The document provides an overview of capital raising options for Australian businesses, focusing on raising funds through the Australian Small Scale Offerings Board (ASSOB). Key points include: - ASSOB allows businesses to raise up to $5 million without a disclosure document, providing a quicker and cheaper alternative to a public offer. - Tauro Capital can assist with ASSOB raises, providing access to their network of professional investors and back office support through the process. - The ASSOB process is sanctioned under the Corporations Act and provides governance and reporting requirements for participating businesses. - Successful ASSOB raises typically raise capital within 3 months, giving businesses fast access to funds through a competitive process of multiple investment rounds

1. Australian Small Scale Offerings Board
Outline of capital raising process
April 09

2. Equity raising alternatives
Locate a strategic business partner / investor
•
Time consuming and high risk process
•
Bargaining power on equity pricing strongly in favour of investor
•
‘Cap in hand’ approach to investors
•
No certainty in the process
•
Raise capital through a public offer via a prospectus or Offer Information Statement (OIS)
•
Expensive: $100K to $200K up front to prepare a prospectus
•
Slow: At least six months audited accounts required for the preparation of a disclosure document
•
Time consuming: Six months lead time in setting the business up for a disclosure document
•
Raise up to $5 million in a small scale offer through the Australian Small Scale Offering Board
•
(ASSOB)
Minimal up front costs
•
Quick access to capital raised (77% of all ASSOB matters raise capital within three months)
•
Access to distribution network: 7,500 professional investors on ASSOB data base will receive notification of
•
the opportunity (as well as the Tauro Capital and Bourse Communications network of 2,500+)
Ability to raise additional rounds of capital every 12 months
•
Sets the business up for a subsequent capital raising via a disclosure document by
•
establishing audit and governance disciplines
1

3. Why use Tauro for an ASSOB
capital raising?
Access to Tauro Capital and Bourse Communications network of 2,500 professional
•
and sophisticated investors
Back office corporate advisory support
•
Financial modelling and forecasting
•
Equity valuation and peer benchmarking (using Capital IQ database)
•
Industry specific focus
•
IT software and services
•
Facilities management & waste management
•
Environmental and facilities services
•
Industrial project management & construction management
•
Recruitment & labor hire
•
Agribusiness
•
2

4. Equity raising – compliance
regime
The ASSOB capital raising process is sanctioned in Corporations
•
Personal offers. 20/12 rule. Section 708 Act 2001under its own ASIC class order (C O02/273)
Affordable & quick but limited to $2m & 20 investors per year
ASSOB capital raisings are not made under disclosure. They are
•
Requires expertise/experience
personal offers made to no more than 20 investors for amounts
not exceeding $5 million (ASIC have granted ASSOB an
Offers made under disclosure
extension to the $2 million limit placed on the general public).
(Offer Information Statement or Prospectus)
The 20 investor limit does not apply to overseas or sophisticated
•
Requires lawyers, accountants and advisors.
investors
Is far more expensive. Usually $110k or more.
Because no disclosure document is required, the process is
•
A personal offer excludes any offer made to the relatively inexpensive and quick to execute.
•
public via an advertisement
Companies executing an ASSOB capital raising are required to
•
The compliant way to market an ASSOB offer adopt high standards of corporate governance and reporting:
•
involves:
Issuers must be unlisted public companies that prepare
•
Informing people the issuer is undertaking an
• annual audited accounts
ASSOB capital raising. This can be done
Issuers must have a minimum of three company directors
•
through the media, at a public event
with the majority non-executive directors
Directing interested parties to the ASSOB
•
Issuers must present investors with a proper business plan
•
issuer page. This can be done via a link from
and report regularly on the achievement of performance
the issuer’s website or through the ASSOB
milestones
member responsible for project managing
the process (Tauro)
Directors and senior managers are subject to bankruptcy
•
Running investor meetings with interested and police checks to ensure only quality professionals
•
parties. Attendees execute a qualifying are entrusted with shareholders’ funds
statement at the beginning of the meeting
This approach is fully sanctioned by ASIC
•
3

5. Equity raising – compliance
regime
Section 708 : You must get it right
• There are specific regulations relating to raising funds
without a disclosure document.
• Most lawyers and accountants don’t fully understand this
area of the law.
• ASSOB specialises in assisting companies under this area
of the Corporations Act and can provide certain
exemptions, through the Class Order, that allow you to do
things that you can’t do without ASSOB.
• Many businesses attempt to use s708 of the Corporations
Act to fund the needs of their business. Most get it wrong
or fail.
4

6. Raising capital on the Australian
Small Scale Offerings Board
Who is the Australian Small Offering Board?
•
ASSOB is an exclusive membership based platform for growing businesses to raise capital
•
from professional investors
Companies can raise up to $5 million per annum on ASSOB without incurring the time and
•
financial cost of preparing a disclosure document
Investors and founders can sell their shares on a secondary market run by ASSOB
•
Matches high quality investment opportunities with high net worth investors
•
Platform has proved to be extremely successful in raising capital since its inception in 1997
•
Companies can only can only access the platform through a accredited ASSOB member
•
The ASSOB capital raising process is sanctioned in Corporations Act 2001under its own ASIC
•
class order (C O02/273)
5

7. Current ASSOB clients – a snapshot
The graphic below is a screen grab from ASSOB’s primary issue page, which can be seen
by all ASSOB members and new interested parties directed to the ASSOB website
ASSOB matters are listed on the web, all 7,500 investors on the database can track the status of each capital raising...
Competitive tension is generated by conducting the raising in ‘rounds’ at different prices. Shares are issued at a
discount in earlier rounds giving early participants a better deal creating an incentive for investors to get on board early
Interested
investors can
move to a
dedicated issuer
page by clicking
here. From that
page they can
download the
offer document.
The red squares indicate that a parcel of shares has been purchased by
an ASSOB investor. Each investment round has it’s own row.
6

8. Company profile
Investors follow a link from the primary issue page (as shown on the previous slide) and are
then taken to a corporate profile page containing a summary of the opportunity, a
download icon for the offer document and a short movie introducing the opportunity
ASSOB have found from past experience
that short mpeg movies that profile the
business and the directors result in higher
investor uptake of the opportunity
The investment fundamentals (exit strategy,
estimated future earnings, available
investment parcels) are highlighted to giver
educated, professional investors access to
fundamentals driving their investment
decision
Investor enquiries are entered here and
sent directly to the ASSOB member running
the process
7

9. The ASSOB Secondary Market
All ASSOB investors (as well as the original founding shareholders) can offer their shares for
sale on a secondary market. This provides investors with an early exit mechanism if they do
not wish to wait for a major liquidity event.
The ability to trade in and out of shares on a secondary market is extremely attractive to investors in early stage and
growing enterprises. Investors in unlisted businesses rarely get this opportunity but the ASSOB platform makes it possible.
It is also possible for founding shareholders to release equity through this mechanism (although not during a capital
raising)
The ASSOB
member (in this
case Tauro
Capital) is
responsible for
managing all
secondary market
transactions.
The status of each secondary offer is listed here. It’s interesting to see that nearly all
secondary offers listed on the Board have been sold!
8

10. Outline of proposed process
Prepare for the capital raising process
•
Prepare ASSOB compliant information memorandum
•
Prepare triple bottom line financial model and forecasts to be used in IM
•
Prepare capital raising structure and equity raising plan satisfactory to the client and ASSOB
•
Develop short form business plan supporting financial model
•
Set up appropriate audit and corporate governance arrangements in the business to ensure the business is
•
compliant with ASIC and ASSOB capital raising requirements
Map out the capital raising by a staged process aimed at creating competitive tension with investors in a summary
•
document – the Strategic Growth Plan (SGP)
Execute the capital raising
•
Submit application to raise equity capital to ASSOB (capital raising structure and strategic growth plan included)
•
ASSOB approve strategic growth plan and information memorandum
•
Pre-marketing of the opportunity to sophisticated investors
•
Matter goes live on ASSOB primary issue board
•
All in bound calls from interested parties handled by Tauro Capital
•
Applications for share subscriptions received by Tauro Capital
•
ASSOB issue share certificates and release funds to the client
•
Periodic review of progress of capital raising with the client every two weeks
•
Remain on ASSOB for future capital raisings or move to disclosure document
•
9

11. Capital raising pre-requisites
In order to complete any restructure or capital raising you
will need:
A compelling growth story
•
No-one invests in a company unless it is growing, even if the buy-in valuation is low
•
How does existing management intend to grow the business?
•
Development plan to include key performance milestones
•
Well considered and reasonable exit timeline and mechanism
•
Suggest 3-5 year exit timeline (typical preference for expansionary equity capital providers)
•
Exit strategy to be trade sale (if maintainable EBIT > $3M but less than $6M or IPO (if maintainable EBIT > $6M))
•
A quality offer documentation supported by thorough analysis
•
Overview business plan and financial model
•
Offer document
•
Investor presentation
•
Transaction documents
•
The appropriate investment vehicle
•
Listed or unlisted public company which publishes audited accounts
•
Ideally a secondary market for investor’s shares
•
Best practice governance structure in place
•
The right board and management team
•
Majority of independent non executive Directors
•
A compliant, legal, well managed capital raising process
•
ASIC penalties for non-compliant public offers are severe (money refunded to investors, investment
•
vehicle wound up, criminal and civil penalties on office holders)
10

12. Why use ASSOB as a platform for the
restructure?
Maximise chances of success – proven track record
•
In 2007, 77% of all opportunities listed on ASSOB are successfully raised capital within 3 months
•
Maximise client’s interests
•
Corporate valuation can be linked to future earnings streams and exit value
•
Not a ‘cap in hand’ approach – investors compete with each other to receive a better deal by
•
participating earlier in the process
Maintain control over the business
•
Unlikely that any individual investor would have a significant shareholding
•
ASSOB investors tend to be passive rather than active
•
Flexibility
•
Founders and investors can offer their shares for sale on secondary ASSOB market
•
ASSOB platform provides ability to offer subsequent issues to finance capital purchases or acquisitions
•
Speed
•
The raising could be completed in as little as 3 to 5 months from commencement of this engagement
•
11

13. A selection of our recent
mandates
OUR CURRENT & PENDING MANDATES
Project
Current mandates and transaction Transaction Enterprise Valuation of Market Conduct final Oversee Approximate
Client Type manage due Status
services Date value opportunity Opportunity negotiations settlement duration
diligence
Acquisitions
Application software (education) Dec-08 $15 million Private √ √ √ √ √ completed 5 months
Application software (accounting) Nov-08 $12 million Public √ √ √ √ √ completed 3 months
Applications software (accounting) Jan-09 $12 million Public √ √ √ √ √ ongoing 5 months
Facilities management Jan-09 $60 million Private √ √ √ √ √ ongoing 6 months
Divestments
Agribusiness Dec-08 $18 million Private √ √ √ √ √ ongoing 12 months
Business advisory
Electrical manufacturing services Jan-09 $8 million Private √ √ √ √ √ ongoing 4 months
Application software (education) Jan-09 $15 million Private √ √ √ √ √ ongoing 14 months
Capital raising
Food processor Jan-09 $10 million Private √ √ √ √ √ ongoing 4 months
Food & wine technology Feb-09 $9 million Private √ √ √ √ √ ongoing 5 months
Real-estate franchise Feb-09 $20 million Private √ √ √ √ √ ongoing 4 months
Application software (accounting) Feb-09 $12 million Public √ √ √ √ √ ongoing 5 months
Childcare services Feb-09 $14 million Private √ √ √ √ √ ongoing 5 months
12

14. The senior members of your
advisory team
Simon Ward Chris Pattenden
Associate
Managing Director
P: +61 3 8602 8888 F: + 61 3 8602 8899
P: +61 3 8602 8888 F: + 61 3 8602 8899
M: +61 413 595 749
E: sward@taurocapital.com.au
E: cpattenden@taurocapital.com.au
Relevant sector experience Professional credentials
Relevant sector experience Professional credentials
Aged care Bachelor of Commerce (Melb)
HVAC & Refrigeration Bachelor of Arts (VUT)
Facilities management Masters of Applied Finance (FINSIA)
Graduate Diploma Applied Finance
Fellow of FINSIA Waste management
(FINSIA)
Associate of FINSIA
Relevant project experience
Certificate in Business (VUT)
Public and private company divestments and acquisitions Relevant project experience
Public company acquisition search mandates Public and private company divestments and acquisitions
Public and private company corporate valuations Public company acquisition search mandates
Corporate restructures and employee incentive programs Public and private company corporate valuations
Corporate restructures and employee incentive programs
Relevant recent transaction experience
Relevant recent transaction experience
Acquisition program – Frigrite Limited (ASX:FRR)
Acquisition program
Industry: Asset & Facilities Management (Refrigeration & HVAC)
Industry: Refrigeration & HVAC
FY08F Revenue = $160M, EBITDA = $8.0M
FY2008 EBITDA: $5.1M
Divestment– National labor hire and recruitment company
Acquisition– (recently completed)
Industry: Blue collar labor hire and engineering services
Application software (accounting)
FY08 Revenue = $40M, EBITDA = $2.5M
FY09 revenue = $120 million, EBITDA = $7 million
Divestment– VIC based IT services recruitment company Acquisition– (recently completed)
FY08 Revenue = $20M, EBITDA = $2M Application software (education ERP)
FY09 revenue = $12 million, EBITDA = $3.5 million

15. Contact us
Simon Ward Chris Pattenden
Managing Director Associate
Tauro Capital Partners Tauro Capital Partners
Level 8, 410 Collins Street Level 8, 410 Collins Street
Melbourne, VIC 3000 Melbourne, VIC 3000
Ph: (03) 8602 8888 Ph: (03) 8602 8888
Fax: (03) 8602 8899 Fax: (03) 8602 8899
Mobile: 0422 380 810 Mobile: 0413 595 749
Email: sward@taurocapital.com.au Email: cpattenden@taurocapital.com.au
Web: www.taurocapital.com.au Web: www.taurocapital.com.au