KAL Design Co is an experience design agency specializing in branding, creative content, digital marketing, interactive design and CRM marketing.
As we are in our 6th year we are seeking to build a agency network through acquisitions that we can ultimately exit in 5-10 years by selling to a larger network conglomerate or PE firm.
Our agency acquisition profile is made up of 6 non-negotiable attributes:
• Diversified client base where no one client makes up more than 20% of total revenue
• Existing management in place that can maintain operations post agency owners transitioning out of the business
• Have multiple relationships with clientele that exceed 3 years
• Have at least 50% retainers in place
• Entity in business for more than 15 years
ABOUT OUR TARGET ACQUISITION:
• Founded in 2003
• Client roster includes a range of both national Fortune 500 clients and regional clients
• Minimal customer concentration
• Average client tenure of 5 years
• Gross Rev: $2.2M (2022 Fiscal Year)
• EBIDTA: $336,000 (2022 Fiscal Year)
• 60% retainer contracts
• 40% project work
• Existing management will remain in place
• 2023 revenue on pace to be 10-15% higher than 2022
THE SHORT TERM NEED:
• We intend to execute our first 1-2 acquisitions using the SBA. The SBA requires we fund 10% of the requested loan + closing costs
• In addition to closing costs, we also are seeking to raise funds for the working capital to avoid increasing our loan through the SBA
• The current purchase price we have offered is $1.375M
• We are seeking to raise the downpayment + funds for working capital
WHAT WE ARE OFFERING:
• 20% in non-controlling preferred stock
• Quarterly Dividends to be paid at a rate 6% annual interest rate
THE LONG TERM VISION:
• Purchase 5 reputable agencies over the next 3-5 years with a diversified client concentration, and long standing client relationships
• KAL Design Co will become creative hub that delivers all creative content and experiences to our surrounding network of agencies
• Network agencies will be staffed with operation, project management and brand strategists to correspond and grow client brands
• Centralizing KAL Design Co. as the creative hub will streamline operational costs and increase profitability while bringing continuity to overall creative quality.
• Hire a small sales team dedicated to opening new doors for each acquired agency. Implementing an outbound marketing and sales approach will ensure we can capitalize on the brand equity of the agencies we purchase, grow the agency brands and scale the network overall
THE EXIT PLAN:
• 5-10 year exit plan
• Target EBIDTA of total network $10-15M EBIDTA
• Sell the agency network to a larger conglomerate at a 3-4X in the next 5-10 years
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