Transcript FBCP - One Eighty Capital

ONE
EIGHTY
CAPITAL
“Making the Possible Probable”
One Eighty Capital
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OEC Overview
One Eighty Capital (“OEC”) provides the capital and
management resources necessary to effect the strategic and
operational transformation of a business:
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OEC acquires equity interests in
companies and works full-time with
current ownership and management
to position and sell the business.
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OEC looks for opportunities that
leverage the ability of our managing
partners to improve and position
businesses for sale to better owners.
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OEC is extremely selective and only
targets companies in industries with
strong underlying fundamentals
where OEC’s specific management
talents can affect a significant
transformation.
OEC prefers deals where the current
owners stay engaged both
professionally and financially to
fully benefit from the transaction.
OEC achieves superior returns by quickly developing and executing the transformation
plan and by identifying and selling to the best buyer for the business.
We quickly expand both EBITDA and the exit EBITDA multiple.
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Who We Are: Managing Partners
• Chris Baltes
– Mr. Baltes has 14 years experience in private equity deal sourcing, fundraising, and turnaround management . Prior to being a managing partner of
OEC, Mr. Baltes was a partner at a top quartile private equity firm, and was
responsible for structuring and executing the operational and strategic
turnaround of portfolio companies. Mr. Baltes had direct and primary
responsibility for three portfolio companies that created in excess of $480
million of realized investor returns or 5.6X invested capital. He has served
on the boards of COHR, Inc., Masterplan, Garden Ridge, Meridian Rail and
AllParts Medical.
• Paul Fischer
– Mr. Fischer has over 25 years experience in manufacturing operations,
finance, accounting and IT. Prior to being a managing partner of OEC, Mr.
Fischer was the CFO of Amsted Industries, a $3.0 billion diversified
manufacturing firm. Mr. Fischer was instrumental in the turnaround of
Amsted from near bankruptcy in 2001. During his four year tenure as CFO,
the equity value of Amsted improved from $300 million to $3 billion. Mr.
Fischer was also the COO of Amsted’s largest portfolio company and was
responsible for the strategic turnaround of the division from a negative
EBITDA to over $100 million of EBITDA in less than five years. He has
served on the board of Varlen Corporation, Patil Rail and AllParts Medical.
Detailed Resumes and Case Studies are available on request
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Both Investors and Business Owners
Benefit from Involvement with OEC
Purchase
Equity
Interest
OEC
Investors
Proceeds
from Equity
Interest and
Profit
OEC
Purchases
Equity Interest
Cash
OEC and Business
Owners Implement
Transformation
Plan
Business
Owners
Sale
Of
Business
One Eighty Capital
Sell Portion
of
Equity
Interest
Deal
Source
Proceeds
from
Remaining
Equity
Interest and
Profit
In recent
deal,
owners
tripled
the value
of their
rollover
equity
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OEC and the Business Owner:
Partners in Creating Value
Ideal Situations:
Business Owners
We look for the following attributes in an business owner:
• Have a good business in a market with strong underlying
fundamentals but have reached a decision point in their business.
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Need additional capital to expand
Need additional talent to expand
Need exit strategy
• Recognize the value of involving the expert help of OEC.
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Two proven management experts working full time in the business
Quickly improve the results and management infrastructure of the business
Leverage OEC’s ability to strategically reposition and sell the business
• Willing to negotiate a mutually profitable arrangement
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Accept an equity partner with talent and capital
Rollover some or all of their equity
Transfer operating authority to OEC
Sell the business outright in 2-5 years
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Ideal Situations
OEC only targets high-potential opportunities where
BOTH Talent and Capital are needed.
OEC
OEC
Managing
Partners
Develop
Positioning Plan
Capital
Implement
Positioning Plan
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Buyout
Ownership
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Ideal Situations
• Manufacturing or Manufacturing services company.
• Market served has sound fundamentals.
• Owners at Crossroad
• considering selling equity to raise capital or take cash off the table.
• Looking for talent or successor
If Above Conditions are ALL met, OEC develops a comprehensive transformation plan
• Transformation Plan suggests ability to create substantial value.
• OEC talent and capital match well with transformation plan
• Owners willing to negotiate acceptable terms.
If Above Conditions are ALL met, OEC acquires equity interest in target company
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Business Owners can Significantly Increase
the Value of their Equity in the Business.
OEC provides superior returns by quickly executing the transformation plan and selling to the best
buyer for the business. We expand both EBITDA and the Exit EBITDA Multiple.
The below chart illustrates the increase in an Owner’s wealth from combinations of EBITDA
improvement and EBITDA multiple expansion.
Change in EBITDA
Improvement in Value of Owner Investment with OEC Involvement
0%
25%
50%
75%
100%
200%
1.0
100%
113%
125%
138%
150%
200%
Expansion of Exit EBITDA Multiple
1.5
2.0
125%
150%
144%
175%
163%
200%
181%
225%
200%
250%
275%
350%
Assumes OEC Buys
@ EBITDA multiple of
3.0
200%
238%
275%
313%
350%
500%
4.0
250%
300%
350%
400%
450%
650%
50% of current equity from Owners
5.0
results from last deal closed by OEC.
Note that in above example, owners reduced involvement risk by taking ½ their equity “off the table.”
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How Does OEC Find Investment Opportunities?
• Since we generally work with business owners that have not
considered selling their business, we use a network of sources to
uncover opportunities.
• We mine for deals by talking to people that can introduce us to
business owners that may fit our profile:
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M & A Firms
Wealth Management Professionals
Bankers/Lenders
Private Equity Firms
Attorneys and Tax Professionals
Corporate Executives
Purchasing Professionals
Network of Business Colleagues
• We are creative in developing deal structures that include
compensation for deal sources.
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OEC as an Investment Opportunity
How OEC Works
• OEC offers investors the opportunity to invest in a
specific deal as limited partners.
• Once OEC finds a deal, limited partner investors have
about 15 days to deliver their committed capital.
• The Managing Partners control the investment and are
compensated with 25 percent of the deal profits,
calculated on the remaining proceeds after the return of
the original investments to the limited partners.
• The Managing Partners also each receive a $125,000 per
year advisory fee from the portfolio company.
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Ideal Investor
• Willing to invest a minimum of $250,000 of capital and no more
than 10 percent of their net worth.
• Able to wait 5 years for investment liquidity
• Interested in protecting principal
– Willing to sacrifice upside potential for limiting downside.
We achieve this by using debt sparingly.
• Targets 20% annual pre-tax return on investment;
– approximately 2 times cash on cash return over four years.
• Has confidence in the integrity and ability of OEC’s
management
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Summary
• Our Managing Partners are seasoned professionals with successful
track-records and a vast assortment of business skills; they personally
implement the business transformation plan through daily
involvement with acquired companies; they also invest a significant
amount of capital.
• OEC partners with the previous business owners and involves them
in the transformation process.
• OEC is very creative and extremely flexible in developing deal
structures that satisfy all stakeholders, align investor risk profiles, and
reward deal sources. Business owners can reinvest some or most of
their proceeds.
• We are highly selective and only target high-potential opportunities
where our management talent and capital match the requirements of
the business transformation plan.
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Appendices
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Transformation Plan: Common Elements
• Develop Comprehensive Strategic Transformation Plan.
• Adjust Management Team Capabilities to Align with
Transformation Plan Requirements.
• Enhance Management Infrastructure (to fully leverage
management capabilities)
– Develop Scalable and Secure IT system
– Develop Dashboard of Key Measures of Success
– Enhance Sound Accounting Procedures and Controls
• Optimize Management Incentive Plans (align incentives and
reward success)
• Identify Potential Best Owners of the Business
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