A Five-Step Process

Step #1

This is a direct sales effort by which we have Area Sales Directors with top level executive sales experience to sell our full range of consulting services. These Area Sales Directors are established in major metropolitan cities according to their identification as we expand geographically from our headquarters in Northwest Ohio.

When soliciting businesses, we ask business owners these three questions:

Do you need more sales?
Do you think that you might need financing during the next two years?
Are you considering the sale of your business within the next two years?

If they answer “yes” to any one of these questions, they are candidates for LD Financial Services, Inc.

Our best selling service is targeted toward companies that need additional sales; which makes most companies a prospect. We target companies with between $2 million and $20 million in sales that have large gross margins and unused capacity. While we may charge a small retainer, the majority of our fee is a percentage of the increase in sales so it is clearly a performance oriented solution to the owner’s sales problem. The business owner has very little to lose and a lot to gain. This consulting service is typically provided under a long term multi-year contract so that as sales continue to grow, so does our income.

Step #2

Source and locate businesses for sale. Much like the residential housing market where many sellers hesitate to reduce their asking price only to find themselves “chasing the market lower” as transactional prices steadily decline, people tend to remember the past worth of their asset, not what the asset and terms of sale are in the current market environment.

While any business will be considered, the general guidelines for acquisition candidates are:

Sales between $2 million and $20 million.
Profitable for the last three of five years, or have a well defined path to profitability, that can be achieved with 12 months after acquisition.
EBITDA of 4 X or less.
Most businesses for sale have one or more inherent problems (lack of marketing, working capital, inadequate margins, out-of-date product lines, industry in down cycle, etc.) that need to be resolved quickly in addition to whatever the seller’s readily admitted motivation is to sell. In the evaluation process, a determination will be made that the company can bring the human and capital resources together necessary to resolve these problems within the initial 12 months after acquisition.
The capital needs of the acquisition in terms of the down-payment by the company and the funds needed to solve the problems mentioned above, and to set the acquisition on the road to profitability, should be less than $2 million initially (See Step #4 for an explanation). The balance of the funding needs for the acquisition will be provided by a combination of: (1) seller financing, (2) bank financing, and (3) asset-based lending (factoring and leasing).
The acquisition candidate should have the ability to expand from local to regional or regional to national in terms of scale.
The acquisition candidate should be located within 500 miles of Northwest Ohio (within 60% of the U.S. population).
Deal structure such that the company can envision that the initial equity investment will yield a return at least 3 times (300%) within a 3-year period of time (over a 50% compound yearly return).
The target company should have a management team in place that can continue running the business on a post-acquisition basis. If additional personnel are required, the company will then access its personnel pool as described in Step #3 below.
The books and records should be in good order and it will be a definite “plus” if the financial statements are audited or can be audited with reasonable expense.
Finally, the company will be looking for the “X” factors, which are those aspects of the company that are unique or provide a competitive advantage or represent barriers to entry.

Step #3

A database of individuals with specific backgrounds and expertise will be maintained in order to have that expertise available for both acquisition evaluation, and strategizing the post-acquisition business model for each potential acquisition candidate, once the financial aspects of the transaction are determined.

Particular attention will be given to developing relationships with those entrepreneurs and managers that want to perform in a results-driven environment that has the associated incentives in place to create personal wealth for them and an above average return for the company’s stockholders. What distinguishes these individuals is that they are looking for a career opportunity and are not focused on just having a job, benefits or entitlements. Their motivation is on results, not time.

These entrepreneurs and managers will be encouraged to search out in their local area for companies that they would like to run if money was available for the purchase. This could generate a list of candidates that are not officially for sale.

Step #4

NanoCapNation.com, an affiliated website, serves as the focal point to develop financing centered on a qualified and screened database of 1,000 accredited investors (angels and institutions) and 1,000 non-accredited investors. Within this group of investors, there would be a core group of 300 investors from each group designated as “One in a Million”.

As their designation implies, this “One in a Million” group of investors will be given a first look at any transactions deemed to be suitable for them. If a “One in a Million” investor elects not to participate on two successive occasions, then that investor will be replaced by another member from the groups that are waiting to make it into the “One in a Million” group. Members of the “One in a Million” group would be ranked according to their previous investment activity. For smaller transactions, priority would be given to those investors with the highest rankings.

To elaborate on the company’s objectives in this regard, initially, one of the screening guidelines is to select acquisition candidates that require $2 million or less from “One in a Million” investors. These funds would be used for; (1) the down-payment to the seller in cash, (2) funds required to solve any pre-determined problems and, (3) to fund the acquisition on its road to profitability or increased sales.

This figure is based upon the assumption that with this group of “One in a Million” investors, who are presented an investment opportunity with outstanding financial returns, at least 200 of these individuals would be willing to invest an average of $10,000 each, for a total investment pool of $2 million, in any one acquisition transaction.

The remaining investors would serve as a backstop or would provide a secondary source of funds if more than the $2 million was required. All of the NanoCapNation.com investors would be invited to participate in any registered offerings. (Initial Public Offerings, Direct Public Offerings, or Secondary Offerings).

In order to accomplish its funding objectives, the company, through an affiliated company has the use of the NanoCapNation.com web site for U.S. based investors, and NanoCapWorld.com (for offshore non-U.S. investors)

Step #5

Wealth management is a service provided by LD Financial, Inc. and is targeted at wealthy individuals, small institutions and pension plans. The company has access to several outstanding money managers which provide advice for a fee, using primarily the value style of investing. This style of investing focuses on finding undervalued businesses that can be purchased at a discount (usually 35%+) from their intrinsic value. Within this value type of investing, there are both active and passive investment styles available to meet the needs of the client. All of the recommended money managers have outstanding long-term records.

Once the sales process of a client’s business begins, there will be a need for financial management of the proceeds from the sale of the business. We will generate fee income from the referral.

See disclaimer page.