Investor Value CreationSoutheast Venture ConferenceCharlotte, NCMarch 13, 2013

LLR is a leading private equity firm focused on investing and partnering with strong management teams to accelerate growth and profitability in established technology and service businesses.

LLR Snapshot

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Investment Criteria

Revenues $15MM to $250MM

Growth 10%+

EBITDA $0 to $50MM

Investment Size $20MM to $100MM

Management Vision & alignment

Market $500MM+ & growth

Model Differentiated, scalable, & sustainable

LLR Experience Situations where we can add value

A. “We love to roll up our sleeves and work side-by-side with our portfolio companies for the long haul.”

B. “We work with management teams to implement strategic and operating initiatives to build long-term value.”

C. “We are active investors who take a proactive approach to working with our portfolio companies.”

D. “We work as a team to support the management of our portfolio companies in a variety of ways.”

The Value Added Investor

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PE and VC Backed Company Study

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• 6,815 companies that received PE investments generated annual revenue growth of 11.6% after 5 years

• 1,854 companies that received VC investments generated annual revenue growth of 36.4% after 5 years

Source: Institute for Exceptional Growth Companies (IEGC) and Pepperdine University

Revenue CAGR – Five Years After Investment

Investor Resources

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Company

Sector Experience

Best Practices

Portfolio

Operating Partners

Advisory Board

Consultants

Service Providers

Lenders

Value Accelerators

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Board of Directors

Strategic Planning

Customers & Partners

Operational Improvements

Talent Management

Acquisitions

Exit

Valu

e

Time

• Stacking the board with a bunch of investor types• Just a foundational board providing basic oversight and compliance

“We Help Build a World Class Board”

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Don’t SettleFor

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• Independent directors with direct operating experience in complementary functional areas

• Active involvement beyond quarterly meetings

• What is the role of the Board?• How active is the Board?• What profile do you envision for board members?

• A sounding board• A mandate rather than a dialogue: “Here is your three-year strategic

plan, now go execute”

“We Provide Strategic Insight”

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• Collaborative strategic planning sessions that you and your team own, with an independent facilitator

• Playbooks and frameworks to help as a guide, but application that is left to you and your team

• What typically happens post-closing?• Can you share a prior 100-day plan?• What are your preliminary thoughts on avenues for growth?• What are the backgrounds of the investors/advisors?

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• A network of companies that can provide meaningful business value

“We Can Make Introductions to Customers & Partners”

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• Portfolio of prospective customers and/or partners• Thoughtful partner development plan• Deep relationships with channel partners / potential buyers

• Are other portfolio companies potential customers and/or partners?• What does the broader portfolio partner ecosystem look like?• What is the firm’s history with driving business through its network?

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• Monthly/quarterly reporting calls• More mandates: “You must implement these processes and

systems”

“We Assist with Improving Operational Efficiency”

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• Roadmaps by each functional area from prior successes• Best practices sharing among portfolio – informal and formal• Specific project examples from other portfolio companies

• We are challenged by X; what has been your experience?• How much interaction occurs within the portfolio?

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• Minimal incremental value: “Meet Bob, he runs a search firm”• Unilateral hiring decisions: “Meet Joe, your new head of sales”

“We Can Source Talent”

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• Deep bench of operating talent in multiple functional areas• Relationships and experience with multiple search firms across

multiple functions, geographies, experience levels• Dedicated director of talent leveraged by the portfolio

• Is there someone on your staff dedicated to helping the portfolio build talent management plans?

• I have holes in my management team; do you have access to talent who can fill them?

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• Pledge to provide or help secure incremental capital• Basic deal experience

“We Can Help with Acquisitions”

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• Thoughtful, collaborative approach: “Here’s an initial acquisition target list, let’s talk about what makes sense for your growth plan”

• An outsourced M&A department• Previous buy-and-build experience and proven playbooks

• What are your thoughts on an acquisition strategy?• Do you have dedicated resources to support our acquisition strategy?• How much experience do you have with buy-and-builds and

integrations?

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• We have successfully exited X number of companies

“We Optimize Exit Value”

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• Thoughtful view on logical buyers and existing relationships into them• Flexible strategy that will expand and evolve your exit options• Management input on exit timing (partnership approach)

• Who have you sold prior portfolio companies to?• Do you have regular dialogues with strategic buyers?• What is your investment horizon?• Walk me through sub-optimal outcomes

Don’t SettleFor

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By

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Decide if you truly want an active investor as your partner

Determine if they really know your space

Make a list of areas you need help and have them present a plan to you

Talk to past and present portfolio companies – the good, the bad and the ugly

Make sure diligence is a two-way street

Investor Evaluation Checklist

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Questions

Justin Reger, LLR Partners

jreger@llrpartners.com215-717-2900

www.llrpartners.com Twitter: @LLRPartners