M&A Financial Model

Project title: Project Grow Date: 25-May-20

Responsible: Mrs Union Time: 6:21 PM
M&A Financial Model

Contents For Training Purposes Only

© Big4WallStreet.com
 M&A Financial Model © Excel Business Modeling Solutions
All rights reserved
q Manual
q Deal Details www.big4wallstreet.com
q Buyer Financial Statements www.big4wallstreet.org
q Target Financial Statements
q Merged Financial Statements Important Disclaimer:
q Summary
q Merger Analysis The Model has been constructed for a specific purpose and is not
q Metrics intended for distribution to third parties.
q Graphs
The Model's use is intended solely for training and educational purposes
q Checks in order to support customers of "Big4WallStreet.com" copyrighted under
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M&A Financial Model
Manual
Period type Actual Actual Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 0 1 2 3 4 5

1 . General information
Model Name: Name M&A Financial Model
Project title: Name Project Grow
Responsible: Name Mrs Union

2 . Model timeline
Model start date Date 01-Jan-18
Forecasting Period Months 12
Start of forecast periods Date 01-Jan-20
End of forecast period 31-Dec-24
Actual Actual
Forecast Forecast

3 . Model Color Coding

3.1 Cells Color Coding
Restricted Cell 100
Model Input Data 100
Call Ups 100
Calculations 101

3.1 Worksheets / Tabs Color Coding

Input Sheets
Calculations Sheets
Output Sheets
Admin Sheets
4 . Date and Time Conventions
Days in Year Days 365
Days in Month Days 30
Months in Year Months 12
Days in Week Days 7
M&A Financial Model
Deal Details
Period type Actual Actual Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 0 1 2 3 4 5

Deal Assumptions
Transaction Close Date Date 31-Mar-20 Values between 01-Jan-20 and 31-Dec-20

Target Share Price USD 15.0

Acquisition Premium % 30.0%
Offer Price USD 19.5

Target Shares Outstanding # 1,400,000

Target Equity Purchase Price USD 27,300,000

Cash Proportion of Purchase Price % 20.0%

Stock Proportion of Purchase Price % 80.0%

Cash Consideration USD 5,460,000

Stock Consideration USD 21,840,000

Buyer Share Price USD 15.0

Share Issuance Discount % 2.0%
Share Issuance Price USD 14.7

Buyer Shares Outstanding # 1,500,000

Shares Issued # 1,485,714
Pro Forma Shares Outstanding # 2,985,714

Equity Issuance Fees % 2.5%

Debt Issuance Fees % 3.0%

Restructuring Cost USD 150,000

Other Transaction Costs USD 250,000
M&A Financial Model
Buyer FS
Period type Actual Actual Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 0 1 2 3 4 5
General Buyer Assumptions
Buyer Name Name iBuy Inc.
Buyer Share Price USD 15.0
Buyer Intrinsic Value per Share USD 15.7
Buyer Shares Outstanding # 1,500,000
Fraction of Year #
M&A Financial Model
Buyer FS
Period type Actual Actual Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 0 1 2 3 4 5
Buyer FS
1 . Income Statement
Revenues USD 6,000,000 6,500,000 6,825,000 7,166,250 7,524,563 7,900,791 8,295,830
% Growth % 8.3% 5.0% 5.0% 5.0% 5.0% 5.0%

Cost of Goods Sold USD 2,000,000 2,050,000 2,388,750 2,508,188 2,633,597 2,765,277 2,903,541
% Margin % 33.3% 31.5% 35.0% 35.0% 35.0% 35.0% 35.0%
Gross Profit USD 4,000,000 4,450,000 4,436,250 4,658,063 4,890,966 5,135,514 5,392,290
% Margin % 66.7% 68.5% 65.0% 65.0% 65.0% 65.0% 65.0%
Sales & General Admin Expenses (SG&A) USD 1,600,000 1,650,000 1,732,500 1,819,125 1,910,081 2,005,585 2,105,865
% Growth % 3.1% 5.0% 5.0% 5.0% 5.0% 5.0%
EBITDA USD 2,400,000 2,800,000 2,703,750 2,838,938 2,980,884 3,129,929 3,286,425
% Margin % 40.0% 43.1% 39.6% 39.6% 39.6% 39.6% 39.6%
Depreciation & Amortization USD 300,000 300,000 424,000 454,560 483,686 511,425 537,824
EBIT USD 2,100,000 2,500,000 2,279,750 2,384,378 2,497,198 2,618,503 2,748,601
% Margin % 35.0% 38.5% 33.4% 33.3% 33.2% 33.1% 33.1%
Interest Expense USD 200,000 200,000 210,000 183,000 156,000 129,000 102,000
EBT USD 1,900,000 2,300,000 2,069,750 2,201,378 2,341,198 2,489,503 2,646,601
% Margin % 31.7% 35.4% 30.3% 30.7% 31.1% 31.5% 31.9%
Income Tax Expense USD 200,000 200,000 206,975 220,138 234,120 248,950 264,660
% Tax % 10.5% 8.7% 10.0% 10.0% 10.0% 10.0% 10.0%
Net Income USD 1,700,000 2,100,000 1,862,775 1,981,240 2,107,078 2,240,553 2,381,941
% Margin % 28.3% 32.3% 27.3% 27.6% 28.0% 28.4% 28.7%
CHECK OK OK OK OK OK OK OK OK
M&A Financial Model
Buyer FS
Period type Actual Actual Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 0 1 2 3 4 5
2 . Balance Sheet
Existing Tangible Assets USD 5,000,000 5,400,000 6,076,000 6,711,440 7,308,754 7,870,228 8,398,015
Intangible Assets USD 0 1,000,000 900,000 810,000 729,000 656,100 590,490
Goodwill USD 0 0 0 0 0 0 0
Non Current Assets USD 5,000,000 6,400,000 6,976,000 7,521,440 8,037,754 8,526,328 8,988,505
Cash USD 1,000,000 1,650,000 2,456,707 3,421,003 4,539,189 5,817,460 7,262,332
Accounts Receivable USD 300,000 450,000 560,959 589,007 618,457 649,380 681,849
Inventory USD 300,000 350,000 261,781 274,870 288,613 303,044 318,196
Other Current Assets USD 300,000 350,000 350,000 350,000 350,000 350,000 350,000
Current Assets USD 1,900,000 2,800,000 3,629,446 4,634,880 5,796,259 7,119,884 8,612,377
TOTAL ASSETS USD 6,900,000 9,200,000 10,605,446 12,156,320 13,834,013 15,646,212 17,600,881

Other Short Term Liabilities USD 300,000 350,000 300,000 300,000 300,000 300,000 300,000
Accounts Payable USD 300,000 350,000 392,671 412,305 432,920 454,566 477,294
Short Term Liabilities USD 600,000 700,000 692,671 712,305 732,920 754,566 777,294
Other Long Term Liabilities USD 200,000 300,000 300,000 300,000 300,000 300,000 300,000
Existing Debt Facilities USD 3,500,000 3,500,000 3,050,000 2,600,000 2,150,000 1,700,000 1,250,000
New Overdraft Facility USD 0 0 0 0 0 0 0
New Sub Debt Facility USD 0 0 0 0 0 0
New Senior Debt Facility USD 0 0 0 0 0 0 0
Long Term Liabilities USD 3,700,000 3,800,000 3,350,000 2,900,000 2,450,000 2,000,000 1,550,000
TOTAL LIABILITIES USD 4,300,000 4,500,000 4,042,671 3,612,305 3,182,920 2,754,566 2,327,294
Common Stock USD 200,000 200,000 200,000 200,000 200,000 200,000 200,000
Retained Earnings USD 700,000 2,400,000 4,500,000 6,362,775 8,344,015 10,451,093 12,691,646 15,073,587
TOTAL EQUITY USD 2,600,000 4,700,000 6,562,775 8,544,015 10,651,093 12,891,646 15,273,587
TOTAL LIABILITIES & EQUITY USD 6,900,000 9,200,000 10,605,446 12,156,320 13,834,013 15,646,212 17,600,881
CHECK OK OK OK OK OK OK OK OK
M&A Financial Model
Buyer FS
Period type Actual Actual Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 0 1 2 3 4 5
Balance Sheet Assumptions
Depreciation as % of (Tangible Assets) % 6.0% 4.7% 6.0% 6.0% 6.0% 6.0% 6.0%
Capital Expenditures (Tangible Assets) USD 700,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000

Depreciation as % of (Intangible Assets) % 10.0% 10.0% 10.0% 10.0% 10.0%

Capital Expenditures (Intangible Assets) USD 1,000,000 0 0 0 0 0

Interest Expense % 5.7% 5.7% 6.0% 6.0% 6.0% 6.0% 6.0%

New Debt USD 50,000 50,000 50,000 50,000 50,000
Repayment USD 500,000 500,000 500,000 500,000 500,000
Accounts Receivables Days Days 18 25 30 30 30 30 30
Accounts Payables Days Days 55 62 60 60 60 60 60
Inventory Days Days 55 62 40 40 40 40 40
M&A Financial Model
Buyer FS
Period type Actual Actual Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 0 1 2 3 4 5
4 . Cash Flow Statement
EBIT USD 2,500,000 2,279,750 2,384,378 2,497,198 2,618,503 2,748,601
Depreciation & Amortization USD 300,000 424,000 454,560 483,686 511,425 537,824
Interest USD (200,000) (210,000) (183,000) (156,000) (129,000) (102,000)
Taxes USD (200,000) (206,975) (220,138) (234,120) (248,950) (264,660)
Working Capital USD (50,000) (30,068) (21,503) (22,579) (23,708) (24,893)
OPERATING CASH FLOW USD 2,350,000 2,256,707 2,414,296 2,568,186 2,728,271 2,894,872

Capex USD (1,700,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000)

INVESTING CASH FLOWS USD (1,700,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000)

Long Term Debt USD 0 (450,000) (450,000) (450,000) (450,000) (450,000)

Subordinated Debt USD 0 0 0 0 0 0
Overdraft / (Repayment) USD 0 0 0 0 0 0
Share Capital Increase USD 0 0 0 0 0 0
FINANCING CASH FLOWS USD 0 (450,000) (450,000) (450,000) (450,000) (450,000)

CASH b/f USD 1,000,000 1,650,000 2,456,707 3,421,003 4,539,189 5,817,460

CASH FLOW USD 650,000 806,707 964,296 1,118,186 1,278,271 1,444,872
CASH c/f USD 1,650,000 2,456,707 3,421,003 4,539,189 5,817,460 7,262,332

CHECK OK OK OK OK OK OK OK
M&A Financial Model
Target FS
Period type Actual Actual Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 0 1 2 3 4 5
General Target Assumptions
Target Name Name Teiken Inc.
Target Share Price USD 15.0
Target Intrinsic Value per Share USD 14.4
Target Shares Outstanding # 1,400,000
Fraction of Year #
M&A Financial Model
Target FS
Period type Actual Actual Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 0 1 2 3 4 5
Target FS
1 . Income Statement
Revenues USD 3,000,000 3,500,000 4,130,000 4,914,700 5,897,640 7,195,121 8,993,901
% Growth % 16.7% 18.0% 19.0% 20.0% 22.0% 25.0%

Cost of Goods Sold USD 1,000,000 1,200,000 1,239,000 1,425,263 1,651,339 1,798,780 2,248,475
% Margin % 33.3% 34.3% 30.0% 29.0% 28.0% 25.0% 25.0%
Gross Profit USD 2,000,000 2,300,000 2,891,000 3,489,437 4,246,301 5,396,341 6,745,426
% Margin % 66.7% 65.7% 70.0% 71.0% 72.0% 75.0% 75.0%
Sales & General Admin Expenses (SG&A) USD 1,900,000 1,950,000 2,145,000 2,359,500 2,595,450 2,854,995 3,140,495
% Growth % 2.6% 10.0% 10.0% 10.0% 10.0% 10.0%
EBITDA USD 100,000 350,000 746,000 1,129,937 1,650,851 2,541,346 3,604,931
% Margin % 3.3% 10.0% 18.1% 23.0% 28.0% 35.3% 40.1%
Depreciation & Amortization USD 150,000 150,000 158,000 181,820 203,985 224,608 243,798
EBIT USD -50,000 200,000 588,000 948,117 1,446,866 2,316,737 3,361,133
% Margin % -1.7% 5.7% 14.2% 19.3% 24.5% 32.2% 37.4%
Interest Expense USD 150,000 175,000 175,000 168,000 161,000 154,000 147,000
EBT USD -200,000 25,000 413,000 780,117 1,285,866 2,162,737 3,214,133
% Margin % -6.7% 0.7% 10.0% 15.9% 21.8% 30.1% 35.7%
Income Tax Expense USD 0 5,000 41,300 78,012 128,587 216,274 321,413
% Tax % 0.0% 20.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Net Income USD -200,000 20,000 371,700 702,105 1,157,280 1,946,463 2,892,720
% Margin % -6.7% 0.6% 9.0% 14.3% 19.6% 27.1% 32.2%
CHECK OK OK OK OK OK OK OK OK
M&A Financial Model
Target FS
Period type Actual Actual Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 0 1 2 3 4 5
2 . Balance Sheet
Existing Tangible Assets USD 2,000,000 2,200,000 2,546,000 2,867,780 3,167,035 3,445,343 3,704,169
Intangible Assets USD 0 40,000 36,000 32,400 29,160 26,244 23,620
Goodwill USD 0 0 0 0 0 0 0
Non Current Assets USD 2,000,000 2,240,000 2,582,000 2,900,180 3,196,195 3,471,587 3,727,789
Cash USD 100,000 365,000 283,125 556,301 1,304,100 2,857,398 5,369,275
Accounts Receivable USD 30,000 45,000 56,575 67,325 80,790 98,563 123,204
Inventory USD 30,000 35,000 50,918 58,572 67,863 73,922 92,403
Other Current Assets USD 30,000 35,000 35,000 35,000 35,000 35,000 35,000
Current Assets USD 190,000 480,000 425,618 717,198 1,487,753 3,064,884 5,619,882
TOTAL ASSETS USD 2,190,000 2,720,000 3,007,618 3,617,378 4,683,948 6,536,471 9,347,671

Other Short Term Liabilities USD 30,000 35,000 35,000 35,000 35,000 35,000 35,000
Accounts Payable USD 30,000 35,000 50,918 58,572 67,863 73,922 92,403
Short Term Liabilities USD 60,000 70,000 85,918 93,572 102,863 108,922 127,403
Other Long Term Liabilities USD 20,000 20,000 20,000 20,000 20,000 20,000 20,000
Existing Debt Facilities USD 2,000,000 2,500,000 2,400,000 2,300,000 2,200,000 2,100,000 2,000,000
New Overdraft Facility USD 0 0 0 0 0 0 0
New Sub Debt Facility USD 0 0 0 0 0 0
New Senior Debt Facility USD 0 0 0 0 0 0 0
Long Term Liabilities USD 2,020,000 2,520,000 2,420,000 2,320,000 2,220,000 2,120,000 2,020,000
TOTAL LIABILITIES USD 2,080,000 2,590,000 2,505,918 2,413,572 2,322,863 2,228,922 2,147,403
Common Stock USD 100,000 100,000 100,000 100,000 100,000 100,000 100,000
Retained Earnings USD 210,000 10,000 30,000 401,700 1,103,805 2,261,085 4,207,548 7,100,268
TOTAL EQUITY USD 110,000 130,000 501,700 1,203,805 2,361,085 4,307,548 7,200,268
TOTAL LIABILITIES & EQUITY USD 2,190,000 2,720,000 3,007,618 3,617,378 4,683,948 6,536,471 9,347,671
CHECK OK OK OK OK OK OK OK OK
M&A Financial Model
Target FS
Period type Actual Actual Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 0 1 2 3 4 5
Balance Sheet Assumptions
Depreciation as % of (Tangible Assets) % 7.5% 6.7% 7.0% 7.0% 7.0% 7.0% 7.0%
Capital Expenditures (Tangible Assets) USD 350,000 500,000 500,000 500,000 500,000 500,000

Depreciation as % of (Intangible Assets) % 10.0% 10.0% 10.0% 10.0% 10.0%

Capital Expenditures (Intangible Assets) USD 40,000 0 0 0 0 0

Interest Expense % 7.5% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%

New Debt USD 0 0 0 0 0
Repayment USD 100,000 100,000 100,000 100,000 100,000
Accounts Receivables Days Days 4 5 5 5 5 5 5
Accounts Payables Days Days 11 11 15 15 15 15 15
Inventory Days Days 11 11 15 15 15 15 15
M&A Financial Model
Target FS
Period type Actual Actual Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 0 1 2 3 4 5
4 . Cash Flow Statement
EBIT USD 200,000 588,000 948,117 1,446,866 2,316,737 3,361,133
Depreciation & Amortization USD 150,000 158,000 181,820 203,985 224,608 243,798
Interest USD (175,000) (175,000) (168,000) (161,000) (154,000) (147,000)
Taxes USD (5,000) (41,300) (78,012) (128,587) (216,274) (321,413)
Working Capital USD (15,000) (11,575) (10,749) (13,465) (17,774) (24,641)
OPERATING CASH FLOW USD 155,000 518,125 873,176 1,347,799 2,153,298 3,111,877

Capex USD (390,000) (500,000) (500,000) (500,000) (500,000) (500,000)

INVESTING CASH FLOWS USD (390,000) (500,000) (500,000) (500,000) (500,000) (500,000)

Long Term Debt USD 500,000 (100,000) (100,000) (100,000) (100,000) (100,000)
Subordinated Debt USD 0 0 0 0 0 0
Overdraft / (Repayment) USD 0 0 0 0 0 0
Share Capital Increase USD 0 0 0 0 0 0
FINANCING CASH FLOWS USD 500,000 (100,000) (100,000) (100,000) (100,000) (100,000)

CASH b/f USD 100,000 365,000 283,125 556,301 1,304,100 2,857,398

CASH FLOW USD 265,000 (81,875) 273,176 747,799 1,553,298 2,511,877
CASH c/f USD 365,000 283,125 556,301 1,304,100 2,857,398 5,369,275

CHECK OK OK OK OK OK OK OK
M&A Financial Model
Merged FS
Period type Transaction Close Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 31-Mar-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Mar-20 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 1 2 3 4 5
Year Fraction 0.75 1.00 1.00 1.00 1.00
Merged FS
1 . Income Statement
Revenues USD 8,966,250 13,280,950 14,622,203 16,295,911 18,489,731
% Growth % 48.1% 10.1% 11.4% 13.5%

Cost of Goods Sold USD 2,345,813 3,183,451 3,534,936 3,814,057 4,402,016

% Margin % 26.2% 24.0% 24.2% 23.4% 23.8%
Gross Profit USD 6,620,438 10,097,500 11,087,266 12,481,855 14,087,715
% Margin % 73.8% 76.0% 75.8% 76.6% 76.2%
Sales & General Admin Expenses (SG&A) USD 2,645,625 3,678,625 4,005,531 4,360,580 4,746,359
% Growth % 39.0% 8.9% 8.9% 8.8%
EBITDA USD 3,974,813 6,418,875 7,081,735 8,121,274 9,341,356
% Margin % 44.3% 48.3% 48.4% 49.8% 50.5%
Depreciation & Amortization USD 852,998 1,103,676 1,085,388 1,104,484 1,123,235
EBIT USD 3,121,815 5,315,198 5,996,347 7,016,790 8,218,121
% Margin % 34.8% 40.0% 41.0% 43.1% 44.4%
Interest Expense USD 486,188 616,750 520,750 424,750 328,750
EBT USD 2,635,628 4,698,448 5,475,597 6,592,040 7,889,371
% Margin % 29.4% 35.4% 37.4% 40.5% 42.7%
Income Tax Expense USD 263,563 469,845 547,560 659,204 788,937
% Tax % 10.0% 10.0% 10.0% 10.0% 10.0%
Net Income USD 2,372,065 4,228,603 4,928,037 5,932,836 7,100,434
% Margin % 26.5% 31.8% 33.7% 36.4% 38.4%
CHECK OK OK OK OK OK OK
M&A Financial Model
Merged FS
Period type Transaction Close Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 31-Mar-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Mar-20 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 1 2 3 4 5
2 . Balance Sheet
Existing Tangible Assets USD 10,569,000 10,514,128 10,778,139 11,523,669 12,217,012 12,861,821
Intangible Assets USD 3,975,000 3,676,875 3,309,188 2,978,269 2,680,442 2,412,398
Goodwill USD 20,441,554 20,441,554 20,441,554 20,441,554 20,441,554 20,441,554
Non Current Assets USD 34,985,554 34,632,557 34,528,881 34,943,492 35,339,008 35,715,773
Cash USD 590,208 3,712,325 6,423,476 9,323,038 13,226,295 18,295,863
Accounts Receivable USD 525,634 655,068 727,723 801,217 892,927 1,013,136
Inventory USD 1,327,945 257,075 261,653 290,543 313,484 361,810
Other Current Assets USD 385,000 350,000 350,000 350,000 350,000 350,000
Current Assets USD 2,828,787 4,974,469 7,762,853 10,764,797 14,782,706 20,020,809
TOTAL ASSETS USD 37,814,341 39,607,026 42,291,733 45,708,289 50,121,714 55,736,582

Other Short Term Liabilities USD 372,500 370,000 370,000 370,000 370,000 370,000
Accounts Payable USD 399,647 342,767 348,871 387,390 417,979 482,413
Short Term Liabilities USD 772,147 712,767 718,871 757,390 787,979 852,413
Other Long Term Liabilities USD 320,000 300,000 300,000 300,000 300,000 300,000
Existing Debt Facilities USD 3,387,500 3,437,500 2,987,500 2,537,500 2,087,500 1,637,500
New Overdraft Facility USD - 0 0 0 0 0
New Sub Debt Facility USD 3,500,000 3,150,000 2,450,000 1,750,000 1,050,000 350,000
New Senior Debt Facility USD 4,000,000 3,800,000 3,400,000 3,000,000 2,600,000 2,200,000
Long Term Liabilities USD 11,207,500 10,687,500 9,137,500 7,587,500 6,037,500 4,487,500
TOTAL LIABILITIES USD 11,979,647 11,400,267 9,856,371 8,344,890 6,825,479 5,339,913
Common Stock USD 22,040,000 22,040,000 22,040,000 22,040,000 22,040,000 22,040,000
Retained Earnings USD 3,794,694 6,166,759 10,395,362 15,323,399 21,256,235 28,356,669
TOTAL EQUITY USD 25,834,694 28,206,759 32,435,362 37,363,399 43,296,235 50,396,669
TOTAL LIABILITIES & EQUITY USD 37,814,341 39,607,026 42,291,733 45,708,289 50,121,714 55,736,582
CHECK OK OK OK OK OK OK OK
M&A Financial Model
Merged FS
Period type Transaction Close Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 31-Mar-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Mar-20 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 1 2 3 4 5
Balance Sheet Assumptions
Depreciation as % of (Tangible Assets) % 7.0% 7.0% 7.0% 7.0% 7.0%
Capital Expenditures (Tangible Assets) USD 500,000 1,000,000 1,500,000 1,500,000 1,500,000

Depreciation as % of (Intangible Assets) % 10.0% 10.0% 10.0% 10.0% 10.0%

Capital Expenditures (Intangible Assets) USD 0 0 0 0 0

Interest Expense % 6.0% 6.0% 6.0% 6.0% 6.0%

Existing
New Debt USD 50,000 50,000 50,000 50,000 50,000
Facilitiy
Repayment USD 0 500,000 500,000 500,000 500,000
Interest Expense % 7.0% 7.0% 7.0% 7.0% 7.0%
Sub Debt New Debt USD 0 0 0 0 0
Repayment % 10.0% 20.0% 20.0% 20.0% 20.0%
Interest Expense % 5.0% 5.0% 5.0% 5.0% 5.0%
Senior
New Debt USD 0 0 0 0 0
Debt
Repayment % 5.0% 10.0% 10.0% 10.0% 10.0%
Accounts Receivables Days Days 20 20 20 20 20
Accounts Payables Days Days 40 40 40 40 40
Inventory Days Days 30 30 30 30 30
M&A Financial Model
Merged FS
Period type Transaction Close Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 31-Mar-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Mar-20 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 1 2 3 4 5
4 . Cash Flow Statement
EBIT USD 3,121,815 5,315,198 5,996,347 7,016,790 8,218,121
Depreciation & Amortization USD 852,998 1,103,676 1,085,388 1,104,484 1,123,235
Interest USD (486,188) (616,750) (520,750) (424,750) (328,750)
Taxes USD (263,563) (469,845) (547,560) (659,204) (788,937)
Working Capital USD 897,055 (71,129) (63,864) (84,063) (104,101)
OPERATING CASH FLOW USD 4,122,117 5,261,151 5,949,562 6,953,257 8,119,568

Capex USD (500,000) (1,000,000) (1,500,000) (1,500,000) (1,500,000)

INVESTING CASH FLOWS USD (500,000) (1,000,000) (1,500,000) (1,500,000) (1,500,000)

Long Term Debt USD (150,000) (850,000) (850,000) (850,000) (850,000)

Subordinated Debt USD (350,000) (700,000) (700,000) (700,000) (700,000)
Overdraft / (Repayment) USD 0 0 0 0 0
Share Capital Increase USD 0 0 0 0 0
FINANCING CASH FLOWS USD (500,000) (1,550,000) (1,550,000) (1,550,000) (1,550,000)

CASH b/f USD 590,208 3,712,325 6,423,476 9,323,038 13,226,295

CASH FLOW USD 3,122,117 2,711,151 2,899,562 3,903,257 5,069,568
CASH c/f USD 3,712,325 6,423,476 9,323,038 13,226,295 18,295,863

CHECK OK OK OK OK OK OK
M&A Financial Model
Summary

The Model is fully functional

Model Checks are OK

1 . Summary
Pre Merger Buyer Metrics Trends Sources of Funds USD Uses of Funds USD
Sales Growth - Avg % 5.0% Cash 1,606,000 Cash Consideration 5,460,000
EBITDA Margin - Avg % 40% New Stock Issuance 21,840,000 Stock Consideration 21,840,000
Net Income Margin - Avg % 28.0% New Debt Refinancing 7,500,000 Old Debt Refinancing 2,475,000
Enterprise Value USD 25,075,360 Fees & Closing Costs 1,171,000
Equity Value USD 23,539,536 All Total 30,946,000 All Total 30,946,000
Equity Value per Share USD 15.69
Buyer Share Price USD 15.00 Bank Ratios
DSCR (minimum) 2.0 x LLCR 1.9 x
Pre Merger Target Metrics Trends DSCR (average) 2.8 x
Sales Growth - Avg % 20.8% Buyer Target Merged
EBITDA Margin - Avg % 29% Revenues
20.0 18.5
Net Income Margin - Avg % 20.4%

MILLIONS
16.3
Enterprise Value USD 22,220,844 14.6
15.0 13.3
Equity Value USD 20,090,375
Equity Value per Share USD 14.35 9.0
7.2
10.0 5.9
Target Share Price USD 15.00 4.9
Offer Price USD 19.50
5.0
7.2 7.5 7.9 8.3
Post Merger Metrics Trends
Accretion / (Dilution) on EPS - Avg % 26.9% 0.0
Accretion / (Dilution) on Cash Flow - Avg % 23.7%
Merger Increase in Equity Value per Share USD 5.20
Merger Increase in Equity Value per Share % 33.1% Buyer Target Merged

Enterprise Value USD 72,681,907

EBITDA 9.3
10.0
Equity Value USD

MILLIONS
62,384,615 8.1
Equity Value per Share USD 20.89 8.0 7.1
6.4
6.0
Financing 3.6
Existing Debt Facilities % 6.0% 4.0 1.7
2.5
1.1
New Overdraft Facility % 6.0%
New Sub Debt Facility % 7.0% 2.0
2.8 3.0 3.1 3.3
New Senior Debt Facility % 5.0%
0.0
% Gearing - Pre Merger % 40%
% Gearing - Post Merger % 30%
End of Sheet
M&A Financial Model
Merger Analysis
Period type Transaction Close Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 31-Mar-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Mar-20 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 1 2 3 4 5

Accretion / Dilution
Pre Merger Shares Outstanding # 1,500,000
Post Merger Shares Outstanding # 2,985,714

Pre Merger Net Income USD 1,981,240 2,107,078 2,240,553 2,381,941

Post Merger Net Income USD 4,228,603 4,928,037 5,932,836 7,100,434
Pre Merger Earnings per Share USD 1.32 1.40 1.49 1.59
Post Merger Earnings per Share USD 1.42 1.65 1.99 2.38
Accretion / (Dilution) on EPS % 7% 17% 33% 50%

Pre Merger Operating Cash Flow USD 2,414,296 2,568,186 2,728,271 2,894,872
Post Merger Operating Cash Flow USD 5,261,151 5,949,562 6,953,257 8,119,568
Pre Merger Cash Flows per Share USD 1.61 1.71 1.82 1.93
Post Merger Cash Flows per Share USD 1.76 1.99 2.33 2.72
Accretion / (Dilution) on Cash Flows per Share % 9% 16% 28% 41%

Summary
Target
Target Share Price USD 15.00
Offer Price USD 19.50
Equity Value per Share USD 14.35

Buyer
Buyer Share Price USD 15.00

Equity Value per Share - Pre Merger USD 15.69

Equity Value per Share - Post Merger USD 20.89

% Gearing - Pre Merger % 40%

% Gearing - Post Merger % 30%

Merger Increase in Equity Value per Share USD 5.20

Merger Increase in Equity Value per Share % 33%

End of Sheet
M&A Financial Model
Metrics
Period type Transaction Close Forecast Forecast Forecast Forecast Forecast
The Model is fully functional Start of period 31-Mar-20 01-Jan-21 01-Jan-22 01-Jan-23 01-Jan-24
Model Checks are OK End of period 31-Mar-20 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24
Period Number 0 1 2 3 4 5
1 . Metrics
Cash USD 590,208 3,712,325 6,423,476 9,323,038 13,226,295
Cash Available for Debt Service USD 3,622,117 4,261,151 4,449,562 5,453,257 6,619,568
Senior Leverage Ratio USD 1.8 x 1.0 x 0.8 x 0.6 x 0.4 x
Total Leverage Ratio USD 2.6 x 1.4 x 1.0 x 0.7 x 0.4 x
Net Debt USD 9,797,292 5,125,175 864,024 -3,585,538 -9,038,795
EBITDA USD 3,974,813 6,418,875 7,081,735 8,121,274 9,341,356

2 . Bank Ratios
Debt Service Coverage Ratio
Cash before Debt Service 3,622,117 4,261,151 4,449,562 5,453,257 6,619,568
Debt Service 986,188 2,166,750 2,070,750 1,974,750 1,878,750
Debt Service Coverage Ratio 3.7x 2.0x 2.1x 2.8x 3.5x
Minimum 2.0x
Average 2.8x
Loan Life Coverage Ratio
Debt Outstanding 10,387,500 8,837,500 7,287,500 5,737,500 4,187,500
Cash before Debt Service 3,622,117 4,261,151 4,449,562 5,453,257 6,619,568
Discount Rate 6.00% 6.00% 6.00% 6.00% 6.00%
Discount Factor 1.06 1.06 1.06 1.06 1.06
NPV of Cash Before Debt Service 20,211,456 17,802,026 14,608,997 11,035,975 6,244,876
Loan Life Coverage Ratio 1.9x 2.0x 2.0x 1.9x 1.5x
Loan Life Coverage Ratio 1.9x
End of Sheet
M&A Financial Model
Graphs

The Model is fully functional

Model Checks are OK

1 . Summary Graphs (in USD unless otherwise stated)

Sources of Funds Uses of Funds

Fees & Closing Costs,
Cash, 1,606,000 Old Debt Refinancing, 1,171,000
New Debt Refinancing, 2,475,000
7,500,000
Cash Consideration, 5,460,000

New Stock Issuance,

21,840,000 Stock Consideration, 21,840,000

Synergies
Target Equity Purchase Price 27,300,000
Revenues Synergies Realized COGS Synergies Realized SG&A Synergies Realized Equity Book Value of Target -222,925
3.0 Assets Fair Value Adjustments -6,635,521
2.5 2.5 2.5 2.5
MILLIONS

2.5 Goodwill 20,441,554

0.5 0.5 0.5 0.5
2.0
1.4
1.5 0.8 0.8 0.8 0.8
0.3
1.0 0.4
0.5 1.2 1.2 1.2 1.2
0.8
0.0
2020 2021 2022 2023 2024

Earnings Per Share Operating Flows Per Share

Pre Merger Earnings per Share Post Merger Earnings per Share Accretion / (Dilution) on EPS Pre Merger Cash Flows per Share Post Merger Cash Flows per Share
Accretion / (Dilution) on Cash Flows per Share 2.72
2.38
2.33
1.99 1.99 1.93
1.76 1.71 1.82
1.65 1.59 1.61
1.42 1.40 1.49
1.32

28% 41%
50% 9% 16%
33%
7% 17%
2020 2021 2022 2023
2021 2022 2023 2024
 EBITDA Free Cash Flows to the Firm
Buyer FS Merged FS Buyer FS Merged FS

10.0 9.3 8.0 6.9

Millions
8.1
Millions

8.0 7.1 5.8

6.4 6.0 4.8 4.9
6.0
4.0 4.0 3.0
4.0 2.8 2.8 3.0 3.1 3.3
2.4 2.7 1.8 2.0
1.6 1.7
2.0 2.0 1.1

0.0 0.0
2018 2019 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024

Leverage Ratios Coverage Ratios

2.6 x Senior Leverage Ratio Total Leverage Ratio DSCR LLCR
3.7x 3.5x

2.8x
1.4 x 2.1x
1.8 x 2.0x
1.0 x
0.7 x 1.9x 2.0x 2.0x 1.9x
1.0 x 0.4 x 1.5x
0.8 x
0.6 x
0.4 x
2020 2021 2022 2023 2024 2020 2021 2022 2023 2024

Enterprise Value Equity Value Equity Value per Share

Post Merger, Post Merger,
72,681,907 62,384,615 Post Merger,
20.89

Buyer, 15.69
Target, 14.35

Buyer, Buyer,
Target, 23,539,536 Target,
25,075,360 20,090,375
22,220,844

End of Sheet
M&A Financial Model
Checks
Period type
The Model is fully functional Start of period
Model Checks are OK End of period

1 . Model Completion Alert

Is the model complete? Option Yes
Has the Model been tested? Option Yes
The Model is fully functional
2 . Checks
Transaction Close Check OK
Buyer FS Check OK
Target FS Check OK
Merged FS Check OK
Sources & Uses Check OK
Overall Model Checks are OK
End of Sheet