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Panel Discussion: Private Equity As a Partner

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Panel Discussion: Private Equity As a Partner Panel Discussion: Private Equity as a Partner May 8, 2019 Discussion Topics Brady Ware Capital Overview M&A Market Overview Private Equity Overview Trends in the Industry Private Equity Benefits & Challenges Panel Discussion Brady Ware Capital Overview Brady Ware Capital, LLC – Investment Banking Advisory Overview Brady Ware Capital Team Cliff Bishop President Office: Dayton P: (937) 913-2538 E: [email protected] Roger Furrer Director Office: Dayton P: (937) 913-2565 E: [email protected] Stephen Ford Director 150+ Office: Columbus 22 Years P: (614) 384-8423 BWC Founded in Combined Years E: [email protected] 1997 of Experience Keith Warner Manager Invaluable Connections Broad Industry Experience Office: Dayton Affiliate of Brady Ware & Industrial P: (937) 913-2539 Company, a regional accounting Business Services E: [email protected] firm with 145+ employees and 4 Technology Manufacturing locations Grant Kramer Consumer Products Strategic Relationship with Duff & Associate Financial Services Phelps, LLC, an international Healthcare Office: Dayton investment banking firm with over Retail P: (937) 913-2516 70 offices and 3,300 employees E: [email protected] Brady Ware Capital, LLC 4 Brady Ware Capital Additions Brady Ware Capital continues to grow with two additions to the team in 2019. Stephen Ford Grant Kramer Director Associate Columbus, OH Dayton, OH Mergers & Acquisitions Mergers & Acquisitions Capital Raising Valuation Services Brady Ware Capital, LLC 5 Brady Ware Capital Services ▪ Brady Ware Capital has extensive experience working with middle-market companies to support an array of corporate objectives through our services and solutions listed below: Financial Advisory Services Investment Banking Corporate Finance Transaction Services Sell-side and buy-side M&A Consulting services and business analysis In conjunction with Brady Ware & Company, Specialty focus on lower-middle-market, including: provide a variety of services relating to a transaction including: privately-owned companies Cash Flow Tax due diligence and structuring Minority and majority recapitalizations of Debt Service Capacity debt and equity Due diligence, accounting-related work, Divisional/Customer Profitability and Quality of Earnings reports Strategic advisory and valuation services Return on Equity Brady Ware Capital, LLC 6 Brady Ware Capital, LLC – Selected Transactions Sell Side Advisor Sell Side Advisor Sell Side Advisor Sell Side Advisor Buy Side Advisor Sell Side Advisor has been acquired by has been acquired by has been acquired by has been acquired by has been acquired by has been acquired by Financial advisor to Financial advisor to Financial advisor to Ferco Financial advisor to Absocold The Retirement Plan Financial advisor to Vistech Financial advisor to Remington Steel, Inc. Aerospace Group Corporation Company, LLC Manufacturing Solutions C.H. Ellis Sell Side Advisor Sell Side Advisor Sell Side Advisor Sell Side Advisor Sell Side Advisor Senior Debt Advisor has been acquired by has been acquired by has been acquired by has been acquired by has been acquired by Provided financial advisory Financial advisor to Financial advisor to Quest Financial advisor to Financial advisor to Strategic Financial advisor to services to One10 regarding Qualitronics, Inc. Information Systems Cardboard Heroes Marketing, Inc. Composite Advantage senior debt providers Sell Side Advisor Sell Side Advisor Sell Side Advisor Sell Side Advisor Buy Side Advisor Senior Debt Advisor has been acquired by has been acquired by has been acquired by has been acquired by has acquired Provided financial advisory services to Russell Cellular Financial advisor to 3 Sigma Financial advisor to Physician Financial advisor to Power Financial advisor to Invotec Financial advisor to regarding senior debt Corporation Technology Partners Services, LLC Engineering, Inc Russell Cellular providers Brady Ware Capital, LLC 7 Duff & Phelps Overview Overview Corporate Finance We are the largest We Perform: . M&A Advisory . Financial Sponsors Group independent global . Over 10,000 engagements annually for over 5,000 investment banking and clients . Fairness and Solvency Opinions . Restructuring Advisory valuation services firm . Over 6,000 valuation advisory engagements for more . Private Placement of Debt and than 1,700 clients Equity 3,300+ Employees . Portfolio valuation advisory services for 70% of top-tier . Transaction Advisory Services Serving clients globally through private equity firms Valuation . Over 1,000 transaction opinions for $2 trillion in deal 70+ Offices and Affiliates value since 2005 . Financial Reporting Valuation In North America, Latin America, . Nearly 400 M&A transactions over the last five years . Tax Services Europe, and Asia . Transfer Pricing . Fixed Asset Management and Strong Global Presence and Capabilities Insurance Solutions . Real Estate Services North America . Alternate Asset Advisory . 1,500+ Total Professionals . 200+ Corporate Finance DLMC Professionals Europe . Disputes and Investigations . 1,500+ Total Professionals . Legal Management Consulting . 250+ Corporate Finance Compliance and Regulatory Consulting Professionals Asia . Compliance Consulting . 250+ Total Professionals . Regulatory Consulting . 10+ Corporate Finance Professionals . Risk Consulting and Infrastructure . Regulatory Tax Advisory . Business Services Worldwide reach bolstered by globally focused ownership group Brady Ware Capital, LLC 8 8 M&A Market Overview BWC Market Observations Healthy Economic Backdrop Driving Strong Potential Turning Points in the Market Appetite for Acquisitions . Strong pressure to deploy . More sellers coming to market abundant capital for the right . Rising interest rates and stock deals (more buyers than sellers) market volatility S&P 500 companies are . 2020 election holding approximately $2 . Strong economic expansion trillion in cash entering 10th year Private equity firms are holding . Unknown events, e.g. tariffs, over $850 billion in committed geopolitical risks, etc. capital . Competitive and complex markets require companies to look for acquisitions to stay ahead . Low interest rate environment . Level of due diligence is high . Private equity is available to lower middle market companies . Many entrepreneurs remain “stuck” . Solid valuations that reflect business fundamentals Brady Ware Capital, LLC 10 Lower Middle Market Deal Statistics Source:Pitchbook Source:Pitchbook Brady Ware Capital, LLC 11 Private Equity Overview Private Equity Overview- A Snapshot Source: Prequin Differentiating Factors Sources of Capital Size Public and Private Pension Funds Specialties Qualified Individuals Services Endowment Funds Experience Insurance Companies Preferred Transaction Structures Investment Advisors & Money Management Firms Industries of Interest Sovereign Wealth Funds Locations of Interest Charitable Foundations Fund of Funds Brady Ware Capital, LLC 13 Private Equity Overview- Acquisition Objectives Goals & Objectives • Encourage owners and management to re-invest in the business to align long-term interests • Grow through strategic initiatives: Add employees to facilitate expansion Improve and increase service and product offerings Increase market share through organic growth and acquisitions Enter new markets • Increase efficiencies and optimize operations • Sell the business when strategically optimal Brady Ware Capital, LLC 14 Trends in the Industry Private Equity Committed Capital Significant Private Equity Capital Remains Available Approximately $855 billion of private equity capital remained unallocated at the end of the fourth quarter in 2018. $450 $855 $900 $400 $800 $350 $700 $300 $600 $250 $500 $200 $400 billions) $150 $300 ($billions) $100 $200 Capital Raised ($ $50 $100 $182 $106 $150 $158 $285 $281 $255 $312 $326 $346 $0 $0 CumulativeOverhang 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Dry Powder Capital Raised Source:Pitchbook Brady Ware Capital, LLC 16 Private Equity Deal Statistics Private Equity Deal Value and Count Continue to Increase The number of deals and total deal value continue to rise at a robust pace. Source:Pitchbook Brady Ware Capital, LLC 17 Private Equity Deal Statistics Cont. Private Equity Exit Activity Remains Moderate Increasing average hold times for portfolio companies is decreasing the amount of sales per year. Source:Pitchbook Brady Ware Capital, LLC 18 Private Equity Add-on Acquisitions Add-On Acquisitions Continue to Rise Acquisitions to expand current portfolio companies continue to increase as a percentage of total buyout activity. Source:Pitchbook Brady Ware Capital, LLC 19 Private Equity Benefits & Challenges Private Equity Benefits and Challenges Benefits Challenges Equity & Growth Capital Entrepreneurs as Employees • Liquidity and diversification for the owner • Transition from owner to employee • Growth capital to expand the business Transfer of Duties Potential for Loss of Jobs • Allows owner to focus on the business • Redundancy resulting in job loss- attributes he/she enjoys typically in administrative departments Expertise Increased Leverage • Private Equity can bring invaluable • Use of leveraged buyouts is a common expertise to grow the business practice and can put pressure on future cash flows Brady Ware Capital, LLC 21 Panel Discussion Our Panelists Jim Whalen John Jacinto Pete Munson Chairman and CEO of Hartzell President & CEO Managing Director Vistech Manufacturing Solutions Cardinal Equity Partners Former CEO of GEMCITY Engineering and Manufacturing Brady Ware Capital, LLC 23.
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