Ephor Group | www.ephorgroup.com | 24 E Greenway Plaza Suite 440 | Houston, TX 77046

Growth Capital Strategies Valuation For private company, BPO service businesses, transaction multiples1 range from 4 to 12X times EBITDA (pretax profit) and 1 to 5X times revenue multiple for deals greater than $25 million with a validated plan to grow 5 to 10X. Transaction multiples vary based on a multitude of factors:

Strategic or transactional business at or above enterprise scale (>$25 million) or subscale

Revenue run rate (amount size and growth rate) and ramp potential (total market opportunity $, % of market share compared to the exit potential analysis of strategic vs. financial buyers)

Customer Revenue Waterfall ($portfolio) and Recurring Revenues (6 month to 1 year to 3+ year contract renewals)

Gross Profit Margins and COGS Margins compared to competitors SG&A Margins compared to similar industries Assets (both financial and other including: IP, patents, brands, team, competitive

advantage Liabilities

Sectors which are highly fragmented, and rich in opportunities for consolidation are therefore attractive to growth capital investment. Although historically growth capital was only available to large scale >$5M EBITDA enterprises or early stage healthcare, energy, and technology startups via venture capital. Sources of capital for growing professional service companies was limited to angel investors, startup lending, and personal guarantees. Today, family office investments and structured equity instruments have become available to entrepreneurs. These entrepreneur friendly useful capital sources are bridging the gap for companies looking to jump the chasm from a small and medium sized business to a market leading enterprise. And jumping the chasm creates the opportunity for wealth creation for founders that is not readily available via other financing instruments. Growth Capital for Entrepreneurs

1 For private company SaaS and other technology providers, transaction multiples can range from 5 to 15X revenue multiple.

Entrepreneur Growth Capital is a flexible investment loan that preserves equity.

Growth Capital Strategies for 2014

Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 404 | Houston, TX 77046

The Importance of Scale on Enterprise Value For startups driven by innovative founders venture capital can be the perfect marriage of funding coupled with ongoing management support necessary to transform the company into a market leader. But for most entrepreneurs venture capital (VC) is simply not available as the company focus is too narrow2.

There exists large pools of un-invested capital in the United States (>$4B) and abroad which are seeking the safe investment returns of growth capital. Companies that qualify for growth capital instruments have a low risk of failure and above market growth. For entrepreneurs, the value of their business significantly jumps from a subscale valuation to scaled enterprise valuation as they cross the chasm from a single location, product, or customer segment to national or global enterprise. For BPO service tech-enabled businesses valuation multiples increase with size and scale.

Subscale Business <$20M

Scaled Enterprise >$25M

2X to 6X Adj. EBITDA

0.5X to 1.0X Revenues

4 to 12X Adj .EBITDA

1 to 5X Revenues for Services

2 See Exhibit A1 and Exhibit A2

Growth Capital Strategies for 2014

Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 404 | Houston, TX 77046

Creating Wealth Through Growth

Did you know that from 1995 to 2009, privately funded capital backed companies grew sales by 133%, while the average United States company grew sales by 28%3?

Growth capital is required to scale business operations. Growth capital is required to pay for the transition from a small subscale company to a large scaled enterprise. Overcoming the Chasm and Growing from Subscale to Scale Of the 1 million private companies in the United States with 20 to 99 employees fewer than 1 in 4 achieve 20%+ year over year growth.

3 Capital backed companies grew jobs by 82%, while all other companies in the U.S. economy grew jobs by 12%. These emerging companies are incredibly important to the economy as they represent well over 4X the average American company’s sales growth and nearly seven (7) times their new job growth.

"Growth capital, whether for market expansion, to consolidate, or to create a market leader is an

opportunity to create wealth for founders."