February 24, 2016
Unlock Your Company’s
Hidden Value Hosted By:
Delaware Trust
Presented By:
Mark Gaeto, Managing Director, Falcon Capital Partners LLC
Ted Stack, Managing Director, Falcon Capital Partners LLC
Falcon Capital Partners, LLC
Securities Products offered through BA Securities, LLC. Member FINRA, SIPC.
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Boutique provider of customizable services with an expert team of
attorneys, CPA, and finance professionals ready to assist with
your most important transactions
Private equity networking
Corporate trust and agency
Escrow agent
Collateral agent
Qualified custodial agent
Independent director services
Special purpose vehicle services
About Delaware Trust
Clients:
Corporations
Law firms
Investors
Private equity firms
Amanda
Page 3
Agenda
Overview of Presentation II.
I. Introduction to Falcon Capital Partners
Hidden Value in the Financials III.
Hidden Value in the Strategy IV.
Hidden Value in the Operations V.
Q&A VI.
5 Minutes
10 Minutes
10 Minutes
10 Minutes
10 Minutes
10 Minutes
Amanda
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Falcon Capital Partners is an investment bank
providing merger & acquisition and strategic
advisory services to middle market and lower
middle market companies and investors
What We Do
5 Minutes (Mark and Ted pitch
our firm)
www.falconllc.com
Quick Statistics
Buy-Side
Advisory
Sell-Side
Advisory
Strategic
Advisory
Services
Overview of Advisory Services
Falcon’s Industry Coverage Universe
Healthcare Services & Technology Software, IT, & Business Services Regional Practice (Mid-Atlantic)
Founded in 2001 and based outside of
Philadelphia in Wayne, PA
Completed over 75 transactions since 2008
representing $1.8 billion in transaction
value
Nationally recognized in the healthcare,
business services, and technology
verticals Falcon focus on regional generalist
practice
Amanda introduce Falcon
Page 5
Who We Are Introduction to Falcon Capital Partners
25 years of experience in the information technology industry as an owner,
senior executive, sales executive, investor, and advisor to leading software and
IT services companies
Founded The Alesco Group, a respected growth advisor to small and mid-
market technology firms
Top performing global account executive at several leading technology
companies including SAP America, Inc.
Invested in and operated ISC, an SAP implementation firm, and orchestrated a
highly successful sale to NYSE firm
Management consultant and principal with PRTM’s sales and marketing
effectiveness practice
25 years of healthcare service, technology, financial, operational, and
entrepreneurial experience
Manager with Ernst & Young’s Healthcare Consulting Practice
Vice-President of Northeast Management Operations, Medaphis (PerSe
Technologies/McKesson, NASD:MCK)
CEO/Co-Founder of Integrated Medical Management, Inc. (IMM), a venture backed
physician management company
Executive Vice-President of Development for Advanced Health Technologies
(NASD:AHTC)
Senior Vice-President of Development for PractiCare, Inc., a wholly owned
subsidiary of The Phoenix Companies (NYSE: PNX)
Founder and Managing Director of Healthcare Technology Ventures and M&A firm
InHealth Venture Management
5 Minutes
Mark Gaeto
Managing Director
Falcon Capital Partners LLC
Ted Stack
Managing Director
Falcon Capital Partners LLC
Emphasize background as
former owners/operators
Page 6
Agenda
Overview of Presentation II.
I. Introduction to Falcon Capital Partners
Hidden Value in the Financials III.
Hidden Value in the Strategy IV.
Hidden Value in the Operations V.
Q&A VI.
5 Minutes
10 Minutes
10 Minutes
10 Minutes
10 Minutes
10 Minutes
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First and foremost…you need to define your goals and objectives to
properly align your overall strategy as a business owner and drive value
Overview of Presentation: Ownership Wants and Needs
Once defined, you can begin to access and unlock the value of your firm, given your personal goals and objectives within the desired timeframe
5 Minutes (Mark and Ted
describe the overall strategy, 3 example
slides to follow) Owner
Priorities
Owner
Timeline 6 months 1 year 2 years 5 years
Sale / Merger Recapitalization Growth and
Retention
Owner
Considerations Risk / Reward
Near-Term
Liquidity
Long-Term
Upside
Every deal is different, every
business is different. Our
presentation will only make sense if you view through
this lens
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A Strategic Growth Vision (“SGV”) serves as a roadmap for
management, and answers three critical questions:
Overview of Presentation: Strategic Growth Vision
Review
management
beliefs and goals
Client
internal
assessment
Market
environment
assessment
Refined
vision and
strategic
options
assessment
Impact analysis
and
implementation
planning
Process of Formulating a Strategic Growth Vision
Where are we
going?
How will we get
there?
Why will we be
successful?
Example of SGV, which is the
roadmap that helps frame the
discussions with our clients
Gloss over for a minute as an
example of “overall strategy”
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Overview of Presentation: Where We Want to Be
Core
Competencies
Financial Goals
Business
Charter
Technology
Trends
Customer &
Market Trends
Competitive
Strategy / Market
Position
Internal Factors
What company can control
External Factors
Largely beyond company’s
control
Company must decide how
to respond to changes in
external environment
Growth Strategy
“Where we want to be”
What are your enablers and constraints?
What are your threats and opportunities?
Good to present in front of your board
for any planning discussions
Gloss over for a minute as an
example of “overall strategy”
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Business
Charter
Economic
Model
Talent,
Culture, &
Leadership
Business
Processes
Technology
Systems
Management &
Governance
Shareholder Expectations
Marketplace Insight
Acquisition & Partner Strategy
Change Agenda
Capital Model (Growth, Product, Sales)
Co
re O
pera
tin
g
Mo
de
l
Competitive
Strategy
Basis of
Competition
Innovation
Intent
Value Stream
Strategies
Product Chain
Competition
Customer Chain
Business Vision &
Strategy Growth & Operational Strategic Initiatives
Transformation & Management
Execution
Your SGV is enabled by an operational strategy and plan and is highly dependent on management execution
Overview of Presentation: Detailed Roadmap
Impress your investors with well
thought out discussion
Gloss over for a minute as an
example of “overall strategy”
Amanda: transition to overall agenda
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1. Understand the Economics
2. Build the Models
Overview: How to Unlock Value
Financial
Strategic
Operational
3. Characterize Your Markets
4. Value the Intangibles
5. Identify Your Targets
6. Define Operational Excellence
7. Begin Now
Unlo
ck t
he H
idden V
alu
e
Grab attention early with a few quick
mentions of specific deals
2 Minutes (Mark and Ted
outline the material)
With the goals defined, you can begin to unlock value in your business
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Agenda
Overview of Presentation II.
I. Introduction to Falcon Capital Partners
Hidden Value in the Financials III.
Hidden Value in the Strategy IV.
Hidden Value in the Operations V.
Q&A VI.
5 Minutes
10 Minutes
10 Minutes
10 Minutes
10 Minutes
10 Minutes
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Wrap your head around the financial statements and dive deeper
to fully understand what’s happening in your business
Hidden Value in the Financials: Understand the Economics
5 Minutes (led by Ted, Mark supplement w/
Brainworks) Reexamine and
Recast the Accounting
Capture Costs on a More Granular
Level
Tighten Controls and Inputs
Move Cash Accrual to GAAP
Accounting
Realize Tax Consequences of
Transaction
Issue of cash vs accrual accounting
Q&A: “I hear you saying financial story needs to match the business story. How
do you go about aligning these for one of your clients? Can
you provide an example?
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Structure your financials into a scalable and workable model
Hidden Value in the Financials: Build the Models
Compare to ‘our process’, we walk
through value/timing
5 Minutes (led by Ted, Mark
supplement) • Products and Services
• Customer Concentration
• Regions
• Industries
• Sales Reps
Determine Revenue Drivers
• Calculate Margins
• Strategize to Improve Costs
• Question the Pricing Strategy
Understand Your Costs
Q&A: “Can you give an example of a key
revenue driver?”
Q&A: “We hear that tech multiples are often higher, but
can you define tech vs tech services
companies?”
What is recurring, what is bundled
Customer concentration
example of one client
Page 15
Agenda
Overview of Presentation II.
I. Introduction to Falcon Capital Partners
Hidden Value in the Financials III.
Hidden Value in the Strategy IV.
Hidden Value in the Operations V.
Q&A VI.
5 Minutes
10 Minutes
10 Minutes
10 Minutes
10 Minutes
10 Minutes
Q&A: “Can you provide more detail about the strategic piece required and
how we can evaluate the
market?”
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5 Minutes
Evaluate external trends impacting the strengths and weaknesses
of your business, including market size and competition
Hidden Value in the Strategy: Characterize Your Markets
Current
Core
Adjacency
2nd Level Adjacency
A B C
A
B
C
C B A Geographies Products/Services
Channels/Segments
Mention banker’s ability to research
and study the overall market
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The intangible aspects of your business will often represent the
key drivers of value for someone looking to acquire
Hidden Value in the Strategy: Value the Intangibles
5 Minutes (led by Mark, with
tech/software focus)
Define Product Management
Document Launch Processes
Assess Brand, Reputation, and
Goodwill
Assess Methods and Procedures
Products/Services
Value the IP Separately
• Determine Cost to Build vs Buy
• Determine Time to Build vs Buy
• Determine Time to Traction
Assess Additional Value of Patents
Software Focus
Tackle software separately
IP becomes negotiating lever
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Your presumed targets must be in line with your personal goals
and objectives must be established at the beginning
Hidden Value in the Strategy: Identify Your Targets
5 Minutes (Mark and Ted)
Seek Synergistic
Buyers
Determine Strategy of Acquisition
Capture Economies of
Scale
Boost Customer
Diversification, Market Share,
or Cross Selling
Fill In the Missing Piece(s)
Relate back to personal
goals/objectives on liquidity and timing
Relate back to adjacent markets
Q&A: “Ok after we’ve unlocked
value from finance and strategy, what
can business owners do to find
hidden value in their operations?”
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Agenda
Overview of Presentation II.
I. Introduction to Falcon Capital Partners
Hidden Value in the Financials III.
Hidden Value in the Strategy IV.
Hidden Value in the Operations V.
Q&A VI.
5 Minutes
10 Minutes
10 Minutes
10 Minutes
10 Minutes
10 Minutes
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Now that you’ve unlocked the value, it’s necessary to look at key
areas of focus for further improvement and refinement
Hidden Value in the Operations: Define Operational Excellence
Tie back to personal objectives, discuss
investment decisions (sales people etc)
5 Minutes (Mark and Ted)
Develop Excellent Management Team
Assign Accountability of Results and Drive Goals
Manage
Document Processes, Systems, and Procedures
Report Metrics and Strengthen Financial
Discipline
Measure
Communicate Plan to
Management with
Measured Metrics
Increase Revenues
Capture Market
Share
Improve Margins
Grow
Growth plan = exit plan
“Complete the roadmap”
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This is a very thoughtful process, and whether you sell or not, the
value added to your business is well worth the exercise
Hidden Value in the Strategy: Begin NOW!
5 Minutes (Mark and Ted)
• Professionalize the Firm
• Think of the End Goal
• Be “Sale Ready” with Historical Track Record
Led by the owner, utilize a good banker
to structure and manage the project
Wrap up with small teaser and mention role
of banker again
Q&A: “Can you provide an example
of a company you’ve worked with
where you ultimately decided to hold off on the sale? And what benefits did they
realize as a result? ‘”
Page 22
Agenda
Overview of Presentation II.
I. Introduction to Falcon Capital Partners
Hidden Value in the Financials III.
Hidden Value in the Strategy IV.
Hidden Value in the Operations V.
Q&A VI.
5 Minutes
10 Minutes
10 Minutes
10 Minutes
10 Minutes
10 Minutes
February 24, 2016
Thank You!
10 Minutes (Amanda leads Q&A,
including scripted questions, followed by
Del Trust survey)
Q&A
Q&A: “What specific role does
Falcon play in unlocking value?”
Q&A: “What specific role does
Falcon play in unlocking value?”
Q&A: “How do you know what escrow or service provider
to select?”
Q&A: “Ted here’s a tough question. Is
there ever a time to avoid using an
investment banker?”
Q&A: “what do you typically see in the
unlocking value exercise? Is the
owner looking to quickly sell and
move on?”