A D I F F E R E N T K I N D O F F I R MB U I L T F O R T H E M I D D L E M A R K E T

HELPING YOU FACILITATE LIQUIDITY TRANSACTIONS

February 19, 2020

SECTION I: FIRM SNAPSHOT

SECTION II: MIDDLE MARKET ACTIVITY

SECTION III: THE OPPORTUNITY

SECTION IV: BEST PRACTICES

2

MIDDLE MARKET LEADERSHIP

Top 20 M&A Advisors (<$250mm)Capstone Headwaters has closed over 500 transactions totaling $24 billion in value.

• 29% of our deals are cross-border

• Over 70% of M&A closings have been with strategic acquirers.

• We have active relationships with over 3,000 private equity firms.

• Initial transaction valuations are exceeded 67% of the time.

• The average valuation premium on our deals is 32%.

• We have earned a 96% performance rating from our clients.

60%M&A

Advisory

CSHW is an established market leader – dedicated to the middle market.

88%PrivatelyOwned

Market Focus

$25mm $250mmEnterprise Value

Rank Financial Advisor

1 Capstone Headwaters

2 Raymond James Financial, Inc.

3 Houlihan Lokey, Inc.4 Jefferies LLC

5 Piper Jaffray Cos.

6 KPMG International Coop.

7 William Blair & Co.

8 BDO, LLP

9 Citigroup

10 Robert W. Baird & Co.

11 JPMorgan Chase & Co12 Lazard

13 Evercore, Inc.

14 Canaccord Genuity Group, Inc.

15 Ernst & Young Global Ltd.16 Goldman Sachs & Co.17 Lincoln International LLC

18 Moelis & Co19 Greenhill & Co., Inc.20 Numis Corp. Plc

Source: FactSet, Thomson Reuters & Capstone Headwaters independent research, LTM December 2018 (number of reported deal closings ex. undisclosed transaction values)

3

ENTREPRENEURIAL DNA

} Our growth-oriented commitment to excellence has resulted in broad recognition from leading industry organizations and continuesto fuel extraordinary corporate results.

8Consecutive Firm

of the Year Awards

27Times Named

Firm of the Year

100+Aggregate

Industry Awards

TOP 10Investment Bank

To Work For

TOP 10Most Referred

Investment Bank

17Years of

Proven Results

2Rounds of

Growth Financing

6Strategic M&ATransactions

27%Compound AnnualEmployee Growth

32%Compound AnnualRevenue Growth

2002 2010 201620152014201320122011»acquired Morgan Stanley’smiddle market M&A groupto fuel national expansion

picked up Northeastcorporate restructuringpractice of ACM Capital

merged Sagepoint Advisors,a technology-focused

M&A boutique

expanded internationallywith Grenport Ltd,

London, UK

merged EQV Capital to adda dedicated presence in

the Southeast US

secured a 34 countryglobal alliance asUS member firm

launch ofDebt Advisory Group

2017

acquired Headwatersto solidify middle

market leadership

founded viaAndersen

MBO

2018 2019

launch ofEquity Advisory Group

Launch ofESOP Advisory Group

Our roots align us perfectly with middle market clients and their businesses.

4

BUILT FOR THE MIDDLE MARKET

MINERALS &MINING

FINANCIALSERVICES

INDUSTRY GROUPS

EQUITYPLACEMENTS

SPONSOR COVERAGE

DEBTPLACEMENTS

SELL-SIDEM&A

BUY-SIDEM&A

CORPORATERESTRUCTURING

PERFORMANCEIMPROVEMENT

PEGSOLUTIONS

FAIRNESSOPINIONS

CAPITAL FORMATIONMERGERS & ACQUISITIONS BUSINESS CONSULTING SPECIALTY SERVICES

EDUCATION& TRAINING

HEALTH &MEDICAL

AEROSPACE& DEFENSE

AGRICULTURE& FARMING

BUILDINGPRODUCTS & SERVICES

BUSINESSSERVICES

CONSUMER& RETAIL

ENERGY& POWER

INDUSTRIALTECHNOLOGY

INFRASTRUCTURE FINANCE

INDUSTRIAL &MANUFACTURING

REAL ESTATE

TRANSPORTATION& LOGISTICS

TECHNOLOGYMEDIA & TELECOM

RESEARCH TEAM

We offer a full suite of services to encircle the business owner as “Trusted Advisor”.

5

OUR HOLISTIC APPROACH

TEAM BUILDING(Transaction Expertise)

• Estate Planning• Wealth Management• Investment Banking • Tax & Accounting• Legal & Corporate• Management Team

PREPARATION(Process Pre-Planning)

• Personal & Estate• Optimal Transaction• Targeted Structure• Management Readiness• Financial Readiness• Strategic Planning

REALIZATION(Deal Execution)

• Production• Market Making• Bid Solicitation• Qualified Presentations• Refinement & Selection• Negotiations & Closing

STEWARDSHIP(Asset Management)

• Risk Management• Preservation v. Growth• Cash Flow Needs• Generational Planning• Insurance Strategies• Philanthropic

CAPSTONE HEADWATERS

CLIENT

Accounting Firm

Shareholders & Board Management Team

Tax AdvisorLegal Counsel

Commercial BankWealth Management

The transactions we complete have a dramatic impact on our clients’ lives.

We approach every transaction in a team-based, fully integrated fashion.

6

AWARD WINNING TRANSACTIONS

2019

CORPORATE / STRATEGIC DEAL OF THE YEAR INDUSTRIALS DEAL

OF THE YEAR

2019

CROSS BORDERDEAL OF THE YEAR

2018

USA RECAP DEAL OF THE YEAR

2018

CONSUMER GOODS & SERVICES DEAL OF THE YEAR

2018

USA PRIVATE EQUITY DEAL OF THE YEAR

2018

PRIVATE EQUITY DEAL OF THE YEAR

2018 2018

US CORPORATE M&A DEAL OF THE YEAR

2017

HEALTHCARE & LIFE SCIENCES DEAL OF THE YEAR

CROSS BORDER M&A DEAL OF THE YEAR

2017

CROSS BORDER DEAL OF THE YEAR

2017

GLOBAL INDUSTRIALS DEAL OF THE YEAR

2017

CROSS BORDERDEAL OF THE YEAR

2017

TELECOMMUNICATION SERVICES DEAL OF THE YEAR

2017

MINING & RESOURCES RESTRUCTURING DEAL

OF THE YEAR

2017

M&A DEAL OF THE YEAR

2016

PROFESSIONAL SERVICES DEAL OF THE YEAR

2016

2016 2017

USA DEAL OF THE YEAR

2016

INDUSTRIALS DEAL OF THE YEAR

2016

CONSUMER GOODS DEAL OF THE YEAR

2016

PRIVATE EQUITY DEAL OF THE YEAR

2016

2019

IT DEAL OF THE YEARPRIVATE EQUITY DEAL OF THE YEAR

DIVESTITURE OF THE YEAR

CHAPTER 11 RESTRUCTURING OF THE YEAR

CROSS BORDER DEAL OF THE YEAR

SEGA BIOFUELS

INFORMATION TECHNOLOGYDEAL OF THE YEAR

TELECOMMUNICATION SERVICES DEAL OF THE YEAR

Our clients’ transactions are often recognized in their respective industries.

7

2019

AN ELITE REPUTATION

2019

GLOBAL MID-MARKETS BOUTIQUE INVESTMENT

BANK OF THE YEAR

2019

CROSS BORDER INVESTMENT BANK OF THE YEAR

2018

US - DEBT FINANCING ADVISORY OF THE YEAR

2018

US MIDDLE MARKETS INVESTMENT BANK

OF THE YEAR

2018

US MIDDLE MARKET INVESTMENT BANK

OF THE YEAR

2017

BOUTIQUE RESTURCUTING INVESTMENT BANK OF THE

YEAR

2017

TOP 10 MOST REFERRED INVESTMENT BANKS

2016

INVESTMENT BANK OF THE YEAR

2016

US MIDDLE MARKET INVESTMENT BANK OF THE

YEAR

2016

TOP INVESTMENT BANK TO WORK FOR

2016

OUTSTANDING SELL-SIDE ADVISORY FIRM

2016

US MIDDLE MARKET INVESTMENT BANK OF THE

YEAR

2016

2018

CORPORATE RESTRUCTURING ADVISORY

FIRM OF THE YEAR

INTERNATIONAL INVESTMENT BANKING FIRM

OF THE YEAR

INVESTMENT BANKING FIRM OF THE YEAR

TURNAROUND AWARDS INTERNATIONAL AWARDS

Our reputation affords our clients immediate market credibility and priority access.

SECTION I: FIRM SNAPSHOT

SECTION II: MIDDLE MARKET ACTIVITY

SECTION III: THE OPPORTUNITY

SECTION IV: BEST PRACTICES

9

SUMMARY MARKET CONDITIONS

DEAL FINANCING

Debt multiples are back to their highest levels for over the past 12 years

VALUATIONS

EBITDA multiples in the $100-$250mm range reached historic levels in 2019 with valuations of 10.0x EBITDA

PE M&A

Building on momentum in 2018, PE firms executed 2,684 transactions in 2019, a slight decline year-over-year

PE EXITS

PE exits in the middle market remain lower year-over-year with 904 exits in 2019 compared to 1,240 in 2018

PE FUNDRAISING

PE fundraising increased to $310 billion in 2019, eclipsing record levels and increasing nearly 58% year-over-year

PUBLIC MARKETS

Public markets tested all-time highs throughout 2019 with the S&P 500 returning 31.5% in the midst of historically low cost of capital

DEAL VOLUME

Transaction volume in 2019 increased 10.3% year-over-year, recording 14,988 deals

FOREIGN M&A

Foreign buyers increased nearly 21% year-over-year, following a year of historically low acquisitions among foreign companies in 2018

STRATEGIC M&A

Acquisitions among private companies increased 10.2% year-over-year in 2019 and total deal value rose to $79.3 billion

Market conditions remain favorable for private business owners seeking liquidity.

10

AN IMPORTANT HISTORICAL PERSPECTIVE

} The number of completed transactions in 2019 reached 14,988 compared to 13,588 transactions in 2018.

} The market remains stable, supported by strong M&A fundamentals, favorable business owner demographics, and the persistence of the U.S. economic bull market.

} The average transaction value reached $61.7 million in 2019 and remains well above the historic average.

Middle Market Transactions

Source: Capital IQEnterprise Value < $500mm

MM M&A activity remains robust and near record highs.

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

$110

$120

$130

$140

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

$ in

mill

ions

Tran

sact

ions

Transactions (Undisclosed Value) Transactions (Disclosed Value) Average Value

2012 Reference Point

>15%

11

VALUATION TRENDS

Middle Market Transactions

Source: Capital IQIncludes multiples 3x-16x

Enterprise Value < $500mm

9.3x

7.6x

8.6x9.0x

8.6x 8.7x9.2x

8.1x

8.8x 8.8x9.0x 8.9x

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

8.0x

9.0x

10.0x

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Ente

rpris

e Va

lue

/ EBI

TDA

MM valuations (in most sectors) are at/near all-time highs.

} Valuations have normalized slightly, but this has placed a higher premium on growth-oriented companies with recurring revenues.

} As we move to a risk-sensitive buyer market, we are seeing more “deal structure”.

12

SECTOR ACTIVITY

LTM EBITDA Multiples by Sector LTM Transactions by Sector

Source: Capital IQLTM ended 12/31/19

Includes multiples 3x-16xEnterprise Value < $500mm

10.4x

9.5x

7.4x

8.4x7.9x

8.3x

9.5x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

ConsumerDiscretionary

ConsumerStaples

Energy Healthcare Industrials InformationTechnology

Materials

Ente

rpris

e Va

lue

/ EBI

TDA

1,791

514 360

1,538

2,703

1,839

466

0

500

1,000

1,500

2,000

2,500

3,000

ConsumerDiscretionary

ConsumerStaples

Energy Healthcare Industrials InformationTechnology

Materials

Tran

sact

ions

} The Industrials, IT/TMT and Consumer Discretionary sectors have been the most active..} Companies with differentiated business models are in high demand, regardless of sector.

The manufacturing rebound was followed by a consumer rebound.

13

SIZE PREMIUMS (OR NOT?)

Average Enterprise Value to EBITDA Multiples

Source: Capital IQIncludes multiples 3x-16x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Ente

rpris

e Va

lue

/ EBI

TDA

Enterprise Value $10-100mm Enterprise Value $100 -250mm Enterprise Value $250 -500mm

} Larger companies command higher multiples (scale, market share, debt, etc.).

} In 2019, there was a shift to the $100-250mm market segment, achieving its highest EBITDA multiples in over a decade.

MM is surging – we are seeing a market anomaly presently.

YUGE!

14

LEVERAGE TRENDS

} The availability of debt along with low interest rates continue to facilitate transactions.

} Debt multiples in Q3 2019 approached the all-time high attained in 2017, reflecting an abundance of available and affordable financing.

Source: GF Data®Includes multiples 3x-15x

Enterprise Value $10mm-$250mm

Average Debt Multiples of Middle Market LBO Transactions

3.7x

3.3x

2.9x 3.0x

3.4x 3.5x 3.4x3.7x

4.0x 3.9x4.2x

3.9x3.7x

4.1x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

5.0x

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 '18 Q3 '19

Tota

l Deb

t / E

BITD

A

Cheap debt capital continues to add fuel to the fire, the leverage is creeping up.

>10%

15

STRATEGIC ACQUIRER ACTIVITY

Source: Capital IQEnterprise Value < $500mm

Acquisitions by Private Companies Acquisitions by Public Companies

$0

$20

$40

$60

$80

$100

$120

$140

0

2,000

4,000

6,000

8,000

10,000

12,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

($ in

mill

ions

)

Tran

sact

ions

Transactions (Undisclosed Value) Transactions (Disclosed Value) Average Value

$0

$20

$40

$60

$80

$100

$120

$140

0

500

1,000

1,500

2,000

2,500

3,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

($ in

mill

ions

)

Tran

sact

ions

Transactions (Undisclosed Value) Transactions (Disclosed Value) Average Value

} Total number of acquisitions by private companies increased for 2019 but the average value declined.

} Total number of acquisitions by public companies declined in 2019 but the average value above the historic average of $65mm

Strategics are active – with a new universe of potential buyers (private PE-backed).

>25%

>(15%)

16

PE ACTIVITY

Source: PitchBookNote: Pitchbook changed methodology to only include buyout deals as of Q3 2017. All data reflects new methodology.

Middle Market Transactions Closed by

Private Equity Firms

746

1,281

1,530

1,821

1,596

2,116 2,105 2,1752,358

2,729 2,684

0

500

1,000

1,500

2,000

2,500

3,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Tran

sact

ions

$99

$61$75

$99

$164$180

$147

$221$242

$197

$310

0

50

100

150

200

250

300

$0

$50

$100

$150

$200

$250

$300

$350

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

PE Fundrais ing ($B) Fund Count

$ in

Bill

ions

Fund

Cou

nt

Middle Market Fundraising by Private Equity Firms

} Closed transactions for PE Firms remain well above historic averages

} PE fundraising increased over 57% from 2018-2019

Sponsors are losing market share … to strategics and themselves!

57%

17

PE VALUATIONS & CONTRIBUTIONS

} A shortage of quality targets, competition, and an abundance of available debt financing have driven valuations.

} The average equity contribution in Q3 2019 was 45.9%.

Source: Source: GF Data®Includes multiples 3x-15x

Enterprise Value $10mm-$250mm

EBITDA Multiples Paid by Financial Buyers Average Middle Market LBO Equity Contribution

6.4x 6.3x6.5x 6.4x

6.7x 6.7x

7.3x 7.2x 7.1x7.4x

4.0x

4.5x

5.0x

5.5x

6.0x

6.5x

7.0x

7.5x

8.0x

8.5x

9.0x

2011 2012 2013 2014 2015 2016 2017 2018 Q3 '18 Q3 '19

Ente

rpris

e Va

lue

/ EBI

TDA

49.6%46.6%

49.8%45.6%

42.8%44.8% 44.7%

48.6% 50.3%

45.9%

0%

10%

20%

30%

40%

50%

60%

2011 2012 2013 2014 2015 2016 2017 2018 Q3 '18 Q3 '19

Equi

ty C

ontr

ibut

ion

Due to competitive pressures, PE valuations are at historic levels.

4%

>17%

18

FOREIGN ACQUIRER ACTIVITY

Source: Capital IQEnterprise Value < $500mm

Acquisitions by Non-U.S. Buyers

Perc

enta

ge o

f Tra

nsac

tions

0%

5%

10%

15%

20%

25%

30%

0

500

1,000

1,500

2,000

2,500

3,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Tran

sact

ions

Transactions with Non-U.S. Buyers Non-U.S. Buyers as % of Total Transactions

} Foreign acquisitions increased 21% year-over-year.

} Foreign buyers have targeted mid-sized acquisitions to develop a U.S. footprint and to globally leverage combined products and expertise.

We have seen a recent rebound in foreign buyers active in US deals.

21%

19

2020 MM M&A OUTLOOK

CORONAVIRUSSUPPLY CHAIN DISRUPTION

EUROPEAN INSTABILITYPOLITICAL UNCERTAINTYEQUITY CAPITAL BACKLOG

LOW COST OF LEVERAGEEXTENDED MARKET RUN/RECORDS

RECORD LEVEL VALUATIONSAGING BUSINESS OWNERS

Crystal Ball – Market fundamentals favor the bull (for the time being anyway).

SECTION I: FIRM SNAPSHOT

SECTION II: MIDDLE MARKET ACTIVITY

SECTION III: THE OPPORTUNITY

SECTION IV: BEST PRACTICES

21

THE OPPORTUNITY

The Transition Wave 2016-2025

45 55 65

5% 70%

25%

CEO’s Age in 2016

Baby Boomers

Source: Headwaters Research

} Four million privately-held businesses stand to change hands over the next two decades as baby boomers, the largest group of owners of these companies, continue to retire.

} There is a massive opportunity to convert corporate assets into liquid assets.

} Companies will either have to decide to transition their companies to the next generation of owners/executives or to monetize their ownership.

A tremendous opportunity for the private wealth management industry.

22

Source: VIP Forum analysis of the Federal Reserve’s Survey of Consumer Finances.

-$ 5.0

$5.0

$15.0

$25.0

$35.0

$45.0

$55.0

$65.0

$75.0

$85.0

$95.0

$1 - $10 $10 - $25 $25 - $50 $50+

$ in

mill

ions

Financial Assets Business Assets Non-Financial Assets

$2.5

$14

$31

$91

76%

69%

59%38%

Between 40% to 80% of a business owner’s wealth is tied up in the company.

POTENTIAL NEW AUM

Unplanned exits result in steep value losses for the founders.

~75% of business owners do not have an exit plan in place.

23

KEY EXIT DECISION DRIVERS

Structural changesDisintermediationCommodification

Policy changesRegulatory riskMarket conditions

Cash flow needsCapital needs

Key employee risksKey customer risks

Cost issuesCompetitive pressures

Inability to address opportunity

Age & HealthFamily IssuesLiquidityDiversificationEstate PlanningPartner conflictUnsolicited offer

Personal Business

IndustryEnvironment

The alignment of various factors ultimately drives exit decisions.

24

LIQUIDTY – ONE SIZE DOES NOT FIT ALL

Liquidity can be accomplished in several ways depending on owner objectives.

100% SALEsale to strategic

MAJORITY SALEmajority sale (70-80%)

ESOP / MBOemployee ownership

MINORITY SALEminority sale (<50%)

DEBT RECAPliquidity via debt

Liquidity Complexity Autonomy

ü Potentially the highest valuationü Provides the most liquidityü Strategic fit

ü Provides liquidity for ownersü Flexible ownership structureü “Second Bite of the Apple”

ü Provides some liquidity for ownersü Typically used for growth capitalü Current owner remains in control

ü Some liquidityü Employee utopiaü Augments transition plans

PROS

O Current owners give up controlO Potential for layoffs and disruptionO Integration issues

O Owners answer to boardO Partner may add little valueO Adds leverage to the company

O Additional debt on balance sheetO New investors take Board seat(s)O Restrictive covenants common

O Limits alternatives down the roadO Report to Trustee of ESOPO No/limited fresh capital. All debt

CONS

ü Least disruptive to businessü Current owner remains in controlü Faster and simpler to execute

O Additional debt on balance sheetO Provides less liquidity for ownersO Restrictive covenants common

2525

PHASE 1PREPARATION

PHASE 2MARKETING

PHASE 3QUALIFICATION

PHASE 4SELECTION

PHASE 5NEGOTIATION

PHASE 6CLOSING

Activities:

Information Request ListMemorandum and TeaserTarget List and NDA

Quality of Earnings

Objectives:

Precise PositioningMarket StrategyMarket Readiness

Hurdles:Availability

TimelinessCommitment

Activities:

Contact TargetsDistribute MemorandumAddress Questions

Objectives:

Broad AccessConfidentialityMarket Education

Hurdles:Market Timing

Internal FocusMoving the Needle

Activities:

Preliminary IndicationsParticipant QualificationCompany Presentation

Objectives:

Valuation GuidanceParticipant SeparationTeam Rehearsal

Hurdles:Financing Environment

Clarity of GoalsTeam Readiness

Activities:

Site VisitsAdditional InformationLetter of Intent

Objectives:

Company ShowcaseValue DefensePricing Competition

Hurdles:Financial Performance

Mgmt. PerformanceTimeline Sync

Activities:

Data RoomSite VisitsQuestion Responses

Objectives:

Total AccessValue DefenseFinancing

Hurdles:Volume

DistractionSpeed

Activities:

Purchase AgreementDisclosure SchedulesRelated Contracts

Objectives:

Final DiligenceValue PreservationRisk Management

Hurdles:Surprises

PerformanceReserve

THE DEAL PROCESS

Transactions are hard work and take 6 to 9+ months to complete.

262626

IT TAKES A VILLAGE

Trust & Estate

Wealth Mgmt.

Co. Lawyer

M&A Lawyer

Acctg.Tax Advisor

M&A Advisor

OptimalSuccess

Construction of the requisite team is critical to transaction success.

SECTION I: FIRM SNAPSHOT

SECTION II: MIDDLE MARKET ACTIVITY

SECTION III: THE OPPORTUNITY

SECTION IV: BEST PRACTICES

28

START A CONVERSATION (IBC = ROI)

Private owners can get the same coverage as their public counterparts.

IBC

PERecap

DebtFinancing

EquityFinancing

ESOPAdvisory

StrategicSale

AcquisitionAdvisory

BoardAdvisory

StrategicPlanning

IndustryResearch

TransactionInsights

4MM transactions tend to be more event-driven without long-term, dedicated coverage services that add strategic value and critical market insights.

4You can offer “IBC-As-A-Service” and establish a major differentiator, offering full lifecycle benefits tailored specifically for the private business owner.

• Dedicated industry team

• Access to research & industry trends

• Insights transactions & valuations

• Transaction planning

• Board advisory & valuations

• Capital markets access

29

INTEGRATE THE PRE-PLANNING

Asset capture is ensured when WM teams are integrated into the process.

4 Help define exit timing and other 'life' goals

4 Analyze post-retirement cash flow needs

4 Wealth management planning to ensure exit supports personal and financial goals

4 With client’s accountants, estimate after-tax proceeds & identify tax strategies

4 Establish trusts and other wealth-transfer vehicles to minimize taxes related to the exit

4 Incorporate the business sale into estate and philanthropic planning

4 Estimate business value; identify strategies to enhance value and prepare for transition

4 Analyze what the business would need to meet owner’s valuation goals

4 Analyze the pros & cons of various transaction alternatives compared to owner’s goals

4 Perform preliminary due diligence to uncover 'thorny' issues or missing documentation

4 Provide valuation and activity trends in the equity and M&A markets in their industry

4 Provide periodic updates: industry, market and valuation trends related to the business

WELATH PLANNING(Provided by Financial Advisor)

BUSINESS PLANNING(Provided by Investment Banker)

30

EMBRACE THE PAIN – ITS A HARD BUSINESS

2019 ACTIVITY REVIEW FREQUENT CHALLENGES

580 Companies Reviewed

52 Selected for Corporate Finance

Assignments

Closings?

ê Companies are not prepared

• Key person challenges

• Corporate governance not in place

• Books are not ready

ê Missed Projections

• Keep running your business

ê Emotional Fortitude

• Work with a full team of professionals

• Market is great, therefore very challenging

Its volume-based blocking & tackling, with lots of challenges – just keep pounding.

31

I want people I can trust … a team I like … a firm that understands what

I need …

I want someone who knows my industry … is connected to the trends & key players …

I want a firm with presence … deep capabilities with the reach I deserve …

Personal FitTRUST

Senior Attention

Industry FocusEXPERTISE

Market Insight

Domestic/LocalSCALE

International

Brand StrengthTRACK RECORD

Reputation

I want proven results … a firm that will deliver a successful outcome … a brand that matters …

HELP SELECT THE RIGHT IB FIRM

ì VALUE ì SPEED ì PROBABILITY OF CLOSE

Helping your client select the right IB is mission critical (if not us J).

32

GET SMART ON VALUATION

} Financial Momentum

} Large Market Size

} Competitive Barriers to Entry

} Diversified Customer Base

} Industry Sector Dynamics

} Market Share & Brand Reputation

} Key Differentiators

} Sustainability & Recurring Revenue

} IP Position

} Long-Term Growth Plan

} Acquisition History

} Management Team

} Customer Concentration

} Inconsistent Financial Performance

} Legal/Industry Risk Exposure

} Lack of Management Depth

} Weak Financial Controls

} Sector Cyclicality

} Governance Issues

} Contingent Liabilities

} Non-Compelling Growth Strategy

} (No growth strategy)

} Key Man/Woman Exit Plans

} Low Defensibility

Help your clients understand their valuation and manage expectations.

33

WRAP UP

} The demographics at work in the US will likely overpower any short term market movements – this is a significant, once in a lifetime, opportunity.

} Have the conversation with your business owner clients.

} We can be your Investment Banking support team.

} We believe that we can help you both serve your clients as part of your overall solution.

} We are the US leader in working with partners, lets share information and best practices.

} We can promise high levels of responsiveness and unbiased advice to your clients.

CONTACTS

DANIEL MCBROOM

Co-Head of Investment Banking Services

dmcbroom@capstoneheadwaters.com

Phone: 303.951.7128

JOHN FERRARA

Founder & CEO

jferrara@capstoneheadwaters.com

Phone: 617.619.3325

We see tremendous opportunity to work together with EPI members.