Red Hook Captial SEA 202-744-1503

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General overview of Red Hook Capital's Senior Advisor Executive ( S.E.A) Program.

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  • STATUS: ROUGH DRAFT MYSTORY: Introduced to buyout industry junior year college Meet Fairfax Group team of lawyer and former CFO Meet CFO TelecomUSA (worked on TelecomUSA/MCI integration) that summer (multibillion integration). <<20/20 should gone with Fairfax Group>> CFO STORY: Call MCI friend: MIT MBA, West Point undergrad, 3 IPOs (Ominpoint acquired T-Mobile), returns for Carlyle, Colombia Capital, raised more than $250m equity and $1billion debt. 3 years bouncing CFO after Omnipoint around country, 2 years helping friends failed buy out (espire), took 3 years to find job across country with company reporting issues (i.e. risk his name to clean it up). However, he is 60 years plus!
  • STATUS: ROUGH DRAFT Industry Trends VC old and PE new model Return to Buy Outs from 1970s and 1980s Wealth of capital Wealth of management every day Pierce get 5 resume senior executives Buy Out Expertise Advisor/Self Buy Firm like Red Hook Capital, Private Equity Firm Sponsor BearStren $100 million management team, but 2 years never found approval, Spectrim Equity looking at for 14 months deal for form President IBM, Carlyle 9 months and Colombia Capital 12 months looked at partner with BRAD buy out team for espire (after $10 million team investment resulting in BK of company.
  • STATUS: ROUGH DRAFT Types of Financing Use this section to learn more about business loans and specific financial products that might be right for your company. Revolving Line Of Credit Revolving lines of credit are the most common and least expensive form of business loan for small- and mid-sized companies. Companies typically enter into revolving facilities to fund their working capital, which is the amount of current assets (cash, inventory and receivables) in excess of current liabilities (items such as payables). Senior Term Debt Senior term debt is the second most common form of financing for a small and mid-sized companies. Senior term debt is typically lent against the collateral value of property, plant and equipment. Senior term debt comes in many varieties and there are many sources of this type of financing. It is typically the second most expensive form of financing. Subordinated Mezzanine Debt Subordinated debt financing typically includes both debt and equity. There are dramatically fewer sources of subordinated debt than there are of senior debt or equity, so it is often considered to be specialty financing. Subordinated debt is substantially riskier than senior debt since the lender generally has less right over collateral and cash flow than the senior lender. As a result, subordinated debt is more expensive financing than either revolving lines of credit or term debt. Lenders usually require equity, generally in the form of warrants, to augment what they earn in interest income. Equity Financing Equity financing incurs the greatest risk of all capital on the part of the investor. Equity investors demand high returns, commensurate with that risk. This sections meant to cover equity financing that is available for management buyouts, growth financings, acquisition financing, employee buyouts, ESOP financing and recapitalizations.
  • STATUS: ROUGH DRAFT Who are you? Controller CFO Business CFO How does your team fit? Industry Knowledge Track record Team Central Casting Know Customers
  • STATUS: ROUGH DRAFT TEAM: ALL TIES TOGETHER (CORNELL START STORY) Arne last deal is one of Cornell most succeful portfolio companies and I was fortunate enough to be working with him on new opportunities when Cornell called him to ask him to do it again last April. 4.1) $800 million under management 4.1) $250 million fund ($50 million) 4.3) $100m London fund
  • THIS DECK IS FOR SELECTING SLIDE FOR POWERPOINT (Road Show, PR, IR, PA, etc.)
  • STATUS: ROUGH DRAFT TEAM: ALL TIES TOGETHER (CORNELL START STORY) Arne last deal is one of Cornell most succeful portfolio companies and I was fortunate enough to be working with him on new opportunities when Cornell called him to ask him to do it again last April. 4.1) $800 million under management 4.1) $250 million fund ($50 million) 4.3) $100m London fund
  • STATUS: ROUGH DRAFT CONCEPT (I interviewed 15 multinational CIOs for another client found: MARKET: Turn key solutions provider MARKET: Highly secure (BB just meet with government found same market needs) MARKET: Customizable solutions (Bob government contractors) MARKET: Platform integration (vs. locked on hardware company) DRIVER Changing technology landscape with expensive solutions DRIVER Mission critical applications requirements DRIVER Multinational enterprises NEEDS: Interpretable platform and applications Turn key solutions provider (1 provider, 1 customized solution) Highly secure Customizable solutions Platform integration DRIVERS: Evolving workforce, mobile, global Evolving, complex global security needs Flexible for evolving threats, new applications Legacy Technology needs replacement
  • STATUS: ROUGH DRAFT Automation outline slide 50 101 story (move ATS to Enfotec space)
  • STATUS: ROUGH DRAFT Need to re-do! 1.1) SOLUTIONS Anand Teleport 1 to 30 1.2) TECHNOLOGY Bob Rainbow technology (vision ahead power curve successful exit) 1.3) CONSOLIDATION: Arne and JDM (launched, sold, consolidated companies for future 100 to startups) 2.1) JDM: Vision Mobile space (international, reseller, PCS, SAT, INTERNET, etc.) 2.2) PIONEER (AK pioneer teleport and BB pioneer security (Arne & JDM mobile space) 2.3) SOLUTIONS: Customer most important 2.4) TECHNOLOGY: Technology drives Solutions (if you installing PBX you better have great margins) 3.1) JDM: MCI, Lockheed Martin, advisor Jupiter, Pierce, Red Hook Capital, Platinum Equity, etc. 3.2) SOLD: AK Washington Teleport, BB sold Rainbow, AD sold ?,
  • STATUS: ROUGH DRAFT Just 10,000 feet and talk about few example at 1,000 feet
  • STATUS: ROUGH DRAFT TEAM: ALL TIES TOGETHER (CORNELL START STORY) Arne last deal is one of Cornell most succeful portfolio companies and I was fortunate enough to be working with him on new opportunities when Cornell called him to ask him to do it again last April. 1.1) SOLUTIONS Anand Teleport 1 to 30 1.2) TECHNOLOGY Bob Rainbow technology (vision ahead power curve successful exit) 1.3) CONSOLIDATION: Arne and JDM (launched, sold, consolidated companies for future 100 to startups) 2.1) JDM: Vision Mobile space (international, reseller, PCS, SAT, INTERNET, etc.) 2.2) PIONEER (AK pioneer teleport and BB pioneer security (Arne & JDM mobile space) 2.3) SOLUTIONS: Customer most important 2.4) TECHNOLOGY: Technology drives Solutions (if you installing PBX you better have great margins) 3.1) JDM: MCI, Lockheed Martin, advisor Jupiter, Pierce, Red Hook Capital, Platinum Equity, etc. 3.2) SOLD: AK Washington Teleport, BB sold Rainbow, AD sold ?, 4.1) $800 million under management 4.1) $250 million fund ($50 million) 4.3) $100m London fund
  • Red Hook Captial SEA 202-744-1503

    1. 1. SEA Program Senior Executive Advisors Red Hook Capital H R
    2. 2. SEA Program Advisor and Investor <ul><li>Differentiators </li></ul><ul><ul><li>Strong SEA candidates (42+ specific expertise) </li></ul></ul><ul><ul><li>Developed from “Leadership Trust” Program </li></ul></ul><ul><li>Focus </li></ul><ul><ul><li>Strategy </li></ul></ul><ul><ul><li>Capital </li></ul></ul><ul><ul><li>International </li></ul></ul>SEA Program RHS
    3. 3. Collective Experience More than 210 years from 7 key players <ul><li>Differentiators </li></ul><ul><ul><li>Management has completed more than $35 billion in deals </li></ul></ul><ul><ul><li>Diversified through recruitment of wide breadth of advisors </li></ul></ul><ul><li>Sample SEA Strategy Advisor success: </li></ul>Strategic Financial Operational Created spin-off of publicly traded technology company Resulting in $20 million investment for this new venture Turnaround and merger of bundled service provider with $50 million in revenue 2x exit opportunity for $50 million backed venture capital deal after refocusing sales strategy
    4. 4. Past Leadership Trust Candidates Visionary to mentor <ul><li>Financial SEA Advisor : Ted is a former financial executive who has serve in the financial community as CFO of Fairchild Industries and AMF Incorporated, as an investment banker for F.S. Smithers and Morgan Stanley, and as an advisor to General Electric Capital’s Telecommunication Financing. He was responsible for the financing and building of ATS-6 communication satellite and the pioneering of American Satellite Corporation. He has served as head of Corporate Finance at F.S. Smithers, now part of Paine Webber, where he managed the Lockheed Martin account at the height of their problems. He has served as professor of finance at Columbia University. He has served on the board of companies and U.S. Government advisory boards. He is currently a board member of the Financial Executives Institute. He received a B.A. from Dartmouth College and M.B.A. from Harvard. </li></ul><ul><li>Visionary SEA Advisor : JD leadership role for funds and corporations has resulted in many successful deals thanks to his strategic vision. JD advises clients ranging on business strategy, mergers and acquisitions, revenue models and future growth opportunities. He has been a speaker at various industry forums, has been quoted in numerous leading publications, such as the Wall Street Journal, and has made several appearances on CNET and CNBC. Mr. Morris has served on the advisory board and board of directors of several companies including Counterpart Publishing Ltd., Globeam Corp., Ferro S.A., I.T.C. Ltd., NCA S.A., etc. Mr. Morris received a B.A. in economics with mathematics from Hampden-Sydney College in Virginia and an Omega Rho Honor Student at #4 world ranked operations research doctorate program at the George Washington University in Washington, D.C. </li></ul>
    5. 5. Past Leadership Trust Candidates Sample of diverse talent pool <ul><li>Global Policy & Regulation: Bill is an angel investor and international advisor to think tanks, US & foreign governments for 25+ years. He received his B.A. & J.D. from Duke University. </li></ul><ul><li>Restructuring/LBO: Jim is a former Managing Director of Lehman Brothers restructuring group. He received a B.A. and M.B.A. from Harvard </li></ul><ul><li>IPO: Brad has taken several companies public as CFO and continues to have access to debt markets as well as private equity firms. He received his B.S. from West Point and M.B.A. from Wharton </li></ul><ul><li>Financial SEA Advisor : Ted is a former financial executive with 40 years investment banking experience for start-ups to billion dollar companies. </li></ul><ul><li>PR: Suzanne has been in the PR business for more than 20 years advising executives on public affairs, media relations and other PR functions that have resulted in interviews and media coverage in the WSJ, NY Times, Washington Post, and other major print, tv, radio, online, and other media outlets. </li></ul><ul><li>Staffing: Gary is an angel investor in IT companies, limited partner of several VC funds, and 25+ year veteran of staffing industry. </li></ul><ul><li>Others: former fellow SRI, former Secretary of the Air Force, former high ranking government officials such as governors and U.S. Ambassadors, former fellow of Boeing, former angel investors/entrepreneurs, public & private CFOs, and other senior CXO candidates for the Senior Executive Advisor (SEA) program. </li></ul>
    6. 6. 1. PAST PRESENTATION Leverage Buy Out Or Management Buy Out By J. David Morris General Partner Red Hook Capital
    7. 7. 1.2 OVERVIEW <ul><li>Why buyout </li></ul><ul><li>What is your strategy </li></ul><ul><li>Who is the team </li></ul><ul><li>How do they get returns </li></ul><ul><li>RHC case studies </li></ul><ul><ul><li>Consolidation IT service (LMT) </li></ul></ul><ul><ul><li>Consolidation Telecom (MCI) </li></ul></ul><ul><ul><li>Consolidation Healthcare (HBO) </li></ul></ul>
    8. 8. <ul><li>Industry trends </li></ul><ul><ul><li>Buyouts surpass 1980s levels </li></ul></ul><ul><ul><li>Venture Capital firms are moving into low end buyouts </li></ul></ul><ul><li>Wealth of capital </li></ul><ul><li>Wealth of management </li></ul><ul><li>Buyout expertise </li></ul><ul><ul><li>Advisor/Consultants </li></ul></ul><ul><ul><li>Private Equity firm sponsor </li></ul></ul>1.3 WHY BUYOUT? Buyouts are a current and long term trend
    9. 9. <ul><li>Target company </li></ul><ul><ul><li>Consolidation </li></ul></ul><ul><ul><li>Turnaround </li></ul></ul><ul><li>Financial backers </li></ul><ul><ul><li>Buyout firm (KKR, Texas Pacific Group, Gore Technologies) </li></ul></ul><ul><ul><li>Equity (Private Equity/GTCR, Pension/CALPERS) </li></ul></ul><ul><ul><li>Debt (Equity Line/Citibank, Senior/Citibank, Mez./Allied Capital) </li></ul></ul><ul><li>Management team </li></ul>1.4 WHAT IS YOUR STRATEGY? Financials are key, but strategy will be the deal closer
    10. 10. <ul><li>What type of a team do you have? </li></ul><ul><ul><li>Strategic (Consolidation) </li></ul></ul><ul><ul><li>Tactical (Turnaround) </li></ul></ul><ul><li>How does your client’s team fit? </li></ul><ul><ul><li>Central casting / Track record </li></ul></ul><ul><ul><li>Industry visionary / Customer relationships </li></ul></ul><ul><ul><li>A / Z </li></ul></ul>1.5 WHO IS YOUR TEAM? Management Team Should Fit Your Strategy
    11. 11. <ul><li>Exit strategy </li></ul><ul><ul><li>Acquisition (cash, stock, warrants) </li></ul></ul><ul><ul><li>IPO (stock, warrants) </li></ul></ul><ul><li>Exit success </li></ul><ul><ul><li>Strategic Acquisition (Miami, FL) telecom consolidation company resulted in return for investor and management of cash and liquid stock (management owned 51% under claw-back); </li></ul></ul><ul><ul><li>Consolidator Acquisition (Irvine, CA): telecom turnaround sold to a consolidator resulting in cash and restricted stock for investors and management. </li></ul></ul><ul><ul><li>IPO/Reverse Merger (Fairfax, VA): management retained owning 49% wholly owned subsidiary with need for broker to provide loan based on locked up stock and help sell stock (SEC rules); </li></ul></ul>1.6 HOW DO YOU GET RETURNS? Lots of Exit Options with Different Returns
    12. 12. 2. CASE STUDY Sample Case Study Red Hook Capital NEWCO Consolidation Private Equity Backed
    13. 13. <ul><li>Vision </li></ul><ul><ul><li>Solutions </li></ul></ul><ul><ul><li>Technology </li></ul></ul><ul><li>Experienced Team </li></ul><ul><li>M&A Expertise </li></ul><ul><li>Operation Expertise </li></ul>2.1 KEY FACTS Highly Secure Communications Solutions
    14. 14. 2.2 WHY CREATE NEWCO? Technology Solutions <ul><li>Turnkey solutions provider </li></ul><ul><li>Highly secure </li></ul><ul><li>Customizable solutions </li></ul><ul><li>Platform integration </li></ul>Market Needs and Drivers Source: Boston Consulting Group, CCV Website Conclusion Emerging technologies drive highly secure global communications solution enterprise needs. Enterprises Need Highly Secure Global Communication Solutions <ul><li>Changing technology landscape </li></ul><ul><li>Mission critical applications requirements </li></ul><ul><li>Multinational enterprises </li></ul>
    15. 15. <ul><li>Highly Secure $1.5m EBITDA 60% </li></ul><ul><li>Secure $1.5m 30% </li></ul><ul><li>VAR $20m 10% </li></ul><ul><li>VAD $30m 5% </li></ul>2.3 VISION ON MARGINS Move Business from Value Added Dealer to Highly Secure Solutions
    16. 16. 2.4 MANAGEMENT Management Team in Development Interim CEO CFO <ul><li>Visionary with M&A expertise ; </li></ul><ul><li>More than 3 billion deals in 5 year period </li></ul><ul><li>Track record CFO of multinational companies with diverse portfolio of companies; </li></ul><ul><li>Leadership roles in IPO early to billion USD companies </li></ul>Board/SEA Chair Board <ul><li>Former Sec. Air Force; </li></ul><ul><li>Former Venture Capitalist. </li></ul><ul><li>CFO with turnaround expert (Fairchild); </li></ul><ul><li>More than 35 years investment banking leadership. </li></ul>President Solutions President Technology <ul><li>Leadership role McKinsey & Company; </li></ul><ul><li>Leader of industry associations </li></ul><ul><li>Top technology sales person; </li></ul><ul><li>Track record in sales with companies that had exit. </li></ul>
    17. 17. <ul><li>2006 Revenue (1) : </li></ul>2.5 OVERVIEW $125 million (Performa) Customers: Multinational corporations to the United States government. Two Operating Divisions: Service (90% of revenue) Technology (10% of revenue) Acquisitions (10 targets) Organic (restructuring) <ul><li>TBA1 2005 revenue casted by outside investment bank </li></ul><ul><li>RHC, TBA1, TBA2 </li></ul>NEWCO at a Glance 2006 Earnings from Operations (1) : $15 Million (Performa) Incorporated: TBA Employees (2) : 700 as of 2007 (from 1 in 2006) Growth Strategy
    18. 18. <ul><li>M&A 2q2005: closing $75 million communications solution provider. </li></ul><ul><li>M&A Pipeline: </li></ul><ul><ul><li>Solutions: cash flow positive (42+ targets) </li></ul></ul><ul><ul><li>Technology: market drivers (14+ targets) </li></ul></ul><ul><li>M&A program </li></ul><ul><ul><li>Organic: synergistic growth & CCV Bus. Dev. </li></ul></ul><ul><ul><li>Increased margins: Acquiring emerging technology companies that can increase margins and provide competitive differentiators. </li></ul></ul>2.6 OUTLOOK Multi-Strategy Approach
    19. 19. 2.7 FINANCIALS Margin % Organic Revenue: Technology 100% CAGR Solutions 20% CAGR CCV Financial Performance (2004-2008) Solutions Technology Technology Drives Solution’s Margins
    20. 20. <ul><li>Vision </li></ul><ul><ul><li>Solutions (Revenue) </li></ul></ul><ul><ul><li>Technology (Margins) </li></ul></ul><ul><li>Experienced Team (Track Record) </li></ul><ul><li>M&A Expertise </li></ul><ul><li>Operation Expertise </li></ul>2.8 KEY FACTS Highly Secure Communications Solutions

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