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Investor Value CreationSoutheast Venture ConferenceCharlotte, NCMarch 13, 2013
LLR is a leading private equity firm focused on investing and partnering with strong management teams to accelerate growth and profitability in established technology and service businesses.
LLR Snapshot
Confidential 2
Investment Criteria
Revenues $15MM to $250MM
Growth 10%+
EBITDA $0 to $50MM
Investment Size $20MM to $100MM
Management Vision & alignment
Market $500MM+ & growth
Model Differentiated, scalable, & sustainable
LLR Experience Situations where we can add value
A. “We love to roll up our sleeves and work side-by-side with our portfolio companies for the long haul.”
B. “We work with management teams to implement strategic and operating initiatives to build long-term value.”
C. “We are active investors who take a proactive approach to working with our portfolio companies.”
D. “We work as a team to support the management of our portfolio companies in a variety of ways.”
The Value Added Investor
Confidential 3
PE and VC Backed Company Study
Confidential 4
• 6,815 companies that received PE investments generated annual revenue growth of 11.6% after 5 years
• 1,854 companies that received VC investments generated annual revenue growth of 36.4% after 5 years
Source: Institute for Exceptional Growth Companies (IEGC) and Pepperdine University
Revenue CAGR – Five Years After Investment
Investor Resources
Confidential 5
Company
Sector Experience
Best Practices
Portfolio
Operating Partners
Advisory Board
Consultants
Service Providers
Lenders
Value Accelerators
Confidential 6
Board of Directors
Strategic Planning
Customers & Partners
Operational Improvements
Talent Management
Acquisitions
Exit
Valu
e
Time
• Stacking the board with a bunch of investor types• Just a foundational board providing basic oversight and compliance
“We Help Build a World Class Board”
Confidential 7
Don’t SettleFor
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• Independent directors with direct operating experience in complementary functional areas
• Active involvement beyond quarterly meetings
• What is the role of the Board?• How active is the Board?• What profile do you envision for board members?
• A sounding board• A mandate rather than a dialogue: “Here is your three-year strategic
plan, now go execute”
“We Provide Strategic Insight”
Confidential 8
• Collaborative strategic planning sessions that you and your team own, with an independent facilitator
• Playbooks and frameworks to help as a guide, but application that is left to you and your team
• What typically happens post-closing?• Can you share a prior 100-day plan?• What are your preliminary thoughts on avenues for growth?• What are the backgrounds of the investors/advisors?
Don’t Settle
For
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• A network of companies that can provide meaningful business value
“We Can Make Introductions to Customers & Partners”
Confidential 9
• Portfolio of prospective customers and/or partners• Thoughtful partner development plan• Deep relationships with channel partners / potential buyers
• Are other portfolio companies potential customers and/or partners?• What does the broader portfolio partner ecosystem look like?• What is the firm’s history with driving business through its network?
Don’t Settle
For
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• Monthly/quarterly reporting calls• More mandates: “You must implement these processes and
systems”
“We Assist with Improving Operational Efficiency”
Confidential 10
• Roadmaps by each functional area from prior successes• Best practices sharing among portfolio – informal and formal• Specific project examples from other portfolio companies
• We are challenged by X; what has been your experience?• How much interaction occurs within the portfolio?
Don’t SettleFor
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• Minimal incremental value: “Meet Bob, he runs a search firm”• Unilateral hiring decisions: “Meet Joe, your new head of sales”
“We Can Source Talent”
Confidential 11
• Deep bench of operating talent in multiple functional areas• Relationships and experience with multiple search firms across
multiple functions, geographies, experience levels• Dedicated director of talent leveraged by the portfolio
• Is there someone on your staff dedicated to helping the portfolio build talent management plans?
• I have holes in my management team; do you have access to talent who can fill them?
Don’t Settle
For
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• Pledge to provide or help secure incremental capital• Basic deal experience
“We Can Help with Acquisitions”
Confidential 12
• Thoughtful, collaborative approach: “Here’s an initial acquisition target list, let’s talk about what makes sense for your growth plan”
• An outsourced M&A department• Previous buy-and-build experience and proven playbooks
• What are your thoughts on an acquisition strategy?• Do you have dedicated resources to support our acquisition strategy?• How much experience do you have with buy-and-builds and
integrations?
Don’t SettleFor
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By
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• We have successfully exited X number of companies
“We Optimize Exit Value”
Confidential 13
• Thoughtful view on logical buyers and existing relationships into them• Flexible strategy that will expand and evolve your exit options• Management input on exit timing (partnership approach)
• Who have you sold prior portfolio companies to?• Do you have regular dialogues with strategic buyers?• What is your investment horizon?• Walk me through sub-optimal outcomes
Don’t SettleFor
GetExcited
By
AskQuestions
Decide if you truly want an active investor as your partner
Determine if they really know your space
Make a list of areas you need help and have them present a plan to you
Talk to past and present portfolio companies – the good, the bad and the ugly
Make sure diligence is a two-way street
Investor Evaluation Checklist
Confidential 14
Confidential 15
Questions
Justin Reger, LLR Partners
www.llrpartners.com Twitter: @LLRPartners