Southern California Institute The Gathering 2020...advantage in the industry or market. There are some more obvious strategic fits than others, including peers or competitors o f the

INVESTMENT BANKING ENGINEEREDTO ACHIEVE MAXIMUM RESULTS

MATERIALS PREPARED FOR

FEBRUARY 27-28, 2020

Southern California InstituteThe Gathering 2020

Trever Acers, Managing Director*• 15+ years of acquisition, finance and business management

experience• Director, TGG Capital and Oxford Investment Group; Senior Global

Program Manager at EMC Corporation; KPMG • MBA, UCLA Anderson School of Management with a Finance

Concentration; BS, Business Administration, University of San Diego • FINRA Series 63 and 79 licensed

Channing Hamlet, Managing Director*• 20+ years of experience advising business owners on management

issues and transaction execution• Managing Director, Cabrillo Advisors; Director, Vistage; Principal,

LLR Partners; Member, Legg Mason Investment Banking• MS, Operations Research, Cornell University; BS, Mechanical

Engineering, Cornell University• FINRA Series 7, 63 and 79 licensed

PRESENTERS

22 Objectivecp.com | 2020

SUCCESS IN SALE TRANSACTION

What % of transactions fail to reach their objectives?



What % of transactions fail to reach their objectives?

•80%

Source: Objective Capital third party research (numerous articles)


A Case Study to demonstrate:

• Role of investment banker

• How advisors can collaborate to create a great outcome for clients

• Elements of a successful sale process

PRESENTATION OBJECTIVES


Ownership Profile• Three owners with equal ownership• Each owner responsible for different areas of the business: sales, operations, technology

Business Profile• Ten years in business• Technology enabled services business, with long term, recurring revenue clients• Recent and rapid growth, with $10.0 million in projected EBITDA

Reason for Sale• One owner experiencing health problems; desires an exit and liquidity• Other owners seeking to continue to grow and build business; however, need to replace skills

and capability of departing partner

THE CASE


Sale Objectives• Liquidity and financial security for all owners• Career path and future growth for two owners• Exit for third owner• Client open to either a strategic sale of 100% or a Private Equity Recap

Complications• In discussions with one interested buyer• Several long term clients entering renewal cycle (representing 30% of revenue)• Management succession plan unclear (i.e: each of three partners critical to operations)• Financial statements are not audited (modified cash / gaap)• Technology built on outdated platform (by a single individual)

Key Selling Points• Recurring revenue and long term client relationships• Strong efficiency as a result of technology platform• Differentiated business model relative to competition• Clear target market with track record of success

THE CASE (CONT.)


Which process best maximizes client objectives?• Standard two step process• Negotiate with identified buyer• Hybrid

What is the ideal outcome?• Strategic sale• Private equity sale• Hybrid

Client Considerations• How to manage client renewal process• Whether and when to discuss health issues• Divergent objectives among shareholders

KEY QUESTIONS


Your Team / Your Advantage: Consistent Decision Making Requires Diverse Perspectives & Knowledge

CPA

M&A Attorney

Wealth Manager

BusinessOwner

Trust & Estate

InvestmentBanker

ManagementTeam

With TeamGet a transaction CompletedMaximize Sale PriceKeep Focused on Business During SaleMinimize Risk After SaleMaximize After-tax ProceedsAchieve Non-financial Objectives

Without TeamTransaction Unnecessarily Falls ApartBelow Market Sale PriceLoose Focus on Business During SaleExposure to Real After Sale RisksDisappointing After-tax ProceedsFailure of Non-financial Objectives



STANDARD PROCESS OBJECTIVES

• Our comprehensive process is designed to position our clients’ for premium valuations and deal terms.

Price & Terms

• Our deep sector knowledge and established network of Board-level contacts enable us to quickly identify, qualify, and engage with the right buyers.

Engagement With High-Fit Buyers

• We leverage our experience, network, and industry knowledge to help our clients select the right partner. Right Partner

• By receiving market feedback from different potential buyers, we are able to provide our clients with multiple deal options to help them achieve their objectives.

Clear Understanding of

Alternatives

GOAL:Clients

Make Best Possible Decision


Designed a process to maximize certainty of closing by identifying the right partner with the right terms.

Personal objectives are one of the core foundations that we utilize to guide clients in decision making.

Following is an example of a framework we develop to ensure clear objectives and to be sure a transaction is designed to meet these objectives.

PERSONAL OBJECTIVES

Illustrative Example

We work closely with our clients to develop a personal

objectives table

We believe this exercise helps our clients identify what their objectives are and what they would like to receive from a

transaction


SALE PROCESSOur senior professionals are deeply involved in all aspects of the transaction execution, from the pitch to the successful completion of the transaction.

Positioning

• Establish Owner Objectives

• Unique Marketing Strategy

• Buyer List & Rationale

• Marketing Materials

• Internal Diligence with Virtual Data Room

Execution

• Engage Buyers with Rationale

• Qualify Buyers

• Distribute CIM Upon Signed NDA

• Management Meetings

• Buyer Information Requests

Negotiation & Close

• Solicit & Receive Offers

• Negotiate Price & Terms

• Evaluate Offers & Select Buyer

• Establish Execution Schedule & Milestones

• Negotiate Purchase Agreement

• Buyer Due Diligence

• Disclosures Schedules

• Closing Coordination

• Close Transaction


Creating a competitive process between high fit buyers allows the seller to increase the value of the business.

TWO STEP AUCTION PROCESS


Letter of Intent (LOI)

Comparisons

Management MeetingsSelect Best FitsIndication of

Interest (IOI)Determine

Interest

It is necessary to build a large buyer pool inclusive of all possible interested acquirers.GLOBAL BUYER POOL


Strategic acquirers are companies that are interested in buying or acquiring the business in question in order to gain a strategic advantage in the industry or market. There are some more obvious strategic fits than others, including peers or competitors of the Company.

Possible Acquirers

• Competitors / Peers

• Suppliers

• New Market Entrants

Strategic Acquirers

Private equity firms publish and promote what they are looking to add to their portfolio. Including private equity investors in the buyer pool is important as long as they have fitting deal criteria.

Criteria

• Funded

• Experience Acquiring in the Space

• Size Fit

• Culture Fit

Private Equity Investors

Speaking to the correct point of contact or decision maker with the Buyer is critical when going through the sale process.

TALK TO THE RIGHT PEOPLE


You’ll want to engage the CEO, or business unit leader. You are looking for someone who’s P&L will be directly effected by a successful transaction. Majority of the time, having a corporate development professional as the buyer representative or point of contact will not be the most advantageous to the seller.

Most Advantageous to Seller Less Advantageous to Seller• CEO• Business Unit Leader• Someone who’s P&L will be directly

effected by a transaction

• Corporate Development Professional

Frame the value of the Company based on the post-acquisition economics, not just a critique of past earnings, to each high-fit acquirer.

POST-ACQUISITION ECONOMICS


$5 $3 $2 $10

$100

$0

$20

$40

$60

$80

$100

Organic Earnings Company Sales toAcquirer'sCustomers

Acquirer's Salesto Company's

Customers

Total IncrementalEarnings

EV/EBITDAMultiple 10x

Acquirer'sShareholder

Value

Post-AcquisitionValue

You can expect an average sale process to take approx. 6 months.

SALE PROCESS TIMELINE


Progress Checkpoints Milestones

Week Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Project Kick Off

Executive Summary

Confidential Information Memorandum Acquirer List

Post-Acquisition Economics

Prepare Virtual Data RoomMarket to Acquirers Offer Solicitation

Mgmt MeetingsNegotiate LOI Due Diligence Negotiate Purchase AgreementFacilitate Closing

Process Summary• Reached out to 150 buyers• Signed 68 non-disclosure agreements• Received 28 initial indications of interest, with value range between 5.0x and 7.5x EBITDA• Invited 10 companies for Stage 2

‒ Management meetings‒ Data room‒ Offer Instructions‒ Purchase Agreement Review]

• Received 5 Letters of Intent• Narrowed to 2 bidders

‒ PE Firm as a platform‒ Strategic Buyer, Portfolio Company of a PE Firm

CASE STUDY: HOW DID IT WORK OUT?


CASE STUDY: OFFERS EVALUATION


PE FIRM STRATIGIC OFFER

Cash at Close $65 million $60 million

Earnout $5.0 million NA

Retained Equity $30 million $30 million

TOTAL VALUE $100 million $90 million

Indemnity Insurance, No Risk Insurance, 1.0% Escrow

Management Roles Executive Leadership Division Leadership

KEY CONSIDERATIONS (ADVANCE PLANNING)

Key Business Issues and Value Drivers• Industry and market cycle• Management team• Intellectual property• Desired business metrics

• Revenue• EBITDA• Growth Rates• Other considerations (community size, proof of concept, risks)

• Predictability of business• Recurring revenue• Consistent delivery• Standard sales process with clear client acquisition metrics

• Clear differentiation from competition (why do customers hire us?)• Identify and develop relationships with potential acquirors


KEY CONSIDERATIONS (CONT.)

Key Value Detractors• Eliminate Risks!• Customer concentration• Employment practices• Litigation / Legal Issues• Audited / GAAP financial statements• IP Ownership• Sloppy Processes• Reliance on key individuals• IT Security• Compliance with industry regulations and standards


T h e E l e m e n t s a n d D i s s e c t i o n o f a $ 1 0 0 M D e a l

O b j e c t i v e C a p i t a l O v e r v i e w & C a s e S t u d i e s

I

II

• Founded in 2006 and led by a team of highly-experienced M&A Advisor professionals

• Our firm has established itself as a leading middle market investment bank

• Nationally Recognized including M&A Advisor Deal of The Year Finalist

Top Tier Full-Service M&A Advisory Firm

Experienced Professionals

Customized, Strategic Sale Approach

Objective Capital Partners is Middle Market M&A and Valuation Advisory firm focused on transaction and advisory services for companies with enterprise values up to $250 million.

Our team uses a highly engineered, structured process designed to consistently achieve maximum results.

• With a track record of successfully completing more than 500 advisory engagements, our professionals understand the unique needs of middle-market business owners

• Deep focus in four industry sectors: Consumer, Technology, Business Services, Healthcare & Life Sciences

• Our senior bankers are FINRA licensed professionals

• We listen to our clients and design processes that will meet their objectives while maximizing their company’s value

• Each transaction is given significant senior banker attention

WHO WE ARE

23

OUR FULL SUITE OF SERVICES

We believe offering a range of best-in-class services allows us to navigate changing market and business conditions, and provide our clients with multiple deal options.

Mergers & Acquisitions

Sell-SideM&A

• Our experience in the middle-market and knowledge of the sale process enables us to deliver expert advice to our clients

• We staff engagements with senior-level bankers whose strategic guidance navigating the sale process aims to maximizes value for our clients

Buy-Side M&A

• We provide process guidance, due diligence and valuation advice to buyers

• Our services include advising management on negotiating the transaction, arranging financing and conducting due diligence on the target company

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Valuation Services

Tax Compliance

• We have provided hundreds of valuation opinions for corporations of all sizes in a variety of industries, for 409a, estate planning and corporate restructuring and other complex tax matters

Financial Reporting

• Our professionals are well versed in valuations to support financial reporting including purchase allocations, impairment testing and complex securities matters

Strategic Advisory

• Our professionals combine deep valuation expertise with transaction execution to provide both opinions and tailored advice to clients

OUR PURPOSE AND VALUES

25

5The objectives of ourclients direct all of ouractions, and serve as ourmeasure of success.

Core Values

Consistent ExcellenceWe strive for excellence ineverything we do eachtime, every time.

We are uncompromising advocates for our clients’ best interest.

Unwavering Integrity

We enjoy hard work; it’s theonly way to achieve exceptionalresults for our clients.

Objective Focused

Hard Work

Collaboration OrientedCollaboratively working with clients, partners, and transaction participants creates the best probability for success.

We work tenaciously to create exceptional results for our clients.

Other Investment Banks

Experiences & Resources

• Extensive Industry Specific experience

• Peers with our clients• FINRA licensed, experienced

professionals

• Generalist professional service providers

Approach

• Seller objectives are the highest priority in the transaction

• Thoughtful, disciplined process• Tailored strategic approach

• Deal driven process• Commoditization of client• Use a “cookie cutter”

approach to each transaction

Nature of Advice

• Guided by sellers’ objectives and achievement of meaningful outcomes

• Realistic, honest perspective

• Transaction oriented• Short-term perspective

Client Service• Consistent senior level

attention• Collaborative team approach

• Junior level execution• Client is given minimum

updates

WHY OBJECTIVE CAPITAL PARTNERS

26

ADVISORY EXCELLENCE

27

Objective Capital has consistently been recognized for its advisory excellence.

INDUSTRY SECTOR FOCUS

28

Consumer

Apparel , Health & Beauty, Food & Beverage, Pet Products, Recreation

Healthcare & Life Sciences

Outpatient Centers, Digital Healthcare Pharma & Biotech, Tools, Genomics

Has been acquired by

Financial Advisor to Troxel

Have Acquired

Financial Advisor to Cannon Safe and

GunVault

Buyside Advisory Services

Financial Advisor to Montesquieu Winery


Financial Advisor to Tula

Financial Advisor to Tavern Bowl

Financial Advisor to The Bicycle Hotel &

Casino

Financial Advisor to RAEN

has received growth capital from

Financial Advisor to Diamond Electronics


Financial Advisor to Minimally Invasive

Devices


Financial Advisor to the target firm

Has partnered with

Strategic Advisor to Allergan

Has partnered with

Strategic Advisor to Aqua

Financial Advisor to Synberc

Financial Advisor to New York Genome

Center

Financial Advisor to CoastCare Partners

Financial advisor to SG Biofuels

General Advisory Services






Buyside Advisory Services

Medical Community Social Platform

(undisclosed)

* The list may include transactions completed by Registered Representatives prior to affiliation with Objective Capital Partners.

Business Services

Human Capital, Insurance Services, Infrastructure, and Tech-Enabled Services


Financial Advisor to Del Mar Recovery

Solutions

Has received a strategic investment from

Financial Advisor to Practicing Excellence


Financial Advisor to Leonetti Company


Financial Advisor to Electronic Control

Systems

Has received a strategic investment from

Financial Advisor to Hart Intercivic


Financial Advisor to Seawind Foods

Financial Advisor to Splashtacular Pool

Service


Financial Advisor to Lights of America


Objective Capital specializes in four industry sectors. The matrix below represents select engagements in each sectors.*

Technology

Software, Internet & Digital Media, Cyber Security, Healthcare Tech


Financial Advisor to Z57 Internet

Solutions

Has been recapitalized with a partner buyout

Financial Advisor to Zeeto Media


Financial Advisor to Ascential Software

Has been recapitalized by

Financial Advisor to VizExplorer


Financial Advisor to Altiris


Financial Advisor to Logicord


Financial Advisor to Kasasa


Financial Advisor to Lexar

Logicord

29

*Select transactions have been completed by an Objective Principal at a previous firm.

REPRESENTATIVE TECHNOLOGY ENGAGEMENTS

REPRESENTATIVE CONSUMER ENGAGEMENTS

30


REPRESENTATIVE BUSINESS SERVICES ENGAGEMENTS

31


REPRESENTATIVE LIFE SCIENCES & HEALTHCARE ENGAGEMENTS

32


VALUATION EXPERIENCE

Our senior teams’ experience includes more than 1,000 business valuation engagements.*

33* The list may include transactions completed by Registered Representatives prior to affiliation with Objective Capital Partners.

34

Business Overview & Owner Objectives

• Toft Group is a global executive search firm fully devoted to life sciences, with a special focus on innovation-driven companies at the intersection of biotech and high tech

• The owner wanted to sell the company for a premium valuation given the company’s unique market position

Process

• The Company had received an unsolicited offer from ZRG

• Contacted a targeted set of strategic acquirers, private equity firms, and investors in parallel with negotiating the unsolicited offer

Result

• Competitive process produced multiple offers from strategic acquirers, private equity firms, and investors

• Increased the purchase price on the first unsolicited offer by 40%

SALE – TOFT GROUP

Objective Capital Partners LLC

is pleased to announce its exclusive role as sole strategic and financial advisor to

in its sale to

Investment Banking Engineeredto Achieve Maximum Results

a portfoliocompany of

35


• Bell Canyon Consulting provides data management consulting with core expertise in master data management, data warehousing, business intelligence, and other information technology services

• The three owners had differing goals at this point in their careers, and pursuing an M&A option allowed each owner to achieve their personal objectives

• Objective Capital was engaged to run a traditional two-step auction process with both strategic and private equity acquirers

Process

• Objective Capital Partners repositioned Bell Canyon into a Technology Enabled Services Company, allowing for an alternative pool of buyers and a strong value proposition

Result

• Objective Capital secured eight (8) IOIs, and seven (7) LOIs

• Objective Capital conducted management meetings with all eight (8) of the firms

• The final sale price was increased 76% from the initial Company valuation, resulting in the sale of Bell Canyon Consulting to TRINITY

SALE – BELL CANYON CONSULTING



in its sale to


a portfoliocompany of

36


• Del Mar Recovery Solutions was a rapidly growing and profitable company providing outsourced services to financial institutions

• Owner wanted to identify a financial partner to provide capital for growth and to allow the owner to diversify his personal balance sheet

Process

• Objective Capital Partners developed a comprehensive buyers list

• Contacted approximately 150 private equity firms and 50 strategic buyers

Result

• Received 18 initial offers

• Conducted eight management meetings

• Received five term sheets

• Client was able to select best fit and best terms



in its sale to


SALE – DEL MAR RECOVERY SOLUTIONS

SALE – CANNON SAFE & GUNVAULT

37


• Cannon Safe is a leader in the residential safes and secure storage industry selling its products under the brand names of Cannon Safe and GunVault

• Owner wanted to explore strategic options with respect to a sale of the business

Process

• Objective Capital Partners engaged a large portfolio of strategic and private equity acquirers with interest in secure storage and shooting sports industries

• MidOcean Partners responded with strong interest and proposed a sale and merger transaction with a competitor, Stack-On Products

Result

• Client received significant liquidity at the completion of the transaction. Client assumed a leadership and attractive equity position in a combined entity representing one of the largest players in the residential safe industry segment.


Served as exclusive strategic and financial advisor to

in the acquisition of


SALE - MINIMALLY INVASIVE DEVICES

38


• Minimally Invasive Devices is a leader in the medical device industry, developing laparoscopic visualization systems

• The Board of Directors wanted to explore strategic options with respect to a strategic sale or growth capital investment

Process

• Objective Capital Partners developed a comprehensive buyers list

• Contacted approximately 100 prospective acquirers and investors in total

Result

• Received significant interest from major medical device companies and financial sponsors

• Received four final offers

• Client was able to select best fit and best terms



in its sale to


SALE – ELECTRONIC CONTROL SYSTEMS

39


• Electronic Control Systems (“ECS”) designs, engineers, installs, maintains and operates automated building controls and integrated energy efficiency solutions

• Zbigniew Cabaj (“Z”), President of ECS, was the largest shareholder and was seeking a strategic partner that would share the ownership risk and provide growth

• Z was a personal guarantor on all bank debt and performance bonds held by the Company

Process

• Objective Capital identified a strategic partner that could assist the company with growth and allow Z and the rest of the ownership group to diversify their personal balance sheets

Result

• ECS was acquired by Albireo Energy (“AE”), a portfolio company of Huron Capital Partners



in its sale to


SALE – SEAWIND FOODS

40


• Seawind Foods is a provider of dehydrated tropical fruits and vegetables to large food companies

• Owner desired to redeploy his time and capital to other business interests and wanted to create an opportunity for the business General Manager to retire

Process

• Created comprehensive marketing materials and contacted more than 100 strategic buyers, along with a handful of operationally oriented private equity firms

Result

• Received five offers from a combination of private equity and strategic buyers

• Sold the Company to a private equity firm that brought in a new management team to transition day to day management

• General Manager was able to retire and owner retained minority ownership



in its sale to


SALE – STEVE FURGAL’S INTERNATIONAL TENNIS TOURS

41


• Steve Furgal’s International Tennis Tours is a provider of premium international travel packages for major sporting events globally

• Owner was planning to retire and therefore was seeking a buyer to take over the business

Process

• Contacted a combination of more than 100 financial and strategic buyers

Result

• Offers were received from several strategic buyers and one private equity firm

• Received a "strategic" valuation for the Company and closed the transaction



in its sale to


42


• Practicing Excellence provides a leading SaaS professional skill-development platform designed to improve the clinician experience

• The Board had verbal interest from a strategic partner to acquire or invest in Practicing Excellence

• The Board engaged Objective Capital to work exclusively with the interested party to explore its options with respect to a sale or strategic investment

Process

• Objective Capital Partners created a business case and financial model outlining the benefits of a strategic alliance and near-term acquisition of Practicing Excellence

Result

• Objective Capital negotiated favorable terms with future upside

• Objective Capital ran the due-diligence process with no unexpected issues

• Practicing Excellence received a strategic investment from NRC Health designed to transition into a near-term acquisition

SALE – PRACTICING EXCELLENCE



In its strategic alliance including an investment from


43


• Company is a rapidly growing provider of innovative patient recruiting SaaS solution for clinical trials

• Company has developed a reputation as a leader in its segment and created an early technology leadership position

• Owners seeking to sell company for a premium valuation given the Company’s unique market position

Process

• Company had received an unsolicited offer from a potential financial acquirer, at an attractive valuation

• Contacted a handful of potential strategic acquirers in the background while negotiating unsolicited offer

Result

• Increased unsolicited offer resulting in a premium valuation

• Received a handful of offers from strategic acquirers, resulting in validation of primary offer

• Closed transaction creating significant liquidity for shareholders



in its sale to


SALE – HEALTHCARE SAAS COMPANY

HealthCare SaaS Company(Undisclosed)

Strategic Acquirer(Undisclosed)

GROWTH CAPITAL – DIAMOND ELECTRONICS

44


• Diamond Electronics is a leading supplier of televisions and other electronics in Central and South America, with significant market share in Mexico

• Owner wanted to identify financing to support growth and the Company's ability to win and execute on a significant government contract, generating more than $800 million in revenue

Process

• Objective Capital Partners created a business case and financial model and pitched the opportunity to more than 100 lenders and investment firms

Result

• Received several term sheets

• Worked with Company to re-define business process to maximize borrowing availability

• Closed on a $65 million financing facility, allowing the Company to execute on the government contract



in its minority investment from

for a total consideration of

$65,000,000


CONTACT INFORMATION

Trever Acers*Managing Director

(858) [email protected]

Channing Hamlet*Managing Director


REGISTERED REPRESENTATIVE*Registered Representative Of And Securities Products offered through BA Securities LLC, Four Tower Bridge, 200 Barr Harbor Drive, Suite 400, West Conshohocken, PA 19428 484-412-8788 Member FINRA SIPC.

DISCLOSUREThis presentation does not constitute an offer, invitation or recommendation to buy, sell, subscribe for or issue any securities or a solicitation of any such offer or invitation and shall not form the basis of any contract BA Securities, LLC.

CONFIDENTIALThe information in this presentation is confidential . If you are not the intended recipient or an authorized representative of the intended recipient, you are hereby notified that any review, dissemination or copying of this presentation is prohibited.

David Crean, Ph.D.*Managing Director


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Documents

Southern California Institute The Gathering 2020...advantage in the industry or market. There are some more obvious strategic fits than others, including peers or competitors o f the