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Case Study:  Fine Art, Inc.

Fine Art, Inc ("FAI" or the "Company") was formed in 1992 by Mrs. Jane Hilson. Shortly
after marrying an artist, Jane began framing and selling his works to furniture
retailers. For the next ten years, Jane would work tirelessly, and before long, had a
nice, profitable business.

During the same year she formed the Company, she was also diagnosed with
breast cancer. In early 2002, it became evident that her ten-year battle would soon
be ending.

Jane was introduced to ARC Industries by an attorney. ARC was quickly able to
see the growth potential of the Company, and assess a value accordingly. Within
five days, Jane was handed a letter of intent for the eventual purchase of the
business. There were several unique obstacles that both parties worked hard to
overcome. Due to ARC Industries flexibility, the final transaction met all of Jane’s
requirements, including:

Option format to maximize estate value.
Most smaller transactions involve an equity investment by the buyer (i.e., a down
payment) and a seller note over a short span of time (three to five years). To
enable Jane’s estate to fully capture all possible tax benefits, ARC paid
approximately 25% of the total purchase price in the form of an option to acquire
the business after Jane’s death.

Jane remained as President.
Jane had a strong interest in continuing what she had started. After all, for the last
ten years, Jane had fully dedicated herself and her life to the business. Therefore,
ARC was introduced to the employees as a passive investor who made an equity
infusion for growth capital and would be assisting in the daily operations of the

Reduced workload.
ARC was able to supplement Jane with an experienced "Sales and Finance Manager" who performed the daily, time-consuming, administrative duties that occupied most of Jane’s time. This allowed Jane to work less, and enjoy the proceeds from the sale of her option to ARC Industries.

Continuity of "Lifestyle Benefits."
ARC understands that a business owner becomes dependent on its’ business to provide certain things such as health insurance, car allowance, club memberships, etc. Through a mutual understanding, Jane retained all of her "Lifestyle Benefits".

By entering into a partnership with ARC Industries, Mrs. Hilson was able to monetize her last ten years worth of work; and with enough time left to enjoy the fruits of her labor.

If you know of any companies that would like to discuss succession-planning opportunities, please do not hesitate to contact us.                     

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