Seriously Twisted Jewellery IM

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

Table of Contents

EXECUTIVE SUMMARY .................................................................................................... 4

BUSINESS OVERVIEW ........................................................................................................................................ 4

INCOME AND OPPORTUNITIES ............................................................................................................................ 4

PURPOSE OF THIS DOCUMENT...................................................................................... 5

ONE PAGE PROFILE ......................................................................................................... 6

CONDITIONS OF ISSUE OF MEMORANDUM .......................................................................................................... 8

REVENUE ...................................................................................................................................................... 10

BUSINESS HISTORY ....................................................................................................... 12

KEY EVENTS................................................................................................................................................... 14

STOCK ON HAND ............................................................................................................................................ 14

CUSTOMER DATABASES .................................................................................................................................. 15

BUSINESS PREMISES ...................................................................................................................................... 15

KEY STRENGTHS ............................................................................................................................................ 17

WEBSITE ........................................................................................................................................................ 18

ORGANISATION, MANAGEMENT AND CONTROL ....................................................... 19

COMPANY PHILOSOPHY .................................................................................................................................. 19

SHAREHOLDERS ........................................................................................................................................... 19

KEY PERSON OVERVIEW .............................................................................................. 20

MARKET ANALYSIS ....................................................................................................... 21

THE OPPORTUNITY........................................................................................................ 23

REASON FOR SALE ....................................................................................................... 24

WHERE WE ARE NOW .................................................................................................................................... 24

WORKOUT PERIOD ........................................................................................................................................ 26

SALE MATTERS .............................................................................................................. 27

SALES PROCESS........................................................................................................................................... 27

INDICATIVE OFFER ........................................................................................................................................ 28

KEY TERMS OF SALE ..................................................................................................................................... 30

DUE DILIGENCE ............................................................................................................................................ 30

FORMAL SALE AGREEMENT ........................................................................................................................... 31

SUBMISSION OF OFFER ................................................................................................................................. 31

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

Executive Summary

Business Overview

Seriously Twisted Jewellery was founded by the owners, Manuela and Megan in 2005 as an opportunity

to collaborate on jewellery design. With bold ideas and a passion for their work, they began by attending

trade fairs to sell their designs to retailers and built up a good retail customer list from this. As demand for

their products grew, they decided to increase their product range by looking for jewellery collections

overseas to complement their brand, that they could import and distribute. This led to two key soledistributor

agreements (Bacio Italy and INORI Stainless Steel Jewellery) and the business flourished.

By 2007/2008, turnover had climbed to approximately $2.2 million and larger premises were required and

new staff hired to accommodate the rapid growth. Unfortunately, across 2010 and 2011, these exclusive

agreements ended and one of these suppliers (Bacio Italy), went bankrupt. A crossroads was reached at

this point and in 2012, the owners decided to downsize the business and concentrate on online sales only.

The business has been operating as such, through its website, ever since.

The business now operates as a small, boutique, predominantly online store and has a database of 1500

customers and also retains the details of the 200+ former retail contacts (should the new owners wish to

utilise these).

Income and Opportunities

All the revenue is generated through the online store on the company’s website, which is additionally

supported through a Facebook, Pinterest and Instagram presence. The current owners spend little time

on the running of the business and as such, it has not grown in recent years.

Due to changing circumstances, the current owners no longer feel they have the time to dedicate to the

business, but believe that the right person can grow and expand the business to reach new heights.

It is clear from the company’s past experience that sourcing overseas jewellery for wholesale distribution

to other retailers, was a very successful area for the business and the owners believe that this could be a

fruitful avenue to explore again, for the new owners.

In addition, taking the time to attend trade fairs and seasonal events and markets also proved to be very

profitable in previous years. Unfortunately, the current owners have not had the time to dedicate to many

of these events in recent years and feel that these are key areas for the future owner(s) to explore again.

In short, what the business now needs is a new owner with fresh ideas and a drive to succeed who is

willing to invest a bit more time in the business to push it back towards growth.

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

Purpose of this Document

The major shareholders Seriously Twisted Jewellery Pty Ltd have decided that they wish to sell the

business and has appointed Ray White Business Sales Sydney CBD ("Ray White") to be the

communication avenue for this process.

This Confidential Information Memorandum ("Memorandum") has been prepared for selected parties

with a preliminary understanding of the business and to assist the recipient of the Memorandum

("Recipient") in making their own independent appraisal of the company before preparing an indicative

non-binding offer. The Memorandum does not purport to be complete or contain all of the information

which a prospective purchaser may require. No representation or warranty is made (or will be made

in any sale agreement) as to the accuracy, reliability or completeness of any information contained in

this Memorandum by the company Directors, Seriously Twisted Jewellery Pty Ltd or Ray White

The Recipient named at the bottom of this page agrees by receiving this Memorandum that it shall not

copy, reproduce or distribute to others this Memorandum, whether in whole or in part, without the prior

written consent of Seriously Twisted Jewellery Pty Ltd. Further, the Recipient of this Memorandum

will keep permanently confidential all information contained herein not already public and will use this

Memorandum only for assessing this company. On request, the Recipient will promptly return all

material received from the company Directors, Seriously Twisted Jewellery Pty Ltd and Ray White,

including this Memorandum, without retaining copies.

All projections in this Memorandum have been prepared by this company for internal use and are for

illustrative purposes only. They do not constitute, and should not be regarded as, a representation

that the projected results will actually be achieved or that the underlying assumptions are valid. The

projections are subject to uncertainties and contingencies, all of which are difficult to predict and many

of which are beyond the control of the company. Seriously Twisted Jewellery Pty Ltd has not

independently verified the projections. All currency amounts are expressed in Australian dollars unless

otherwise stated.

All inquiries in connection with this Memorandum or the sale process in general should be directed to

Matthew Holland as detailed below. All contact between the Directors and employees of Seriously

Twisted Jewellery Pty Ltd and prospective purchasers will be arranged by Matthew Holland. Under

no circumstances should prospective purchasers contact management or staff of this company

directly.

Matthew Holland

Business Agent Licence # 122781

Recipient:______________________

Ray White Business Sales Sydney CBD

Level 17. 135 King St, Sydney NSW 2000

PH: 1800 858 696

E: matthew.holland@raywhite.com

Copy No.:

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

One Page Profile

Business Category:

Website address :

Online Jewellery Retail

www.seriouslytwisted.com.au

Sale Price : In the region of $110,000

Actual 2012/13 Actual 2013/2014 Actual 2014/2015

Gross Sales $106,519 $84,406 $39,428

Stock Stock on hand is valued at approximately $63,000

Premises

Overview

Owner Involvement

and workout

No premises offered or required. This business can be run from home. Stock takes up

very little space.

This company began as a collaboration between friends just over 10 years ago. A

focus on trade fairs and events saw the business grow rapidly until the owners could no

longer make enough handmade jewellery to keep up with demand. Exclusive

distribution deals were signed with two overseas jewellery companies and the business

took off, peaking at a turnover of $2.2 million in 2007/8. Unfortunately, one of the

suppliers went bankrupt in 2010, leaving Seriously Twisted Jewellery unable to

continue to meet customer demand at the same levels. The current owners decided to

downsize the business, rather than refocus their efforts to find new suppliers. As such,

the business has been operating as a small online business for the last few years.

Minimal involvement at present – approx. 2 hours a week. Further focus and input,

fresh ideas and taking the brand to key events would be greatly beneficial in growing

the business (as has been the case in the past).

Minimal workout required – this is a ‘walk-in, walk-out’ business for the new owners.

The Opportunity

An opportunity to acquire an online business that, with a little investment of time, could

grow quite rapidly.

A new owner needs to bring passion, new ideas and a will to succeed. The current

owners will provide their industry knowledge, contacts and databases to let the new

owner hit the ground running

Quick Facts about the business

An established online business with a comprehensive

ecommerce website.

A company with a great reputation, known for excellent

customer service

The business has a database of approximately 1500

customers.

Facebook, Pinterest and Instagram accounts that can

be further leveraged to increase online presence.

An easy ‘walk-in, walk-out’ business that can be operated

from home.

Ample opportunities for future growth.

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

Conditions of Issue of Memorandum

This Memorandum is supplied on the following conditions, which conditions are expressly accepted

and agreed to by the Recipient, in part consideration of the supply of the Memorandum, as evidenced

by the retention by the Recipient of this document. If these conditions are not acceptable, the

Memorandum is to be returned immediately.

1. This Memorandum does not purport to contain all of the information that may be required to

evaluate an acquisition of the Company and any intending purchasers and their respective

advisors should conduct their own independent review, investigations and analysis of the

Company and of the information contained or referred to in this document.

2. Neither the Director(s), the Company, the Consultant, and the partners and employees of the

Consultant or their respective subsidiary or associated companies or businesses,

shareholders, directors, partners, offices or employees (collectively the "Beneficiaries") makes

any representation or warranty, express or implied, as to the accuracy, reliability or

completeness of the information contained in this Memorandum or subsequently provided to

the Recipient by any of the Beneficiaries including, without limitation, any historical financial

information, the estimates and projections and any other financial information derived there

from, and nothing contained in this Memorandum is, or shall be relied upon as, a promise or

representation, whether as to the past or the future.

3. Except insofar as liability under any law cannot be excluded, the Beneficiaries shall have no

responsibility arising in respect of the information contained in this Memorandum or in any other

way for errors or omissions (including responsibility to any person by reason of negligence).

4. The estimates and projections contained in this Memorandum involve significant elements of

subjective judgement and analysis which may or may not be correct. There are usually

differences between forecast and actual results because events and circumstances frequently

do not occur as forecast and these differences may be material. The Recipient, any intending

purchasers and their respective advisors should make their own independent review of the

relevant assumptions, calculations and accounting policies upon which the estimates and

projections are based.

5. The Beneficiaries may in their absolute discretion, but without being under any obligation to do

so, update or supplement this Memorandum. Any further information will be provided subject

to these terms and conditions.

6. This Memorandum including any update or supplement to this document does not and will not

form part of any sale agreement that may result from the review, investigations and analysis of

the Company by the Recipient, and intending purchasers and/or their respective advisors. Any

agreement for the sale of the Company will contain any and all information, representations

and warranties upon which he Recipient or any other intending purchaser should rely. The

formal sale agreement will also contain an acknowledgment by the Recipient that it has not

relied on any representations or warranties by any of the Beneficiaries in entering into the sale

agreement other than any representations and warranties set out in the sale agreement itself.

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

7. The Company and the Consultant, reserve the right to evaluate any offers and to reject any

and all offers submitted, without giving reasons for rejection. The Beneficiaries shall not be

liable to compensate the Recipient or any intending purchasers for any costs or expenses

incurred in reviewing, investigating or analysing any information in relation to the Company, in

making an offer or otherwise.

8. The information in this Memorandum is provided to the Recipient only as a matter of interest.

It does not amount to a recommendation either expressly or by implication with respect to the

purchase of the Company.

9. The information in this Memorandum may not be appropriate for all persons and it is not

possible for the Beneficiaries to have regard to the investment objectives, financial situation

and particular needs of each person who reads or uses the information in this Memorandum.

Before acting in reliance on the information in this Memorandum the Recipient should check

its accuracy, reliability and completeness and obtain independent and specific advice from

appropriate experts.

10. By accepting a copy of this Memorandum, the Recipient agrees that it shall not contact or

discuss the Company, the contents of this Memorandum or any other information supplied to

the Recipient as contemplated hereby or any proposal concerning the Company arising out of

this Memorandum with any officer, employee, supplier, customer, licensor, franchisee or

associate of the Company without the prior consent of the Shareholders which may be given

by the Consultant.

11. This Memorandum and further information which may be supplied as contemplated hereby are

supplied on the terms set out above and on the terms contained in a confidentiality agreement

entered into by the Recipient, the terms of which incorporate the above conditions and which

contain restrictions on the use of the information, its disclosure and on the conduct of the

Recipient subsequent to the recipient thereof. The Recipient acknowledges the foregoing and

it is hereby agreed that the terms of the confidentiality agreement are incorporated into, and

forms part of, these conditions.

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

Revenue

For the previous 2015 financial year, Seriously Twisted Jewellery earnt $39,429 in gross revenue.

The graph below shows the sales for the past three financial years.

Revenue by Financial Year

$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$0

2012/13 2013/14 2014/15

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

Business History

The owners of Seriously Twisted Jewellery first met over 10 years ago when both were running market

stalls, side by side, at the craft market in Manly. A shared passion for unique jewellery, saw them soon

become firm friends and a collaboration was formed, resulting in the foundation of Seriously Twisted

Jewellery Pty Ltd.

Below show the key dates of the business :

Date

Key Events

2005 The company was established.

2006

Signed the sole distributor agreement with Bacio Italy for

Australia and New Zealand.

2007 Company moved into larger premises and added staff.

2008

2008

2010

Signed the sole distributor agreement with INORI Stainless

Steel Jewellery for Australia and New Zealand.

Business moved into new premises again and added more

staff.

Bacio Italy agreement was terminated and Bacio Italy went into

bankruptcy.

2011 INORI exclusivity contract ended.

2012

Owners decided to downsize and operate as an online

business only – business premises no longer required.

As the above timeline shows, the business has operated as an online business only since 2012.

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

Key Events

In previous years, the current owners have found that attending key events across the year

has been a key element in driving the success of the business. Unfortunately, as the business

has downsized and the owners’ focus has moved elsewhere, this type of involvement has

waned and is potentially a factor in the declining performance of the business.




Trade fairs

o Trade fairs were very lucrative in the past in building the wholesale distribution

side of the business. Potential clients can see your products first-hand and talk

face-to-face. The current owners collected many of their retail contacts from

these events and built some strong relationships.

The High Tea Party

o This is an annual event that takes place in Adelaide, Melbourne, Brisbane,

Perth, Sydney and Auckland

o This is marketed as a fairly upmarket, exclusive charitable event that attendees

buy tickets to attend

o It is heavily skewed towards women and as a relatively boutique event, those

companies who take part have a fairly affluent, captive audience

o This is an event that the current owners feel was quite successful to attend in

the past

Selective Christmas/seasonal fairs/markets

o In addition, attending particular fairs and markets has good to build awareness

and achieve sales revenue in previous years.

o E.g. Double Bay Festival.

Stock on Hand

Of great benefit to the new owner is that there is a considerable amount of stock on hand, and

being jewellery, this will not expire.

At present, stock on hand is believed to be in the vicinity of $63,000.

Approximately $10,000 of this is the form of handmade jewellery designed by the current

owners and the vast majority of the remainder is in the form of Bacio bracelet beads. As the

Bacio brand was bought and continues to trade and these beads are compatible with Pandora

bracelets, the Bacio stock remains desirable, popular and highly saleable.

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

Customer Databases

The current owners have a database of approximately 1,500 customers of the online business. These

are valuable for promotions, newsletters and repeat business.

In addition, what may be of great interest to the new owner is the list of approx. 200 retail customers

from when the company had a thriving wholesale business. Many of these retail customers were very

reluctant to lose Seriously Twisted Jewellery as a supplier because products sold well. This list is a

valuable tool to reignite this side of the business for future growth if the new owners want to pursue

this.

Business Premises

The business no longer has its own company offices, but rather is run by the current owners from

home.

All tasks are shared between the two owners and the stock takes up minimal space. No special

equipment is required to run the business, other than a PC and internet access.

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Key strengths

Seriously Twisted Jewellery possesses the following key strengths:

Strength

Easy to run business

Details

The business requires little time input to run as-is and

can be managed from home. The new owner will be

able to start straight away with no interruption to the

business’s trading.

The format is simple, being an online business all

orders and payments are managed through the

website and then stock simple needs to be posted out

to customers in a timely manner.

Excellent reputation

The company has an excellent reputation both with

customers and within the industry.

Customer satisfaction with products and service is

high and many previous retail customers would

welcome the company back as a supplier if the new

owner wants to reintroduce the wholesale distribution

side

A large geographical footprint

As an online business with stock that is relatively

small and easy/inexpensive to post, this business

easily caters to both domestic and international

customers alike.

Up-to-date website with

ecommerce integration

The business has a very modern, attractive website

that is regularly updated with new products.

It provides customers with multiple ways to search for

products and includes areas for newsletters and a

blog, among other features.

Strong opportunities for growth

Residing in the online shopping arena which is in the

midst of experiencing strong growth, at the expense of

traditional bricks-and-mortar retail channels, places

this business in a good arena for future expansion.

There are several avenues that a new owner can

explore to increase sales revenue and profitability.

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Website

The company maintains one website. The company owns all IP and ownership rights to the source

material of the website including graphics and content.

The website address is www.seriouslytwsted.com.au

The website is slick and up-to-date, being regularly maintained by the current owners. The content is

comprehensive and includes :








Company information

Newsletter and blog features

A membership program for regular customers

Fashion and stylist tips which lend expertise and sophistication to the site and the products

Multiple ways for customers to browse and search for products

Easy contact methods

Links to the Facebook, Instagram, Pinterest pages and Twitter, YouTube etc

The ecommerce integration is easy to use and simple for the new owner(s) to maintain and update. It

offers payment through credit card or PayPal and varying postage options for both domestic and

international customers, with SSL technology for added reassurance.

This is a valuable asset to the business.

Search Engine Optimisation :



The current owners used advertising combined with Search Engine Optimisation to great effect

in the past to increase the brand’s presence and cut-through but have not done this in recent

years.

Given this business has a good online profile, this would be a logical tool for the new owner to

utilise in the future.

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

Organisation, management and control

Company Philosophy

The owners have always ensured that the business runs collaboratively.

The business was started from a shared passion for creating unique jewellery and a desire to share

this and enjoy the process of turning it from a simple market stall to a thriving business.

The owners have always lived and worked on the Northern Beaches and used this area as their

inspiration for their designs. The coastal lifestyle influenced not just their products, but also their

philosophy in running the business. It was always intended to be a laidback and fun business to run.

Very little time is currently spent running the business by the current owners (perhaps 2 hours a week).

While the business is easy to manage on a day-to-day basis, it would benefit from a greater time

investment from a new owner, to build it up and set it back on track.

Shareholders

Seriously Twisted Jewellery Pty Ltd, as at May 2016 had 2 major shareholders, as follows :

Owner 1

Owner 2

1 ordinary share

1 ordinary share

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Key Person Overview

Seriously Twisted Jewellery Pty Ltd as at May 2016 does not employ any staff, other than the two

owner-operators.

Owner 1

Owner 1 is mainly responsible for all artwork, graphic design, social media posts, newsletters

and photography.

Owner 2

Owner 2 does most of the administration of the business as well as banking, email enquiries

and liaising with their book-keeper that they outsourced the finances to.

Shared responsibilities

Many of the day-to-day operations are shared. These include, but are not limited to :

Order fulfilment

Invoicing customers

Updating and adding website content.

All-in-all, the current owners believe they spend no more than 2 hours per week on the business. Even

with a significant increase in the investment of time, this business can easily be run by a single owneroperator.

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Information Memorandum Prepared for: Seriously Twisted Jewellery Pty Ltd

Market Analysis

The Online Jewellery and Watch Sales industry consists of a small number of companies, some of

which are online only, but many of which are bricks and mortar stores, with a complementary online

presence.

This sector includes large retailers such as Michael Hill selling gold, silver and precious jewellery and

watches, as well as small businesses concentrating on costume jewellery or semi-precious jewellery.

It is estimated that there are only approximately 70 companies operating in this sector, with an

expected estimated revenue for 2015/16 of $122 million.

Generally speaking, this industry has performed strongly over the last 5 years, experiencing

cumulative growth of approximately 18.7%, which closely mirrors the rising fortunes of other online

retail sectors.

Market share within this industry is becoming increasingly diluted as new players enter due to

potentially high profit margins. The ability to carve out a market share is becoming increasingly difficult

for new players though, and it can be difficult for new entrants to gain a foothold. Buying an established

business is a good option to avoid these difficulties.

$125,000,000

Size & Growth of Online Jewellery and Watch Industry

$120,000,000

$115,000,000

$110,000,000

$105,000,000

$100,000,000

$95,000,000

$90,000,000

2011-12 2012-13 2013-14 2014-15 2015-16

Source: IBISworld report, 2015

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The Opportunity

The sale of Seriously Twisted Jewellery Pty Ltd provides a prospective purchaser the opportunity to:




Acquire a well-established business with an excellent ecommerce website.

Step straight into a business with a healthy supply of stock to begin operating immediately.

Enter an industry that is rapidly growing with a business that has a good client database and

excellent reputation.


Leverage the existing Facebook, Instagram and Pinterest accounts to increase presence and

focus on a solid online marketing strategy to prompt further growth by reaching new consumers.


Employ Search Engine Optimisation, (which the owners used to good effect in the past) to increase

presence and cut-through.


Increase profitability by approaching past retail contacts (more than 200) and reigniting the

wholesale distribution side of the business.


Operate a business that requires minimal day-to-day input and can be run from home by a sole

owner-operator.


Look for new, fresh opportunities to increase the product range and find the next trend by exploring

jewellery collections from overseas and entering into distributor agreements – a strategy that was

very successful in the past.


Attend key events around the state and the country to increase the brand’s profile, build the

customer base and look for opportunities for expansion and growth.

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Reason for sale

Where we are now

Seriously Twisted is currently in the Maturity Phase.

The graph above shows that the company is currently in Maturity Phase. At this stage the

company has a good business model and product range. The company has a mature

operation that is likely looking at moderate growth and consistency in profitability.

The owners have downsized and stepped back from the business in recent years.

Personal circumstances and other commitments have led them to reach the reluctant decision to sell

the business.

In addition, they recognise that they simply no longer have the time or the passion to push the company

back into the Growth phase.

Therefore, it is time to hand the business over to a new owner who will be able to take a small online

business and expand it.

It has been a little neglected of late, which is reflected in its performance, however, ample opportunities

exist to change this and turn it back into a highly profitable venture.

All the tools required to revitalise the business already exist – an excellent website, a solid database

of wholesale contacts, knowledge of key events to attend, ample stock and a good online customer

base, plus the opportunity to leverage the company’s Facebook, Instagram and Pinterest presence.

Search Engine Optimisation would also help to put these accounts to better use.

The only additional element required is the investment of a new owner’s time.

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Workout Period

The nature of this business is such that the new owner should be able to step in and take over, with

minimal handover from the current owners as everything is managed through the website.

Of course, the current owners are happy to spend a short period of time on the handover to ensure

that the new owner is confident in overseeing the business and understands all the areas and how it

is managed, but it is not anticipated that this will need to be lengthy.

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Sale Matters

All communications with Seriously Twisted Jewellery directors in respect of the sale process must be

made through Matthew Holland. Where necessary Matthew Holland will arrange contact with

Seriously Twisted Jewellery Directors.

During the sale process prospective purchasers may wish to clarify issues with Matthew Holland.

These enquires should be directed to:

Details:

Matthew Holland

Ray White Business Sales Sydney CBD

Level 17

Phone: 1800 858 696

Email:

135 King Street, Sydney NSW 2000

matthew.holland@raywhite.com

Under no circumstances are prospective purchasers to contact management, employees, agents,

clients or suppliers of the Company to discuss any matter in connection with the sale process or this

Confidential Information Memorandum without the prior written consent of the Shareholders or the

Consultant.

Sales Process

Ray White Business Sales Sydney CBD (hereafter referred to as the "Consultant") has been appointed

to manage the communication process for the sale of Seriously Twisted Jewellery, (hereafter referred

to as the "Company") and as such represents the interests of the Seriously Twisted Jewellery,

shareholders (hereafter referred to as the "the Director(s)") in dealing with prospective purchasers

relating to the sale process and the offers received.

Further detailed information and access to the business and its management team will only be

provided to those parties who establish a strong and genuine interest to proceed with an acquisition

of this size and nature. To that end we anticipate that the sale process will involve:






Submission of a written indicative offer;

Short listing of parties;

Completion of detailed due diligence;

Submission of a formal unconditional offer; and

Signing of a contract of sale and completion within a relatively short period following submission

of the formal offer.

Discussion will be held with short-listed parties during the due diligence period to verify and resolve

sale preconditions and the terms and conditions set out in the proposed contract of sale.

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Indicative Offer

Prospective purchasers who have executed a Confidentiality Deed and substantiated their capacity to

proceed with the proposed transaction will be provided with this Memorandum. Prospective

purchasers are required to submit in good faith an indicative offer. Such offers will not constitute an

offer binding the party but will form part of the basis on which prospective parties will be short listed.

The Director(s) seeks a written indicative offer from prospective purchasers which must contain the

following:

a) Full name of respondent and name and details of contact for correspondence and further

information;

b) Background information on the prospective purchaser and their business;

c) Details of the legal and beneficial ownership and control (direct or indirect) of the prospective

purchaser;

d) Confirmation as to whether the purchaser wishes to acquire the business and the net assets it

employs or the shares in the Company and the impact this has on the indicative offer;

e) An indicative non-binding offer detailing the purchase price to be offered for the Company

business based on the net assets employed as at 30 June 2015 plus a fixed goodwill payment

with scope to adjust the final price to reflect changes in the net asset positions between 30 June

2015 and Completion;

f) An explanation of the means by which the proposed transaction is to be funded which

substantiates the prospective purchaser’s capacity to proceed with a transaction of the size and

nature contemplated;

g) Details of the level of approval that has been obtained in submitting the indicative offer (e.g.

Board, Chief Executive) and all additional internal or external (including regulatory) approvals

(e.g. Board, shareholder, FIRB, trade practices) which would be required prior to entering into

an unconditional binding sale agreement;

h) Any other additional information that the Consultant would reasonably require and reasonably

expect to receive for the purpose of considering the indicative offer and in particular, prospective

purchasers should specify:-

any material commercial or financial assumptions that underlie the indicative offer;

any circumstances which, if varied, would cause the prospective purchaser to vary the price

or conditions of the indicative offer;

any facts or circumstances relating to the recipient that may impact on the successful

assignment of material contracts or impact on the successful fulfilment of any other

conditions; and

any critical timing issues; and

i) Any special or specific due diligence matters that the prospective purchaser will require

information on if they proceed to the due diligence phase.

Copyright. All Rights Reserved. Ray White Business Sales Sydney CBD 28


Information Memorandum Prepared for: This Plumbing Company

Copyright. All Rights Reserved. Ray White Business Sales Sydney CBD 29


Information Memorandum Prepared for: This Plumbing Company

Key Terms of Sale

Without in anyway prejudicing the final terms that the vendors may wish to include in such sale

documentation, the following key terms are envisaged;

Purchase

The sale of the Company has been presented as a sale of the Company and the net assets it employs.

Purchase Price

The final purchase price will be structured as:



an amount for purchase for the net assets employed as at Completion; plus

A fixed goodwill payment.

Post Completion Audit

The net assets employed at completion will be audited and there will be a post-completion adjustment

to the purchase price to reflect the changes in the Company’ net assets employed position between

30 June 2015 and Completion.

Payment

The full purchase price will be payable based on the estimated Completion Accounts with any postcompletion

adjustments to be paid in full within seven days for the receipt of the audited statement of

net assets employed as at the Completion date.

Conditions and Warranties

The conditions and warranties which the vendor is prepared to accept will be detailed in the sale

agreement provided to prospective purchasers during the Due Diligence phase of the sale process.

Due Diligence

Prospective purchasers who submit acceptable indicative offers will be short listed and invited to

undertake a due diligence review of the Company.

The due diligence process will include access to additional information concerning the Company, and

access where appropriate to senior management. Prospective purchasers will be required to submit

written requests for further information or access to management.

Copyright. All Rights Reserved. Ray White Business Sales Sydney CBD 30


Information Memorandum Prepared for: This Plumbing Company

Formal Sale Agreement

It is envisaged that discussions in respect of the proposed sale agreement will be held during the due

diligence period to clarify and resolve the material terms and conditions to be included in the formal

sale agreement.

The formal sale agreement will contain:



the only representations and warranties on which a purchaser can rely; and

An acknowledgment by the purchaser that it has not relied on any representations or warranties

by the Company or the Consultant in entering into the sale agreement, other than the

representations and warranties set out in the sale agreement.

Submission of Offer

Following completion of the due diligence process, prospective purchasers will be invited to submit a

binding unconditional offer based on the information received and verified through their own due

diligence inquiries.

Decision on Sale

The Director(s) reserve the right to evaluate any expression of interest, detailed proposal or offer in

connection with the Company submitted by any party and to reject any or all of them without giving

reasons for rejection. No party is entitled to the basis of the Director(s) decision to accept or reject

any expression of interest, detailed proposal or offer.

The Director(s) may at any time have discussions or negotiations with any party or any other interested

parties to enter into an agreement or agreements with any one or more of them in relation to the

proposal without giving reason for so doing or any prior notice to any or all interested parties.

The Director(s) is not under any obligation to accept an offer submitted by any party or any other

person. The Director(s) may accept an offer from any party without attributing a reason.

Responsibility for Costs

The Director(s), the Company and the Consultant and their respective officers, employees and

representatives are not liable to reimburse or compensate any party or any of their representatives for

any costs or expenses incurred by any party or its representatives in conducting their review and

evaluation of the proposal, submitting an expression of interest or detailed proposal, making an offer

or otherwise in connection with the proposal.

Copyright. All Rights Reserved. Ray White Business Sales Sydney CBD 31


Information Memorandum Prepared for: This Plumbing Company

Copyright. All Rights Reserved. Ray White Business Sales Sydney CBD 32

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