What factors do you consider when deciding to invest in a business?

Transferability -Transferability denotes the right to sell an asset in a market within areasonable time frame at relatively low transaction cost, along with minimal effect on its value. Transferability is limited by ownership agreement, lack of disclosure, and the time and cost torectify it.

Liquidity - Liquidity relates to how quickly and certainly a security ownership interest can be converted into cash at the owner’s discretion. Investors value liquidity and will pay a premium for liquidity, or demand a discount for the lack of liquidity

Weighted Average Cost of Capital -Weighted average cost of capital is a calculation of a firm’scost of capital in which each category of capital is proportionately weighted.. All sources of capital, including common stock, preferred stock, bonds, debentures, notes, and any other long term obligations are included in this calculation. Simply put, determining the capital structure of the proposed target subject company can provide a true measure of return on invested capital for our investors.

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Internal Rate of Return - The internal rate of return on an investment or project is the "annualizedeffective compounded return rate" or rate of return that makes the net present value of all cash flows (both positive and negative) from a particular investment equal to zero. It can also be defined as the discount rate at which the present value of all future cash flow is equal to the initial investment or, in other words, the rate at which an investment breaks even. For us performing a sound business valuation with a clear justification of purchase price taking into account the market approach, income approach, and asset approach is a quantifiable metric for the basis of developing an Internal Rate of Return.We base our buying assumptions primarily on this metric and not Discounted Cash Flow analyses as Discounted Cash Flows need a reliable, constant, stable income stream into perpetuity which cannot be readily assessed in volatile economic or market conditions. Due Diligence Assessment- Due diligence is largely a discovery process which can be demonstrated in the financial recasting process. For example, consider Capital Expenditures which are defined as the cost of acquiring fixed assets, adding to a fixed asset or extending a fixed assets useful life. Capital expenditures will generally increase to support salesgrowth. A flattening or declining annual expenditure on fixed assets might suggest management Is trying to increase earnings to inflate the business value. An investor may quickly learn they need additional capital to purchase the fixed assets, thus reducing working capital amounts andplacing the business in a higher risk category.

Exit Strategy - When determining justification of purchase price, it is instrumental in our investment decisions to plan an exit strategy in place with a predetermined price as a basis for our contingency planning. We build our purchase price into this metric for calculating our Internal Rate of Return after consideration of our Weighted Cost of Capital

Are you strategic buyers or financial buyers?

Both, our partnerships provide resources enabling us to segment our holdings within industries parallel to each other in order increase efficiencies and synergies, incidentally these partnerships give us the buying power to negotiate favorable investment outcomes, therefore adding to our returns on equity investments.

What industries do you invest in?

Energy, Agriculture, Utilities, Construction, Manufacturing, Aerospace, Defense, Beverages, Consumer, Industrial, Information Technology, Intellectual Property, Real Estate, Financial, Retail, Media, and Services.

How much do you usually invest in a target company?

Our Partners generally invest as low as $1 million to as high as $50 million in any one particular target subject company and prefer to invest in middle market opportunities with EBITDA ranging from $5 million to $100 million, showing a historic average growth between 4-9 percent annually.

Why does Regal Partners have the target company pay for a business valuation?

Our partners consider payment to us for a business valuation as a vested interest which therefore constitutes a serious indication of consideration to a proposed investment into the target subject company as an investment. First and foremost we need to place a benchmark on the value of the business using all approaches including income, market, and asset valuations. It also implies confidence in a successful partnership between all respective parties. Consider in the event our partners find weaknesses in the business, this particular engagement allows us the chance to improve upon the business and position it for a successful turnaround and restructuring. This also provides our partners the necessary framework to correctly package the investment opportunity to our partnering associate private equity groups in the event we do not invest directly.

Can I choose another firm to perform the business valuation?

No. We will not consider investing in a proposed target subject company without our valuation.

How much can be expect to pay for the valuation?

This depends on the scope of the engagement, the size of the target company as well as many dependent variables including entity formation and the complexity including minority and majority shareholders. Generally, it is common to expect anywhere from as low as $5000.00 to as high as $35,000.00 as a reference.

Will i have access to the business valuation?

Yes, all partners are provided a copy of the business valuation and can expect a comprehensive demonstration report.

Regal Partners

1200 Brickell Aveneu, Suite 1950
Miami FL 33131
Toll Free 1 (800) 372 5303
carlosdiez@regalpartners.net

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