BASICS OF RAISING CAPITAL OCTOBER 11, 2012
Agenda Private Equity Industry Benefits of Private Equity What Private Equity Investors Look For Clairvest Group Inc. 2
Private Equity Overview Fundraising Investment Exits 3
Private Equity Landscape Private Equity Venture Capital Late Stage Angel/Seed Startup Growth Turnaround 1 st 3 rd stage Bridge MBO LBO 4
Private Equity Overview $600 $500 $400 $300 $200 $100 $0 3,040 3,500 $571 3,000 2,517 2,228 2,500 2,032 1,686 1,828 1,738 2,000 1,393 $305 1,225 1,500 843 $196 1,000 $174 $161 $147 $126 500 $40 $83 $62 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Capital Invested ($B) # of Deals Closed Source:PitchBook 5
Private Equity Overview Assets under Management Private Equity Funds Preqin 6
Private Equity Overview Outperformance of Top Quartile Funds 25% 20% 20.25% 21.1% 21.1% 1st Quartile Median 3rd Quartile 18.6% 15% 10% 9.65% 8.3% 10.7% 8.0% 5% 0% 0.28% 1.0% 0.5% -5% -2.6% Small Buyout Mid Buyout Large Buyout Mega Buyout Preqin 7
Private Equity Overview U.S LBO Deal Value Value Creation Strategies Change 2008 + Buy and Break Up Buy and Roll Up Buy on credit Buy to grow Source: Bain & Co. 8
Private Equity Overview Success Factors Strengthen Management Stick to Core Realize Scale Ideally, strengthen before closing by addressing gaps Identify replacements in first 100 days post closing Ensure Management are materially invested Continue with industry and company learning after closing Gain knowledge of assess full value of scale Value Creation Plan Agree on a plan with top management Close collaboration between Board and management Experience Repeat a successful model for add-on acquisitions
Private Equity Overview Advantages of Buy-to-Grow Lower Cost Access to Debt Financing Exit Flexibility Multiple Arbitrage 10
Agenda Private Equity Industry Benefits of Private Equity What Private Equity Investors Look For Clairvest Group Inc. 11
Benefits of Private Equity Partnerships Access Capital to: Accelerate Growth Plan Succession Reduce Leverage Increase Efficiency 12
Benefits of Private Equity Partnerships Private Equity provides more than just capital: Assistance to build a more valuable business Industry Knowledge Corporate Finance Expertise and Network Discretion 13
Agenda Private Equity Industry Benefits of Private Equity What Private Equity Investors Look For Clairvest Group Inc. 14
What Private Equity Investors Look For Strong & Invested Management Team Attractive Industry Sector Well Positioned for Growth Strong Unit Economics Plan for Eventual Sale Appropriate Governance and Liquidity Contingency Planning 15
Being Prepared Financial Audited F/S Regular KPI Reporting Detailed budgets/ 5 years forecast Legal Incorporation Docs. Business licences Supply contracts Major customer agreements Regulatory approvals Employee agreements (especially senior staff) Corp. Governance Documented policies for: Bonuses Benefits Pension plans Safety Board of directors/ advisors 16
Agenda Private Equity Industry Benefits of Private Equity What Private Equity Investors Look For Clairvest Group Inc. 17
Clairvest Group Inc. Clairvest Group was founded in 1987 by entrepreneurs for entrepreneurs Seasoned Board of Directors 37 investments to date Co-CEOs lead the firm for 18 years Management team together for 10 years Clairvest Group is listed on the Toronto Stock Exchange (TSX: CVG) Clairvest is owned 88% by its board and management We invest our own money, at least 25% of each fund comes from Clairvest * Companies that members of Clairvest board led 18
Clairvest - Distinguishing Characteristics Industry Focused Alignment of Interest Ownership Flexibility Acquisition Experience Patient Growth Capital Our Distinguishing Characteristics We dedicate substantial resources to our chosen domains We invest our own money; at least 25% of each fund from CVG Over 88% of Clairvest owned by management and the board We do not insist on a control position We back in place owner-operators We have supported 15 regional consolidation strategies We assisted portfolio companies with over 190 acquisitions We provide capital to facilitate growth We hold our investments longer to build leading businesses We focus on value creation as opposed to financial engineering 19
Winters Bros. Waste Systems Inc. Case Study Leading Solid Waste Management Company in Long Island, New York Regional Consolidation Play Investment: US$15.7M Convertible Pref. Shares CVG+CEP Ownership: 36% 20
Winters Bros. Waste Systems Inc. Case Study Acquisition & Consolidation of Long Island Waste Market JAMAICA ASH RUBBISH REMOVAL Solid #1 Position $140 M in Run-rate Sales 21
Winters Bros. Waste Systems Inc. Case Study IESI Offer Sale Price $263M (4.0x Return) 22
Clairvest Group Inc. How to Reach Us Clairvest Group Inc. 22 St. Clair Avenue East, Suite 1700 Toronto, Ontario, Canada, M4T 2S3 Phone: 416-925-9270 www.clairvest.com Michael Castellarin Managing Director 416-413-6007 michaelc@clairvest.com Maria Klyuev Director, Investor Relations 416-413-6016 mariak@clairvest.com 23