unlock your company’s hidden value

February 24, 2016

Unlock Your Company’s

Hidden Value Hosted By:

Delaware Trust

Presented By:

Mark Gaeto, Managing Director, Falcon Capital Partners LLC

Ted Stack, Managing Director, Falcon Capital Partners LLC

Falcon Capital Partners, LLC

Securities Products offered through BA Securities, LLC. Member FINRA, SIPC.

Boutique provider of customizable services with an expert team of

attorneys, CPA, and finance professionals ready to assist with

your most important transactions

Private equity networking

Corporate trust and agency

Escrow agent

Collateral agent

Qualified custodial agent

Independent director services

Special purpose vehicle services

About Delaware Trust

Clients:

Corporations

Law firms

Investors

Private equity firms

Amanda

Agenda

Overview of Presentation II.

I. Introduction to Falcon Capital Partners

Hidden Value in the Financials III.

Hidden Value in the Strategy IV.

Hidden Value in the Operations V.

Q&A VI.

5 Minutes

10 Minutes

10 Minutes

10 Minutes

10 Minutes

10 Minutes

Amanda

Falcon Capital Partners is an investment bank

providing merger & acquisition and strategic

advisory services to middle market and lower

middle market companies and investors

What We Do

5 Minutes (Mark and Ted pitch

our firm)

www.falconllc.com

Quick Statistics

Buy-Side

Advisory

Sell-Side

Advisory

Strategic

Advisory

Services

Overview of Advisory Services

Falcon’s Industry Coverage Universe

Healthcare Services & Technology Software, IT, & Business Services Regional Practice (Mid-Atlantic)

Founded in 2001 and based outside of

Philadelphia in Wayne, PA

Completed over 75 transactions since 2008

representing $1.8 billion in transaction

value

Nationally recognized in the healthcare,

business services, and technology

verticals Falcon focus on regional generalist

practice

Amanda introduce Falcon

Who We Are Introduction to Falcon Capital Partners

25 years of experience in the information technology industry as an owner,

senior executive, sales executive, investor, and advisor to leading software and

IT services companies

Founded The Alesco Group, a respected growth advisor to small and mid-

market technology firms

Top performing global account executive at several leading technology

companies including SAP America, Inc.

Invested in and operated ISC, an SAP implementation firm, and orchestrated a

highly successful sale to NYSE firm

Management consultant and principal with PRTM’s sales and marketing

effectiveness practice

25 years of healthcare service, technology, financial, operational, and

entrepreneurial experience

Manager with Ernst & Young’s Healthcare Consulting Practice

Vice-President of Northeast Management Operations, Medaphis (PerSe

Technologies/McKesson, NASD:MCK)

CEO/Co-Founder of Integrated Medical Management, Inc. (IMM), a venture backed

physician management company

Executive Vice-President of Development for Advanced Health Technologies

(NASD:AHTC)

Senior Vice-President of Development for PractiCare, Inc., a wholly owned

subsidiary of The Phoenix Companies (NYSE: PNX)

Founder and Managing Director of Healthcare Technology Ventures and M&A firm

InHealth Venture Management

5 Minutes

Mark Gaeto

Managing Director

Falcon Capital Partners LLC

Ted Stack

Managing Director

Falcon Capital Partners LLC

Emphasize background as

former owners/operators

Agenda






Q&A VI.

5 Minutes

10 Minutes

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First and foremost…you need to define your goals and objectives to

properly align your overall strategy as a business owner and drive value

Overview of Presentation: Ownership Wants and Needs

Once defined, you can begin to access and unlock the value of your firm, given your personal goals and objectives within the desired timeframe

5 Minutes (Mark and Ted

describe the overall strategy, 3 example

slides to follow) Owner

Priorities

Owner

Timeline 6 months 1 year 2 years 5 years

Sale / Merger Recapitalization Growth and

Retention

Owner

Considerations Risk / Reward

Near-Term

Liquidity

Long-Term

Upside

Every deal is different, every

business is different. Our

presentation will only make sense if you view through

this lens

A Strategic Growth Vision (“SGV”) serves as a roadmap for

management, and answers three critical questions:

Overview of Presentation: Strategic Growth Vision

Review

management

beliefs and goals

Client

internal

assessment

Market

environment

assessment

Refined

vision and

strategic

options

assessment

Impact analysis

and

implementation

planning

Process of Formulating a Strategic Growth Vision

Where are we

going?

How will we get

there?

Why will we be

successful?

Example of SGV, which is the

roadmap that helps frame the

discussions with our clients

Gloss over for a minute as an

example of “overall strategy”

Overview of Presentation: Where We Want to Be

Core

Competencies

Financial Goals

Business

Charter

Technology

Trends

Customer &

Market Trends

Competitive

Strategy / Market

Position

Internal Factors

What company can control

External Factors

Largely beyond company’s

control

Company must decide how

to respond to changes in

external environment

Growth Strategy

“Where we want to be”

What are your enablers and constraints?

What are your threats and opportunities?

Good to present in front of your board

for any planning discussions



Business

Charter

Economic

Model

Talent,

Culture, &

Leadership

Business

Processes

Technology

Systems

Management &

Governance

Shareholder Expectations

Marketplace Insight

Acquisition & Partner Strategy

Change Agenda

Capital Model (Growth, Product, Sales)

Co

re O

pera

tin

g

Mo

de

l

Competitive

Strategy

Basis of

Competition

Innovation

Intent

Value Stream

Strategies

Product Chain

Competition

Customer Chain

Business Vision &

Strategy Growth & Operational Strategic Initiatives

Transformation & Management

Execution

Your SGV is enabled by an operational strategy and plan and is highly dependent on management execution

Overview of Presentation: Detailed Roadmap

Impress your investors with well

thought out discussion



Amanda: transition to overall agenda

1. Understand the Economics

2. Build the Models

Overview: How to Unlock Value

Financial

Strategic

Operational

3. Characterize Your Markets

4. Value the Intangibles

5. Identify Your Targets

6. Define Operational Excellence

7. Begin Now

Unlo

ck t

he H

idden V

alu

e

Grab attention early with a few quick

mentions of specific deals

2 Minutes (Mark and Ted

outline the material)

With the goals defined, you can begin to unlock value in your business

Agenda






Q&A VI.

5 Minutes

10 Minutes

10 Minutes

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10 Minutes

Wrap your head around the financial statements and dive deeper

to fully understand what’s happening in your business

Hidden Value in the Financials: Understand the Economics

5 Minutes (led by Ted, Mark supplement w/

Brainworks) Reexamine and

Recast the Accounting

Capture Costs on a More Granular

Level

Tighten Controls and Inputs

Move Cash Accrual to GAAP

Accounting

Realize Tax Consequences of

Transaction

Issue of cash vs accrual accounting

Q&A: “I hear you saying financial story needs to match the business story. How

do you go about aligning these for one of your clients? Can

you provide an example?

Structure your financials into a scalable and workable model

Hidden Value in the Financials: Build the Models

Compare to ‘our process’, we walk

through value/timing

5 Minutes (led by Ted, Mark

supplement) • Products and Services

• Customer Concentration

• Regions

• Industries

• Sales Reps

Determine Revenue Drivers

• Calculate Margins

• Strategize to Improve Costs

• Question the Pricing Strategy

Understand Your Costs

Q&A: “Can you give an example of a key

revenue driver?”

Q&A: “We hear that tech multiples are often higher, but

can you define tech vs tech services

companies?”

What is recurring, what is bundled

Customer concentration

example of one client

Agenda






Q&A VI.

5 Minutes

10 Minutes

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10 Minutes

10 Minutes

10 Minutes

Q&A: “Can you provide more detail about the strategic piece required and

how we can evaluate the

market?”

5 Minutes

Evaluate external trends impacting the strengths and weaknesses

of your business, including market size and competition

Hidden Value in the Strategy: Characterize Your Markets

Current

Core

Adjacency

2nd Level Adjacency

A B C

A

B

C

C B A Geographies Products/Services

Channels/Segments

Mention banker’s ability to research

and study the overall market

The intangible aspects of your business will often represent the

key drivers of value for someone looking to acquire

Hidden Value in the Strategy: Value the Intangibles

5 Minutes (led by Mark, with

tech/software focus)

Define Product Management

Document Launch Processes

Assess Brand, Reputation, and

Goodwill

Assess Methods and Procedures

Products/Services

Value the IP Separately

• Determine Cost to Build vs Buy

• Determine Time to Build vs Buy

• Determine Time to Traction

Assess Additional Value of Patents

Software Focus

Tackle software separately

IP becomes negotiating lever

Your presumed targets must be in line with your personal goals

and objectives must be established at the beginning

Hidden Value in the Strategy: Identify Your Targets

5 Minutes (Mark and Ted)

Seek Synergistic

Buyers

Determine Strategy of Acquisition

Capture Economies of

Scale

Boost Customer

Diversification, Market Share,

or Cross Selling

Fill In the Missing Piece(s)

Relate back to personal

goals/objectives on liquidity and timing

Relate back to adjacent markets

Q&A: “Ok after we’ve unlocked

value from finance and strategy, what

can business owners do to find

hidden value in their operations?”

Agenda






Q&A VI.

5 Minutes

10 Minutes

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10 Minutes

Now that you’ve unlocked the value, it’s necessary to look at key

areas of focus for further improvement and refinement

Hidden Value in the Operations: Define Operational Excellence

Tie back to personal objectives, discuss

investment decisions (sales people etc)


Develop Excellent Management Team

Assign Accountability of Results and Drive Goals

Manage

Document Processes, Systems, and Procedures

Report Metrics and Strengthen Financial

Discipline

Measure

Communicate Plan to

Management with

Measured Metrics

Increase Revenues

Capture Market

Share

Improve Margins

Grow

Growth plan = exit plan

“Complete the roadmap”

This is a very thoughtful process, and whether you sell or not, the

value added to your business is well worth the exercise

Hidden Value in the Strategy: Begin NOW!


• Professionalize the Firm

• Think of the End Goal

• Be “Sale Ready” with Historical Track Record

Led by the owner, utilize a good banker

to structure and manage the project

Wrap up with small teaser and mention role

of banker again

Q&A: “Can you provide an example

of a company you’ve worked with

where you ultimately decided to hold off on the sale? And what benefits did they

realize as a result? ‘”

Agenda






Q&A VI.

5 Minutes

10 Minutes

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February 24, 2016

Thank You!

10 Minutes (Amanda leads Q&A,

including scripted questions, followed by

Del Trust survey)

Q&A

Q&A: “What specific role does

Falcon play in unlocking value?”

Q&A: “What specific role does

Falcon play in unlocking value?”

Q&A: “How do you know what escrow or service provider

to select?”

Q&A: “Ted here’s a tough question. Is

there ever a time to avoid using an

investment banker?”

Q&A: “what do you typically see in the

unlocking value exercise? Is the

owner looking to quickly sell and

move on?”