Alleghany Capital. Building leading businesses with long-term capital

Transcription

1 2017 Alleghany Capital Building leading businesses with long-term capital

2 Who We Are Alleghany Capital Corporation ( Alleghany Capital ) is a wholly-owned subsidiary of Alleghany Corporation ( Alleghany ) that oversees Alleghany s private capital investments and acquisitions. We own controlling stakes in companies with leading positions in the business services, construction, consumer products, energy production, and manufacturing sectors. Alleghany Corporation (NYSE:Y) went public in 1929 as a railroad holding company (controlling nearly 20% of the track mileage in the United States at the time) and over the following decades diversified its interests to include finance, insurance, manufacturing, transportation, and steel production. Today, Alleghany is a diversified holding company anchored by a core position in property and casualty reinsurance and insurance. One of the oldest companies listed on the NYSE. $24 billion in total assets. $8 billion in book value. Investment grade credit rating. Note: Financial data above as of March

3 Alleghany s History Through Six Eras of Leadership Otis & Mantis Van Sweringen : Otis and Mantis Van Sweringen s first venture was in real estate (Shaker Heights, Ohio). From there, they entered the railroad business. By the time the brothers founded Alleghany as a holding company for their business interests, they had amassed five major railroad systems. In 1929, Alleghany (named after Alleghany, Virginia, the highest point in the Van Sweringen railroad system) began trading on the New York Stock Exchange under the single letter Y. Robert Young : In 1937, Alleghany found new leadership in Robert Young and Allan Kirby, who purchased the company after the Great Depression. Robert became Chairman. Allan, whose father, Fred Morgan Kirby, co-founded the F.W. Woolworth Company, became Alleghany s largest shareholder. In 1949, Robert diversified Alleghany by acquiring 91% of the voting stock in Investors Diversified Services (IDS), the world s largest mutual funds group. Allan Kirby : When Robert died suddenly in 1957, Allan Kirby was the obvious choice to succeed him. As CEO, Allan sold off some of the company s rail interests and focused on IDS. During his tenure, the market value of Alleghany s interest in IDS increased, and for the first time ever, the company began paying dividends : Allan Kirby s son, F.M. Kirby II, became CEO in F.M. s management philosophy, which called for a decentralized parent company structure, was key to the company s expansion. Under F.M. s 25 years F.M. Kirby of leadership, Alleghany grew into an operating company with interests in multiple businesses. Using the proceeds from the sale of IDS, which later became Ameriprise, Alleghany became a major player in insurance. John Burns : John Burns, Alleghany s President since 1977, succeeded F.M. in John oversaw the growth of Chicago Title and Trust into a leader in the title insurance industry and re-established Alleghany s presence in the railroad business, building a large stake in what would become Burlington Northern Santa Fe Present: In 2002, John Burns recruited Weston Hicks to join Alleghany and, in 2004, Weston became CEO. In 2003, under Weston s direction, Alleghany acquired RSUI and transformed it into an Weston Hicks integrated insurance company which has produced over $1.5 billion in cumulative underwriting profits, and established Darwin Professional Underwriters, which had a successful IPO in Weston has directed the growth of Alleghany Capital Corporation and, in 2012, oversaw the $3.5 billion acquisition of Transatlantic Re, a top 10 global property & casualty reinsurer. 3

4 Vision & Values Vision To partner with entrepreneurial management teams to grow and enhance their businesses over the long term. What We Believe The products, services, innovation, and employment provided by ethical businesses pursuing profitable and durable growth opportunities drive human progress. Values INTEGRITY EXCELLENCE OWNERSHIP INNOVATION SAFETY & STEWARDSHIP RESPECT TEAMWORK Conduct business ethically and with integrity. Uphold values in the face of competing objectives. Honor commitments. Set high standards of performance, quality, and service. Work hard. Exceed expectations. Face challenges with perseverance and optimism. Act with an ownership mindset. Take pride in the company and its mission. Be accountable. Cultivate an entrepreneurial spirit. Encourage creativity and receptivity to new ideas. Continuously learn and improve. Commit to the health and safety of all stakeholders. Respect the community and the environment. Empower. Treat others with professionalism, dignity, and respect. Value individual and cultural differences. Foster teamwork and collaboration. Be inclusive and transparent. Help others, personally and professionally. 4

5 Our Companies Company Description Headquarters Sector Founded Bourn & Koch, Inc. is a manufacturer of machine tools and supplier of replacement parts, accessories, and services for a variety of cutting technologies. Rockford, IL Manufacturing 1975 IPS-Integrated Project Services, LLC is a provider of technical consulting, design, engineering, construction, project controls, commissioning and qualification services for technically complex facilities worldwide. Blue Bell, PA Business Services 1989 Jazwares, LLC is a global toy, entertainment and musical instrument company. Sunrise, FL Consumer Products 1997 R.C. Tway Company, LLC (dba Kentucky Trailer) is a leading manufacturer of custom trailers and truck bodies for the moving and storage, mobile medical, and other industries. Louisville, KY Manufacturing 1879 Stranded Oil Resources Corporation is an exploration and production company focused on enhanced oil recovery. Denver, CO Energy 2011 W&W AFCO Steel is a fabricator and erector of structural steel for commercial, manufacturing and transportation infrastructure projects. Oklahoma City, OK Infrastructure 1945 Wilbert Funeral Services is a leading provider of products and services for the funeral and cemetery industries and precast concrete markets. Overland Park, KS Manufacturing

6 A Unique Option for Owner-Managers Privately Held Business: Status Quo Succession issues and concentration of net worth. Limited financial resources for expansion outside of debt and owner reinvestment. Sell to a Competitor/Strategic Acquirer Corporate culture and legacy often lost in integration with acquirer. Loss of management control. Potential workforce and facility consolidation. Sell to a Private Equity Fund Private equity Hamster Wheel (disruptive auction process every 3-5 years). Excessive leverage. Long-term investments avoided. Sell to a Family Office Limited follow-on capital driven by diversification mandates. Changing investing goals as family priorities evolve. Alleghany Capital Permanent Capital Autonomous Operating Model Prudent Leverage Follow-on Growth Capital Public Company Resources 6

7 Our Strategy We aim to build value by partnering with motivated owners and managers of companies with leading positions in niche markets that will benefit from our: Permanent Capital/Long-Term Investment Horizon: Since Alleghany Capital is not a fund, we do not face pressures to sell our companies within a short time period. This allows our companies to take a long-term approach to building their businesses. Autonomous Operating Model: Our subsidiaries function as entrepreneurial autonomous enterprises, maintaining their unique operating principles and cultures. Prudent Leverage: We focus on business growth vs. financial engineering, believing that excessive leverage endangers the sustainability of even the best businesses. Follow-on Growth Capital Through Economic Cycles: We actively seek to invest in platform companies, defined as businesses where we have the opportunity to fund high return projects or accretive add-on acquisitions. As a long-term holder, we view down cycles as an opportunity to invest. Resources of a Long-Established Public Company: Our subsidiaries have the ability to leverage the banking, insurance, legal, M&A, and tax support of a NYSE-listed company, as well as a large network of CEOs and senior managers in a wide variety of global businesses. 7

8 Who We Look to Partner With: Platform Investments We look to acquire majority positions or minority positions that will eventually lead to majority control in companies that have the following attributes: Experienced and adaptable management teams that (i) share our values and long-term approach to business and (ii) have a clear strategic vision and executable growth plan for their companies. Sustainable competitive positioning in niche markets, supplying products or services that are essential to or valued by its customers. Scalable positions in fragmented industries that will benefit from a relationship with a long-term capital provider to support add-on acquisitions. $20 to $60 million in EBITDA. Headquarters in North America. 8

9 Add-On Acquisitions Our companies are actively pursuing add-on acquisitions with EBITDA in excess of $5 million, both domestically and internationally: Targeting specialty machine tool companies and related parts and consumables businesses. King Machine Tool acquired in Diamond Technology Innovations acquired in Targeting design and engineering firms focused on the life sciences, healthcare, food and beverage, and consumer products sectors. Targeting licensed and branded toy/entertainment companies. First Act acquired in Targeting specialty trailer/truck body manufacturers as well as providers of niche mobile/modular solutions. Advanced Mobility acquired in SMIT acquired in Bussman Medical & Research acquired in Targeting steel fabricators and erectors. Targeting providers of products and services for the funeral, cemetery and cremation industries. 9

10 Our Process We have an efficient transaction process that limits disturbance to seller operations and establishes the working relationships that will be critical post-close. Sourcing Initial Meeting Alleghany Capital Review & Analysis Execute Term Sheet Final Due Diligence & Negotiation Deal Closing Alleghany Capital searches for businesses that meet our investment criteria with owners/managers that share our longterm horizon. Ongoing Management meetings and site visits. Review of historical and projected financial and operating metrics. Application of Alleghany Capital Investment Criteria. Detailed valuation work culminating in a verbal indication or term sheet. Further management meetings, site visits, and background checks. Interviews of select customers and suppliers. Competitor and industry research/analysis. Accounting, legal, environmental, and tax reviews. Negotiate definitive documentation (e.g., purchase and stockholders agreements). ~1 month ~ 1-2 months Assuming a responsive management team and a collaborative process, we target a total transaction timeline of days. 10

11 Our Investment Team David Van Geyzel President & CEO Mr. Van Geyzel is the President & CEO of Alleghany Capital Corporation ( Alleghany Capital ). He is a member of the board of directors of Bourn & Koch, Inc.; IPS-Integrated Project Services, LLC; Jazwares, LLC; R. C. Tway Company, LLC; Stranded Oil Resources Corporation; WWSC Holdings, LLC; and Wilbert Funeral Services, Inc. Prior to joining Alleghany Capital in 2007, Mr. Van Geyzel was an investment professional at Copper Arch Capital LLC, where he focused on investments in the public equity markets, and Brown Brothers Harriman s 1818 Mezzanine Funds, L.P. ( BBH ), where he focused on a variety of private equity and mezzanine debt transactions in a wide range of industries. Before BBH, Mr. Van Geyzel worked in UBS Warburg LLC s Leveraged Finance Group. Mr. Van Geyzel graduated from Columbia University with a B.A. in both History and Economics. He holds an M.B.A. from Columbia Business School. Udi Toledano Chairman Mr. Toledano is the Chairman of Alleghany Capital. He is a member of the board of directors of Bourn & Koch, Inc.; IPS-Integrated Project Services, LLC; Jazwares, LLC; R. C. Tway Company, LLC; Stranded Oil Resources Corporation; WWSC Holdings, LLC; and Wilbert Funeral Services, Inc. Prior to joining Alleghany Capital in 2013, Mr. Toledano managed UTA Capital LLC, an Alleghany Capital-funded special situation fund. Prior to that, he managed Millennium 3 Opportunity Fund, a venture capital fund. Previously, Mr. Toledano was President of Andromeda Enterprises, Inc. and CR Capital Inc., both private investment companies, where he invested in industries such as manufacturing, real estate, healthcare, technology, and shipping. Earlier in his career, Mr. Toledano worked at Interactive Data Corporation and Peat, Marwick and Partners. He is the lead director of Universal Stainless & Alloy Products Inc. (NASDAQ:USAP), which he cofounded in 1994, and has served on numerous public and private boards. Mr. Toledano holds a B.S. in Physics and Mathematics and an M.B.A. from the Hebrew University of Jerusalem. John Daly Vice President Rob Hulick Vice President Rich Albano CFO Mr. Daly is a Vice President of Alleghany Capital. Prior to joining Alleghany Capital in 2013, Mr. Daly was an Associate at BBH Capital Partners L.P., the private equity arm of Brown Brother s Harriman, where he executed transactions and worked with portfolio companies in a variety of sectors, with a particular focus on technologyenabled business services, media, and telecommunication investments. Prior to BBH, Mr. Daly worked in the Financial Institutions coverage group and Corporate Mergers and Acquisitions team at J.P. Morgan Securities, Inc. Mr. Daly graduated from Dartmouth College with a B.A. in English. He also holds an M.B.A. from The Wharton School of the University of Pennsylvania. Mr. Hulick is a Vice President of Alleghany Capital. Prior to joining Alleghany Capital in 2013, Mr. Hulick was an Associate at BBH Capital Partners L.P., the private equity arm of Brown Brothers Harriman, where he focused on leveraged buyouts, recapitalizations, and growth equity transactions across a wide range of industries, including transaction and portfolio coverage experience in the healthcare, infrastructure, and manufacturing sectors. Prior to BBH, Mr. Hulick worked in Cronus Partners Manufacturing & Industrial and Health Care investment banking groups. Mr. Hulick graduated from Princeton University with a B.A. in English. He also holds an M.B.A. from The Wharton School of the University of Pennsylvania. 11 Mr. Albano is the Chief Financial Officer of Alleghany Capital. Prior to joining Alleghany Capital in 2017, Mr. Albano was a partner in RSM s transaction advisory services practice and was a member of the firm s national Consumer and Industrial products industry leadership team. Prior to RSM, he was a senior manager in the transaction advisory services practice of Ernst & Young. Mr. Albano graduated from Rutgers University with a B.S. in Accounting and from Seton Hall University with an M.B.A. He is also a Certified Public Accountant in the states of New York and New Jersey.

12 Contact Information Owners or representatives of businesses that fit Alleghany Capital s investment criteria are invited to contact: David Van Geyzel President and CEO Alleghany Capital Corporation 1411 Broadway, 34th Floor New York, NY dvangeyzel@alleghanycc.com Udi Toledano Chairman Alleghany Capital Corporation 1411 Broadway, 34th Floor New York, NY utoledano@alleghanycc.com 12