Post Capital Partners: How To Buy A Business Seminar University Of Chicago - Gsb October 4, 2008

Post Capital Partners How to Buy a Business Seminar University of Chicago - GSB October 4, 2008

Stephen P. Lamberton [email protected] 212-888-5700 Ext. 202

Post Capital Partners Overview 

Private Equity firm • Established 2004 • 3 partners • Approximately $100mm in capital (fund and family)

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Strategy has 2 focal points • Small cap focus, invest in companies with minimum EBITDA of $2mm • Investments made in partnership with operating executives

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Management Partnership Program 

Work with executives primarily in three ways: • Executives seeking to be owners • Retired Executives – deal flow, advisors, board members • Extended network of executives

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Meeting executives is focus of business development

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Attributes of Management Partners    

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Track record of success as business leader Desire to be a business owner Large company best practices Operating history in smaller businesses An investment thesis • Industry in which they have operated before or that has applicable crossover • Strategy based on their experience and current market trends • Potential targets identified or knowledge that there is a robust universe of potential targets 4

Current Management Partners Sector

Acquisition Criteria

Management Partner

Services to Automotive Retail Market

Services related to automotive retail market, including marketing services, auto financing and auto warranties. Focus on the pre-owned car market.

20 year veteran of the auto retail sector with experience including managing auto retail operations and selling services into/through the auto retail channel.

Physical Therapy

Groups of regionally focused independent physical therapy facilities.

25 year veteran of the physical therapy market who has founded small practices and been the President of a large national provider.

Insurance / Insurance Services

Companies underwriting specialized lines of insurance risk or companies providing services, such as marketing or processing to the insurance market.

35 year veteran of the insurance industry including serving as the CEO of several large integrated insurance carriers.

Specialty Chemicals

Specialty chemicals companies selling into the water management / wastewater treatment, specialty coatings, food additives, cosmetics / fragrances or mining applications markets.

25 year veteran of the specialty chemicals industry with both operations and sales & marketing experience gained through positions of increasing seniority at ExxonMobil, and as President / CEO of several niche specialty chemicals businesses.

Healthcare Staffing

Companies providing part-time healthcare staffing including travel nurses, allied health, locum tenens and per diem nurses. In addition, companies outsourcing practice areas such as Hospitalists.

Former founder and CEO of outsourced service provider for the temporary staffing industry.

Engineered Products

Companies designing and manufacturing precision engineered products which serve as components or systems for industrial applications.

Senior executive with extensive experience serving as CEO of designers / manufacturers of engineered products.

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Private Equity Led Buyout Venture Capital Investor

Private Equity Investor

Startup

Growth Equity

Buyout

Early Stage

Leveraged Recapitalization

Management Buyout

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Why Executives Consider Partnering with Private Equity Opportunity 

Entrepreneurial Spirit

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Profitable

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Fun

Threat 

Risk tolerance

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Working for yourself Expanded responsibilities Smaller staff

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Large upside

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Potential to lose investment

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See above

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See above

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Time Line of Partnering with Private Equity Stage in Process

Timing

Introduction Meeting on the phone Meeting in person Agreement on investment thesis Agree to partner Refine investment thesis Formulate marketing plan Search for and evaluate companies to acquire Due diligence Secure debt financing Closing

1-2 months

3-12 months

Exit

When plan complete or someone values company as if it were

Repeat

As soon as executive ready to go

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Time Line of Partnering with Private Equity, cont’d Given timing of process, current circumstances of executive very important: 

Full time employment may not allow for appropriate time commitment to search and evaluation process • Confidentiality required by full-time employment makes process less transparent

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Some source of revenue useful given time uncertainty • Consulting or other project based work

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No substitute for financial security

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Partnering with Private Equity – Opportunities & Threats Issue

Opportunity

Equity based economics Leverage

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Large upside

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Potential to lose investment

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Higher return on equity No personal guarantee Benefit of experience Sounding board Working to create value for yourself Growth opportunities Acquisitions

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Challenging operating environment

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Communicate bad news Governance

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Time Commitment

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Dilution

Board of Directors Time Commitment Access to Additional Capital

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Threat

Q&A

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