions
SkyView Partners | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
10
Mitigating Factors
• High: Debt to Equity
• Character (credit)
• Global Cash Flow
• Low: Loan to Value
Standard Loan Structure
The above is not a proposal and not a commitment to lend.The fee, rate, terms, and conditions are for informational purposes only and will require formal credit underwriting and approval.
SkyView Partners | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
$750,000 Minimum
Common deal structure with
95% bank financing requires
20% - 30% of proceeds held in
escrow subject to client
conversion hurdles for seller.
Get Pre Qualified in 48 hours:
www.skyview.com
SkyView Partners | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391 11
NEXT STEPS: Sellers
• Determines the amount of bank financing available from the seller’s practice:
– Cash flow
– Enterprise value
• Ascertaining bank financing available from the seller’s practice puts a seller in better position to set asking price and begin search for buyer(s).
12SkyView Partners | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
Pre-Qualification from our M&A Consulting Team
National and state by state buyer ranking method that gauges:
• Creditworthiness, and
• Practice readiness to acquire
another practice
13SkyView Partners | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
NEXT STEPS: Buyers
Key factors in determining PurchasingPowerTM ranking, include:
• Completion of online buyer profile
• Pre-Qualification
• Existing banking relationship with SkyView network bank
• Access to liquidity (buyer capital or access to line of credit)
• Completed valuation
• Utilization of practice management coaching program
SkyView Partners | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
Q&A