May 8, 2019 Discussion Topics Brady Ware Capital Overview - - PowerPoint PPT Presentation

May 8, 2019 Panel Discussion: Private Equity as a Partner

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: cbishop@bradyware.com Roger Furrer Director Office: Dayton P: (937) 913-2565 E: rfurrer@bradyware.com Stephen Ford Director Office: Columbus P: (614) 384-8423 E: sford@bradyware.com Keith Warner Manager Office: Dayton P: (937) 913-2539 E: kwarner@bradyware.com Grant Kramer Associate Office: Dayton P: (937) 913-2516 E: gkramer@bradyware.com

• Affiliate of Brady Ware &

Company, a regional accounting firm with 145+ employees and 4 locations

• Strategic Relationship with Duff &

Phelps, LLC, an international investment banking firm with over 70 offices and 3,300 employees

Broad Industry Experience

• Industrial
• Business Services
• Technology
• Manufacturing
• Consumer Products
• Financial Services
• Healthcare
• Retail

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22 Years

BWC Founded in 1997

150+

Combined Years

• f Experience

Invaluable Connections

Brady Ware Capital Additions

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Brady Ware Capital continues to grow with two additions to the team in 2019. Stephen Ford Director Columbus, OH Grant Kramer Associate Dayton, OH Mergers & Acquisitions Valuation Services Mergers & Acquisitions Capital Raising

Brady Ware Capital Services

▪ Brady Ware Capital has extensive experience working with middle-market companies to support an array of corporate objectives through

• ur services and solutions listed below:

 Consulting services and business analysis including:

• Cash Flow
• Debt Service Capacity
• Divisional/Customer Profitability
• Return on Equity

Investment Banking

 Sell-side and buy-side M&A  Specialty focus on lower-middle-market, privately-owned companies  Minority and majority recapitalizations of debt and equity  Strategic advisory and valuation services

Corporate Finance Transaction Services

 In conjunction with Brady Ware & Company, provide a variety of services relating to a transaction including:

• Tax due diligence and structuring
• Due diligence, accounting-related work,

and Quality of Earnings reports

Financial Advisory Services

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Sell Side Advisor Sell Side Advisor Sell Side Advisor Sell Side Advisor Buy Side Advisor Senior Debt Advisor Sell Side Advisor Sell Side Advisor Sell Side Advisor Sell Side Advisor Senior Debt Advisor

Provided financial advisory services to One10 regarding senior debt providers

has been acquired by

Financial advisor to Quest Information Systems

has been acquired by

Financial advisor to The Retirement Plan Company, LLC

has been acquired by

Financial advisor to Strategic Marketing, Inc.

has been acquired by

Financial advisor to Invotec Engineering, Inc

has been acquired by

Financial advisor to Vistech Manufacturing Solutions

has been acquired by

Financial advisor to Composite Advantage

has acquired

Financial advisor to Russell Cellular

has been acquired by

Financial advisor to C.H. Ellis

has been acquired by

Financial advisor to Ferco Aerospace Group

has been acquired by

Financial advisor to Cardboard Heroes

has been acquired by

Financial advisor to Absocold Corporation Provided financial advisory services to Russell Cellular regarding senior debt providers

has been acquired by

Financial advisor to Remington Steel, Inc. Financial advisor to 3 Sigma Corporation

has been acquired by

Brady Ware Capital, LLC – Selected Transactions

has been acquired by

Financial advisor to Physician Technology Partners

has been acquired by

Financial advisor to Power Services, LLC

Sell Side Advisor Sell Side Advisor Sell Side Advisor Sell Side Advisor Buy Side Advisor Sell Side Advisor

Financial advisor to Qualitronics, Inc.

has been acquired by

Sell Side Advisor

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8

Duff & Phelps Overview

Corporate Finance Compliance and Regulatory Consulting DLMC Valuation

• M&A Advisory
• Financial Sponsors Group
• Fairness and Solvency Opinions
• Restructuring Advisory
• Private Placement of Debt and

Equity

• Transaction Advisory Services
• Financial Reporting Valuation
• Tax Services
• Transfer Pricing
• Fixed Asset Management and

Insurance Solutions

• Real Estate Services
• Alternate Asset Advisory
• Disputes and Investigations
• Legal Management Consulting
• Compliance Consulting
• Regulatory Consulting
• Risk Consulting and Infrastructure
• Regulatory Tax Advisory
• Business Services

North America

• 1,500+ Total Professionals
• 200+ Corporate Finance

Professionals Asia

• 250+ Total Professionals
• 10+ Corporate Finance Professionals

Europe

• 1,500+ Total Professionals
• 250+ Corporate Finance

Professionals

We Perform:

• Over 10,000 engagements annually for over 5,000

clients

• Over 6,000 valuation advisory engagements for more

than 1,700 clients

• Portfolio valuation advisory services for 70% of top-tier

private equity firms

• Over 1,000 transaction opinions for $2 trillion in deal

value since 2005

• Nearly 400 M&A transactions over the last five years

We are the largest independent global investment banking and valuation services firm 3,300+ Employees

Serving clients globally through

70+ Offices and Affiliates

In North America, Latin America, Europe, and Asia

Strong Global Presence and Capabilities Overview Worldwide reach bolstered by globally focused ownership group 8 Brady Ware Capital, LLC

M&A Market Overview

BWC Market Observations

• Strong pressure to deploy

abundant capital for the right deals (more buyers than sellers)

• S&P 500 companies are

holding approximately $2 trillion in cash

• Private equity firms are holding
• ver $850 billion in committed

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

• More sellers coming to market
• Rising interest rates and stock

market volatility

• 2020 election
• Strong economic expansion

entering 10th year

• Unknown events, e.g. tariffs,

geopolitical risks, etc.

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Healthy Economic Backdrop Driving Strong Appetite for Acquisitions Potential Turning Points in the Market

Lower Middle Market Deal Statistics

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Source:Pitchbook Source:Pitchbook

Private Equity Overview

Private Equity Overview- A Snapshot

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Differentiating Factors Size Specialties Services Experience Preferred Transaction Structures Industries of Interest Locations of Interest Sources of Capital Public and Private Pension Funds Qualified Individuals Endowment Funds Insurance Companies Investment Advisors & Money Management Firms Sovereign Wealth Funds Charitable Foundations Fund of Funds

Source: Prequin

Private Equity Overview- Acquisition Objectives

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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

Trends in the Industry

Private Equity Committed Capital

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$182 $106 $150 $158 $285 $281 $255 $312 $326 $346

$0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cumulative Overhang ($billions) Capital Raised ($ billions) Dry Powder Capital Raised $855

Source:Pitchbook

Approximately $855 billion of private equity capital remained unallocated at the end of the fourth quarter in 2018.

Significant Private Equity Capital Remains Available

The number of deals and total deal value continue to rise at a robust pace.

Private Equity Deal Statistics

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Private Equity Deal Value and Count Continue to Increase

Source:Pitchbook

Increasing average hold times for portfolio companies is decreasing the amount of sales per year.

Private Equity Deal Statistics Cont.

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Private Equity Exit Activity Remains Moderate

Source:Pitchbook

Private Equity Add-on Acquisitions

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Acquisitions to expand current portfolio companies continue to increase as a percentage of total buyout activity.

Add-On Acquisitions Continue to Rise

Source:Pitchbook

Private Equity Benefits & Challenges

Private Equity Benefits and Challenges

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Benefits Challenges Equity & Growth Capital

• Liquidity and diversification for the owner
• Growth capital to expand the business

Transfer of Duties

• Allows owner to focus on the business

attributes he/she enjoys

• Private Equity can bring invaluable

expertise to grow the business

Expertise Entrepreneurs as Employees

• Transition from owner to employee
• Redundancy resulting in job loss-

typically in administrative departments

• Use of leveraged buyouts is a common

practice and can put pressure on future cash flows

Potential for Loss of Jobs Increased Leverage

Panel Discussion

Our Panelists

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Pete Munson

Managing Director Cardinal Equity Partners

John Jacinto

President & CEO Vistech Manufacturing Solutions

Jim Whalen

Chairman and CEO of Hartzell Former CEO of GEMCITY Engineering and Manufacturing