OUR INVESTMENT PHILOSOPHY IS SUMMARIZED AS FOLLOWS:

Transcription

1 Situations Criteria Investment Process Principals Recent Transactions Contact WELCOME Cactus Capital provides closely-held lower middle market companies with the capital to finance either the exit of an existing equity holder, core growth or an acquisition strategy. With offices in Denver and Phoenix, Cactus Capital works with companies throughout the Southwestern United States. Over the course of lengthy careers in finance managing and investing in closely held businesses, Cactus Capital well understands middle market companies, the issues they confront and the needs of their owners. Post investment, we become the new partner that can add value above and beyond just the capital provided to finance the transaction. Functioning at the Board of Director level, we work with management to increase the equity value for all partners management, the remaining owners and our investors. OUR INVESTMENT PHILOSOPHY IS SUMMARIZED AS FOLLOWS: Find businesses with predictable and strong cash flow business models Focus on goal oriented transactions such as family succession, management succession, growth or acquisition, divergent ownership goals or a passive owner who wants to sell the business to active management Back exceptional management teams that have a demonstrated track record of success Provide flexible capital structures that are most able to withstand a variety of economic scenarios Motivate management by providing them opportunity to purchase equity in the company plus granting stock options to key managers Support the business after closing at the board level, particularly with such important matters as key management changes, operational changes, growth initiatives, enhanced MIS, acquisitions and optimizing the exit strategy

2 SITUATIONS TO CONSIDER CACTUS CAPITAL Retirement-After decades of hard work, it is simply time to go fishing, enjoy the grandchildren, do some travel, etc., unencumbered by the demands of having the corner seat and being the owner of a privately held business. Cactus Capital can facilitate these transactions and, where possible, allow the existing management to continue to run the company. Family/Management Succession-Similar to a retirement scenario, other family members and/or management may desire to purchase the business from the existing owners but lack the financial resources in order to accomplish the purchase. Cactus Capital can back the management team and/or the other family members in purchasing the existing ownership interests. Growth/Acquisition-Often there are attractive acquisition targets operating in the same industry that the existing owner seeks to purchase but lacks the required capital resources. Cactus Capital can assist the existing owners in making such acquisitions. Ownership Differences-Sometimes, the various owners of a business no longer agree upon the strategic direction of the company. Cactus Capital can meet with the various owners, develop an understanding of the divergent goals and, where appropriate, buy-out one or more of the partners interests. Leverage Dividends-Typically after many years of hard work, owners of businesses want to take some chips off the table and diversify their portfolio, but don t know how to accomplish this. Cactus Capital can facilitate such a shareholder distribution by acquiring an ownership interest in the business.

3 TARGETED INDUSTRIES Cactus Capital's industry focus is in service businesses, light/niche manufacturing and value added distribution companies because the Principals believe they most typically possess a predictable and strong cash flow business model. KEY ATTRIBUTES WE SEEK INCLUDE: Dominant player in a stable niche with a long-term competitive advantage Recurring revenue streams without high customer concentrations High gross and operating margins High free cash flows meaning limited capital expenditure and working capital requirements Few operating and execution risks Minimum EBITDA of $2 million An owner/manager with a large personal stake in the business and a track record of success in the industry

4 OUR TYPICAL INVESTMENT PROCESS IS AS FOLLOWS: A well prepared executive summary and a summary of the seller(s) valuation will usually allow us to determine whether we desire to proceed further. We understand that a confidentiality agreement is often required to be executed prior to obtaining a more complete descriptive memorandum. A well prepared business plan and/or descriptive memorandum that fully describes the company is very helpful in making a more meaningful assessment of the business, but is not a requirement. After obtaining and reading the business plan, we seek to tour the company and meet the owner(s) to discuss the business, their motivation for selling and their sales price and terms objectives. After conducting limited industry due diligence, we seek to enter a non-binding letter of intent (LOI) setting forth the terms under which an acquisition would occur, a summary of the due diligence process and the time frame for completing a transaction. After getting the LOI executed, we circle up the capital (both junior equity and bank financing) required to complete the acquisition, assuming favorable due diligence findings. After getting the capital in place, we then conduct a thorough due diligence examination of the business. Due diligence should result in confirming the seller s attestations, not in identifying undisclosed, material facts and/or financial adjustments. Depending upon what has been historically done by the sellers, we will typically engage independent CPAs to review and/or audit the most recent financial statements of the company. Assuming favorable due diligence findings, we will then prepare binding legal documentation and close a transaction as soon as possible relative to the date the letter of intent was executed. FOLLOWING ACQUISITION, OUR APPROACH IS AS FOLLOWS: The management team will continue to be responsible for the day-to-day operations of the company and is typically incentivized to create shareholder value through stock ownership. If needed, we have the ability to supplement the existing management team. Early on, we make sure that that the management information system (MIS) is optimized as we view it as important tool for both management and the Board of Directors. Working with management, we seek to create value by identifying areas of the company that can be taken to the next level. Among other actions, this typically includes implementing

5 methods to increase sales, improving operating margins, making ROI justified capital expenditure, most effectively allocating capital and addressing other, important operating issues. We hold Board of Director meetings no less than quarterly which are operationally oriented. Cactus Capital Partners Ed Brown Dan Mahoney

6 PRINCIPALS EDWARD C. BROWN For the last several years Mr. Brown has been acting as an equity sponsor who not only advises, but also personally invests in, companies that are going through a transition. In most cases the majority owners of these companies wanted to sell their ownership position and Mr. Brown was engaged to help them accomplish this. Prior to his personal equity sponsor activities, Mr. Brown was Founder and Managing Partner of two private equity investment funds totaling $200 million in capital based in Denver, CO. The primary investors in the funds were the Small Business Administration, state pension plans, commercial banks, insurance companies and wealthy individuals. From June 1994 to February 2003 the funds invested in 57 companies. These investments were generally made in low technology companies with between $10 million and $50 million in revenues that needed capital for management buyouts or to expand. The size of the investments ranged from $1 million to $7 million with a maturity of five to seven years. Mr. Brown also has extensive experience in direct private investments, investment banking, and accounting. Prior to founding the first investment fund, Mr. Brown was Vice President and Director of Mezzanine Finance at Lincoln National Investment Management Company in Ft. Wayne, Indiana. Prior to his affiliation with Lincoln National, Mr. Brown was Managing Partner at FBS Capital, a $100 million equity/mezzanine investment division of U.S. Bank in Minneapolis, Minnesota. He was also associated with USB Merchant Bank, where he was Managing Director and head of private placements. Prior to joining USB Merchant Bank, he held positions with Dain Bosworth, an investment banking firm headquartered in Minneapolis and the Toro Company and was a CPA with Arthur Andersen. Mr. Brown graduated from Yale University and received a Masters of Business Administration in Finance with distinction from Cornell University. He was also a Lieutenant in the United States Navy assigned to Underwater Demolition Team 11 and Seal Team 1 and made two tours to Vietnam. During 2001, Mr. Brown served as Chairman of the Board of Governors for the National Association of Small Business Investment Companies and was on the Board from 1996 to worked for several years in the banking

7 DANIEL MAHONEY Dan Mahoney has 30 years of experience in private equity, banking, investment banking, mergers and acquisitions, accounting, middle market and oil and gas investing and senior corporate management. For the past ten years, Mr. Mahoney has focused upon private equity transactions including sponsoring the buyout of Auto Safety House, forming and managing Maverick Energy, LCC, which invested in several natural gas well and processing plant investments, co-sponsoring the purchase of Central States Bus and co-sponsoring the $125 million financing of the Jordan Bridge. Mr. Mahoney was first employed by KPMG for nine years, first in the audit department then in the mergers and acquisitions department where he progressed to senior manager. He has also industry, both with National Westminster Bank and First Interstate Bank, as a vice president in each of their leveraged finance departments and for Houlihan Lokey Howard & Zukin as a vice president in the financial advisory services department. He has served as Chief Financial Officer for both Buzzeo Inc., an early stage software development company and for Auto Safety House, an Arizona school bus distributor. During his career, Mr. Mahoney has participated in over 100 transactions as advisor, financer or principal. Mr. Mahoney obtained his undergraduate degree in accounting from Saint Bonaventure University in 1979 and his Masters Degree in finance from New York University s Stern School of Business in Mr. Mahoney is a former Certified Public Accountant, a former Senior Member of the American Society of Appraisers in business valuation, a former Certified Insolvency and Restructuring Accountant and a former Certified Fraud Examiner.

8 RECENT TRANSACTIONS ASPEN EARTHMOVING LLC Mr. Brown sponsored the buyout of AEM ( a $20 million construction company based in Carbondale, CO that was purchased by several individuals and management in May 2005 for $9 million. AUTO SAFETY HOUSE In 1999, Mr. Mahoney sponsored the buyout of Auto Safety House, the largest school bus distributor in the state of Arizona. Rocky Mountain Capital Partners, a private equity group managed by Mr. Brown, acquired the company and transitioned it from family ownership to private equity ownership. Rocky Mountain sold the company in 2007 after nearly doubling the size of the company. CENTRAL STATES BUS SALES, INC. In 2009 and early 2010, Mr. Mahoney and Mr. Brown co-sponsored the purchase of Central States Bus Sales, Inc. ( CSB is the largest Blue Bird school bus distributor in the country and has facilities in Missouri, Illinois, Tennessee, Kentucky and Arkansas. It has over $100 million in revenues and was purchased by several institutional investors and management in February JORDAN BRIDGE In 2010, Mr. Mahoney served as co-sponsor in the $120 million financing of the Jordan Bridge, a privately owned replacement toll bridge located in Norfolk/Chesapeake Virginia and spanning the Elizabeth River. This bridge is being engineered by Figg and Bridge, and built by Lane Construction. MAVERICK ENERGY, LLC In 2002, Mr. Mahoney formed and managed Maverick Energy, LLC which managed several oil and gas limited partnerships that invested in a variety of projects with SandRidge Energy, Inc. (formerly Riata Energy, Inc.), a vertically integrated natural gas company headquartered in Oklahoma City, Oklahoma. Mr. Mahoney and his partners invested $15 million in several natural gas well, pipeline

9 and processing plant projects located in both the Permian Basin in Texas and the Piceance Basin in Colorado. Most of these investments were sold in From 2003 through 2005, he also sat on the Board of Directors of Petro Source Energy, a tertiary oil recovery company. THE RESORT COMPANY Mr. Brown sponsored the buyout of The Resort Company ( TRC is the largest property management company in Steamboat Springs, CO and manages about 1,200 condominium units in Steamboat, Vail, Breckenridge and Beavercreek. It generates net revenues of $17 million and was purchased by an institutional investor and management in September ZENITH ADMINISTRATORS, INC. Mr. Brown sponsored the buyout of Zenith ( which is America's largest third party employee benefit program administrator. The Company has current revenues of $80 million and was purchased by several institutional investors, individuals and management in March Mr. Brown currently sits on the Board and is an owner.

10 CONTACT US Please contact us for a confidential, initial conversation about your business and what you are looking for. We will promise to be responsive and get back to you quickly. Ed Brown 25 Downing Street Denver, CO c ed@cactuscapitalpartners.com Dan Mahoney 9753 East Gelding Drive Scottsdale, AZ w c dan@cactuscapitalpartners.com