Financial Service Into deck

1. Problems Projects People Solutions
“ Unlocking China’s Talent and Information ”
www.smithstreetsolutions.com November 2009

2. Service Offerings
SmithStreetSolutions is a China-based Consulting and Advisory firm that provides services to clients
around the world.
Our diverse skill sets, language competencies and industry experience enable our team to collect,
Our diverse skill sets, language competencies and industry experience enable our team to collect,
collaborate, analyze and organize information to deliver superior solutions
collaborate, analyze and organize information to deliver superior solutions
Our solutions provide the flexibility for clients to focus on their core competencies and scale their business
Our solutions provide the flexibility for clients to focus on their core competencies and scale their business
while effectively managing their cost structure and allocation of resources
while effectively managing their cost structure and allocation of resources
International presence of senior management allows for immediate attention to each client’s unique needs
International presence of senior management allows for immediate attention to each client’s unique needs
Investment Research & Analytics
Investment Research & Analytics Market Research
Market Research
Investment Opportunity Identification
Investment Opportunity Identification Market & Business Research
Market & Business Research
Industry Research & Company Profiles
Industry Research & Company Profiles Primary Research
Primary Research
Strategic // Operational // Investment Related Due
Strategic Operational Investment Related Due Pharmaceutical Research
Pharmaceutical Research
Diligence
Diligence Competitive Intelligence
Competitive Intelligence
Valuation Analysis including 409A and FAS 157
Valuation Analysis including 409A and FAS 157 Data Analysis
Data Analysis
Quarterly Valuations for Portfolio Companies
Quarterly Valuations for Portfolio Companies
Sales & Marketing Analysis
Sales & Marketing Analysis
M&A Advisory
M&A Advisory
Media Monitoring
Media Monitoring
Financial Modeling
Financial Modeling
China Market Entry // Feasibility
China Market Entry Feasibility
Financial Document Translation – Chinese
Financial Document Translation – Chinese
(Traditional & Simplified), Japanese, Korean
(Traditional & Simplified), Japanese, Korean
“ Managing across time, distance and culture ”
“ Managing across time, distance and culture ”
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3. Solutions Provided to Financial Services Clients
Our clients can attest to our ability to produce high-quality work outputs – with fast turnaround
times – which provide real value to their businesses.
Client Service Provided Client's Request SmithStreet –> Solutions
Leading PE firm Industry Research Evaluate investment Delivered a comprehensive
Investment Opportunity opportunities and competitive report outlining global and
Identification landscape of select industries in domestic trends, regulatory
Market Entry Feasibility China environment, and key competitor
Company Profiles profiles
English-to-Chinese Translation
Global Financial Advisory Firm Offshore Analyst Staffing Provide flexible staffing of Staffed fully-managed and
Business Research qualified business analysts to dedicated resources to execute
Data Cleansing, Analysis and support US-based engagement research and analyses, providing
Modeling team from offshore the flexibility to scale up or down
the offshore team based on
workload during each project
phase
Multinational Industrial Products M&A Advisory Facilitate the acquisition of a Guided the client through
Corporation Client Liaison / Intermediary Chinese industrial products business, legal and cultural
English-to-Chinese Translation company (including aspects of acquiring a Chinese
manufacturing facilities, sales firm
teams, trademarks and licenses) Acted as an intermediary to find
resolutions to disagreements
Boutique Investment Bank Industry Research Recommend attractive retail Engaged in both primary and
Investment Opportunity chains in second- and third-tier secondary research to identify
Identification cities in China based on specific potential target companies
investment criteria meeting investment criteria
Facilitated initial negotiations
between potential targets’
management and client
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4. SmithStreetSolutions – Senior Management
Our leadership is made up of experienced consulting and financial services professionals with in-
depth experience and successful track records across industries.
Franklin Yao – Chief Executive Officer
Franklin Yao – Chief Executive Officer
Franklin has spent his career advising Financial Services, Insurance, and Professional Services organizations in both Asia and North
Franklin has spent his career advising Financial Services, Insurance, and Professional Services organizations in both Asia and North
America in the areas of investment strategy, China market entry, offshoring and outsourcing, analytics, business strategy, operations
America in the areas of investment strategy, China market entry, offshoring and outsourcing, analytics, business strategy, operations
reengineering, and strategic sourcing.
reengineering, and strategic sourcing.
Previously, Franklin was at the global consulting firm Opera Solutions, where he managed the day-to-day operations of the Shanghai
Previously, Franklin was at the global consulting firm Opera Solutions, where he managed the day-to-day operations of the Shanghai
office and oversaw an eight-fold growth in its size. Prior to Opera Solutions, Franklin was a strategy consultant at the Mitchell
office and oversaw an eight-fold growth in its size. Prior to Opera Solutions, Franklin was a strategy consultant at the Mitchell
Madison Group, Cap Gemini Ernst & Young, and Inductis. In addition to his work at SmithStreetSolutions, Franklin is a Partner at
Madison Group, Cap Gemini Ernst & Young, and Inductis. In addition to his work at SmithStreetSolutions, Franklin is a Partner at
Glocal Strategy, China’s leading PR agency; a Strategy Advisor for JUCCCE, a joint US-China NGO for clean energy development; and
Glocal Strategy, China’s leading PR agency; a Strategy Advisor for JUCCCE, a joint US-China NGO for clean energy development; and
Deputy Chairman of the Shanghai Yangpu High-Tech District Overseas Chinese Committee.
Deputy Chairman of the Shanghai Yangpu High-Tech District Overseas Chinese Committee.
Franklin received a B.A. in Economics and in East Asian Studies from Yale University.
Franklin received a B.A. in Economics and in East Asian Studies from Yale University.
Robin Kerawala – Chief Operating Officer
Robin Kerawala – Chief Operating Officer
Robin has been advising his North American clients in the areas of strategic procurement and outsourcing over the past 10 years. He
Robin has been advising his North American clients in the areas of strategic procurement and outsourcing over the past 10 years. He
has served clients in the financial services, professional services, manufacturing and government sectors.
has served clients in the financial services, professional services, manufacturing and government sectors.
Previously, Robin was an Engagement Manager at Mitchell Madison Group where he delivered significant cost savings for his clients,
Previously, Robin was an Engagement Manager at Mitchell Madison Group where he delivered significant cost savings for his clients,
advising them on global logistics strategy, raw materials sourcing, as well as legal services and HR outsourcing issues. Robin also
advising them on global logistics strategy, raw materials sourcing, as well as legal services and HR outsourcing issues. Robin also
worked as a consultant at Operations Management Group, Cap Gemini Ernst & Young, and Silver Oak Solutions.
worked as a consultant at Operations Management Group, Cap Gemini Ernst & Young, and Silver Oak Solutions.
Robin graduated from Brown University with a B.A. in Economics.
Robin graduated from Brown University with a B.A. in Economics.
Steven C. Lee, CFA – Principal, Investment Research & Analytics
Steven C. Lee, CFA – Principal, Investment Research & Analytics
Steven has over 13 years of experience in investment analysis, structured products, and portfolio management. Prior to joining
Steven has over 13 years of experience in investment analysis, structured products, and portfolio management. Prior to joining
SmithStreet, Steven served as Managing Director for an opportunistic, multi-strategy hedge fund in New York focusing primarily on
SmithStreet, Steven served as Managing Director for an opportunistic, multi-strategy hedge fund in New York focusing primarily on
private investments. Previously, he was the Head of Structured Products at Refco Alternative Investments, where he was responsible
private investments. Previously, he was the Head of Structured Products at Refco Alternative Investments, where he was responsible
for the creation, distribution and management of Principal Protected Notes and Total Return Swap structures. Steven has also formerly
for the creation, distribution and management of Principal Protected Notes and Total Return Swap structures. Steven has also formerly
worked at Asset Alliance Corporation, Bear Stearns investment banking, and James D. Wolfensohn, Inc.
worked at Asset Alliance Corporation, Bear Stearns investment banking, and James D. Wolfensohn, Inc.
Steven received a Bachelor of Arts in Economics, with Distinction, from Yale University and is a CFA Charterholder.
Steven received a Bachelor of Arts in Economics, with Distinction, from Yale University and is a CFA Charterholder.
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5. SmithStreetSolutions – Team Member Profiles
We have built a diverse and talented team representing 11 countries and bringing together a wide
range of industry experience.
Anders Paulsson – Director, Investment Research & Analytics
Anders Paulsson – Director, Investment Research & Analytics
Collectively, Anders is well experienced in finance, divided between fixed income derivatives and asset back securitization at RBC Capital
Collectively, Anders is well experienced in finance, divided between fixed income derivatives and asset back securitization at RBC Capital
Markets. Within these areas, he has experience in the marketing and structuring of derivatives and the risk analysis and portfolio management
Markets. Within these areas, he has experience in the marketing and structuring of derivatives and the risk analysis and portfolio management
of securitized assets.
of securitized assets.
Anders graduated from the MBA program at CEIBS in Shanghai and earned his B.Sc. in Economics & Finance from Lehigh University.
Anders graduated from the MBA program at CEIBS in Shanghai and earned his B.Sc. in Economics & Finance from Lehigh University.
Joseph Floyd – Director, Investment Research & Analytics
Joseph Floyd – Director, Investment Research & Analytics
Previously, Joseph was an investment professional at American Capital, a US private equity firm and an investment banker at FT Partners, a US
Previously, Joseph was an investment professional at American Capital, a US private equity firm and an investment banker at FT Partners, a US
boutique investment bank. He has deep experience with both principal investing and M&A advisory.
boutique investment bank. He has deep experience with both principal investing and M&A advisory.
Joseph graduated with high honors from the University of California, Berkeley with a B.A. in Economics and a B.S. in Business Administration.
Joseph graduated with high honors from the University of California, Berkeley with a B.A. in Economics and a B.S. in Business Administration.
He previously held an NASD Series 7 license.
He previously held an NASD Series 7 license.
Michael Yeo – Manager, Market Research
Michael Yeo – Manager, Market Research
Michael has managed numerous global & China market research initiatives for clients across a range of industries. His projects have ranged
Michael has managed numerous global & China market research initiatives for clients across a range of industries. His projects have ranged
from identifying potential investment opportunities for private equity firms to delivering strategic recommendations to Chinese government
from identifying potential investment opportunities for private equity firms to delivering strategic recommendations to Chinese government
agencies. Previously, Michael was a SOX Internal Auditor at Shell and an External Auditor at Ernst & Young.
agencies. Previously, Michael was a SOX Internal Auditor at Shell and an External Auditor at Ernst & Young.
Michael received his B.A. in Accounting & Economics from the University of Reading.
Michael received his B.A. in Accounting & Economics from the University of Reading.
Feng Xu – Research Associate, Investment Research & Analytics
Feng Xu – Research Associate, Investment Research & Analytics
Feng has experience in international M&A, private equity and venture capital at SmithStreet. He previously worked at a Philadelphia-based
Feng has experience in international M&A, private equity and venture capital at SmithStreet. He previously worked at a Philadelphia-based
asset management company as an investment advisor and a Pennsylvania-headquartered US mortgage company as a financial analyst.
asset management company as an investment advisor and a Pennsylvania-headquartered US mortgage company as a financial analyst.
Feng earned his M.S. in Analytical Finance from Lehigh University, M.Sc. in International Business from University of Nottingham, a B.S. in
Feng earned his M.S. in Analytical Finance from Lehigh University, M.Sc. in International Business from University of Nottingham, a B.S. in
Information and Computer Science from Zhejiang University (China).
Information and Computer Science from Zhejiang University (China).
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6. SmithStreet Understands the Factors that Drive Valuation
SmithStreet analyzes each unique situation to unlock maximum value for clients.
Understanding of
Understanding of
Projections //Strategic
Projections Strategic Balance Sheet
Balance Sheet Potential Synergies //
Potential Synergies Inherent Risk of
Inherent Risk of Business, Incremental
Business, Incremental
Plan
Plan Optimization
Optimization Risks
Risks Business
Business Assets & Liabilities
Assets & Liabilities
Sale Process and
Sale Process and Discounted Cash
Discounted Cash
Collective Judgment
Collective Judgment Flow Analysis
Flow Analysis
of SmithStreet
of SmithStreet
Public Market
Public Market
Other Companies for Comparables
Comparables
Other Companies for
Sale or Potentially
Sale or Potentially
for Sale
for Sale Industry &
Industry & Recent
Recent
Maximum
Maximum
Market
Market Comparable
Comparable
Valuation
Valuation
Conditions
Conditions Transactions
Transactions
Industry and Company
Industry and Company
Specific Characteristics
Specific Characteristics
Industry Merger and
Industry Merger and
Acquisitions
Acquisitions
Comparables
Comparables
Public //Private
Public Private
Market Conditions
Buyer(s’) Ability
Buyer(s’) Ability
Market Conditions
to Pay
to Pay
Ability to Raise Capital //
Ability to Raise Capital Potential Synergies //
Potential Synergies Other Investment
Other Investment
Strategic Implications
Strategic Implications Dilution //IRR
Dilution IRR
Leverage
Leverage Risks
Risks Opportunities
Opportunities
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7. SmithStreet Identifies M&A Synergies to Unlock Value
SmithStreet Analyzes the Acquirer and Target to Identify Synergies
Cross-selling opportunities between different sales forces, products and verticals
Cross-selling opportunities between different sales forces, products and verticals
Revenue Enhancement
Revenue Enhancement Potential new product lines and geographic markets
Potential new product lines and geographic markets
How economies of scale can reduce average production costs, increase purchasing
How economies of scale can reduce average production costs, increase purchasing
Cost Reduction
Cost Reduction power, eliminate supply chain intermediaries and better utilize capacity
power, eliminate supply chain intermediaries and better utilize capacity
Appropriate size of Management teams and office locations post-M&A
Appropriate size of Management teams and office locations post-M&A
Non-essential assets post-M&A that can be divested: real estate, factories, inventory,
Non-essential assets post-M&A that can be divested: real estate, factories, inventory,
Asset Optimization
Asset Optimization etc.
etc.
Value of intangible assets such as patents, copyrights and trademarks
Value of intangible assets such as patents, copyrights and trademarks
Tax savings via NOLs
Tax savings via NOLs
Tax Reduction
Tax Reduction Tax savings via geographic location post-M&A
Tax savings via geographic location post-M&A
Decreases in WACC via optimal debt // equity ratio
Decreases in WACC via optimal debt equity ratio
Financial Synergies
Financial Synergies Reductions in beta via increased assets, cash flow and diversified income
Reductions in beta via increased assets, cash flow and diversified income
Additional strategic options due to increased assets and cash flow, such as: IPO, debt
Additional strategic options due to increased assets and cash flow, such as: IPO, debt
Strategic Options
Strategic Options recapitalization, geographic expansion, etc.
recapitalization, geographic expansion, etc.
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8. Illustrative Example: Preparation, Process, Negotiation Drive Value
The market’s initial perception will not fully
capture your Company’s inherent value.
Preparation and Synergy Identification Drive Perceived
Note: all figures are representative examples only
$288 mm
$192 mm
’10 EBITDA ($ in mm)
$24.0
Earnings Up
Market’s
First
Impression
Market will
initially
$18.0 discount Management’s
projections by 25%
$144 mm $216 mm
8x 12 x 12+ x
Process and Negotiations Increase Core Multiple Paid
Through preparation, process and negotiation, SmithStreet
Through preparation, process and negotiation, SmithStreet
increases the market’s willingness to commit to higher valuations.
increases the market’s willingness to commit to higher valuations.
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9. Methodology for Valuation Analysis (409A and FAS 157 Services)
SmithStreetSolutions reviews and analyzes multiple information sources to determine valuation
parameters.
Review financial statements and Management estimates to develop several sets of projections by which to
Review financial statements and Management estimates to develop several sets of projections by which to
value the company
value the company
Hold discussions with Management or Advisors concerning the business, milestones, operations and future
Hold discussions with Management or Advisors concerning the business, milestones, operations and future
prospects
prospects
Review financial terms and conditions set forth in the capitalization table and articles of incorporation
Review financial terms and conditions set forth in the capitalization table and articles of incorporation
Compare the financial performance of the company with that of publicly traded comparable companies and
Compare the financial performance of the company with that of publicly traded comparable companies and
relevant precedent transactions
relevant precedent transactions
Specific Valuation Methodologies
Specific Valuation Methodologies
Discounted Cash
Discounted Cash Common Stock
Common Stock Precedent Transaction
Precedent Transaction
Flow Analysis
Flow Analysis Comparison
Comparison Analysis
Analysis
Build detailed financial
Build detailed financial Compare financial
Compare financial Use relevant precedent
Use relevant precedent
projection model and
projection model and performance of company to
performance of company to M&A and private
M&A and private
discount cash flows to
discount cash flows to a select group of
a select group of placement transactions to
placement transactions to
present value using WACC
present value using WACC comparable public
comparable public establish valuation
establish valuation
method
method companies
companies parameters
parameters
SmithStreet delivers comprehensive valuation analysis: enterprise value determined by multiple
SmithStreet delivers comprehensive valuation analysis: enterprise value determined by multiple
methodologies and equity value per share determined by capitalization table waterfall analysis
methodologies and equity value per share determined by capitalization table waterfall analysis
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10. Methodology for Identifying Investment Targets
SmithStreet uses a rigorous methodology to search for and identify potential investment targets
meeting client-specified criteria.
Analyze key trends, government policies, map out the
Industry Research value chain, and highlight areas of opportunity
Compile a master list of available companies along with
Identify the Key Players key data & financials for each individual company
Screen companies using defined investment criteria
Quantitative Analysis including: company financials & ratios, growth rates,
number of locations, geographic coverage, etc.
Senior management interviews to determine: SWOT
Qualitative Research (strengths, weaknesses, opportunities & threats), brand
recognition, openness toward outside investors, etc.
Present industry report with recommended investment
Recommend candidates; facilitate company introductions and
Targets negotiations
Our investment research projects are custom-tailored to each individual client’s needs
Our investment research projects are custom-tailored to each individual client’s needs
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11. Complete Confidentiality
At SmithStreetSolutions, we regard confidentiality as our lifeline and have actively taken measures to
safeguard our clients’ business information.
Our Infrastructure For Information Security
Our Infrastructure For Information Security
• SmithStreetSolutions has taken crucial steps to manage sensitive information so that it remains secure,
• SmithStreetSolutions has taken crucial steps to manage sensitive information so that it remains secure,
credible and trustworthy
credible and trustworthy
Servers
Servers Employee’s Terminal
Employee’s Terminal
Our access controlled data centers are protected and secured Our physical workspace consists of one floor, accessible
at various entry levels: perimeter, network, host, application only to employees of the company
and data
Each individual terminal is secured by multiple logins /
Multiple barriers ensure the integrity of our network which password-protected entryways
are designed to detect, prevent and defend against threats
Restricted internet access (personal email accounts, online
Our managed firewall provides around-the-clock security chatting tools, personal websites)
monitoring, and management logs and reviews of potential
intrusions Disabled USB and copying capabilities (data cannot to be
transferred without the proper authorization)
Firewall log data is continuously archived in a physical
backup media available for restoration for a specified time Restricted access available to client team only
period commensurate with service levels
Strict confidentiality agreements are required for all
employees
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12. Contact Information
Shanghai Office
20 Jinchuang Road, 10th Floor
Steven C. Lee, CFA
Steven C. Lee, CFA Yangpu, Shanghai 200433
Principal, Investment Research & Analytics
Principal, Investment Research & Analytics +86 (21) 6565 6533
US Mobile:
US Mobile: +1 (917) 806 6508
+1 (917) 806 6508
China Mobile: +86 150 2190 8229
China Mobile: +86 150 2190 8229
Email: steven.lee@smithstreetsolutions.com
Email: steven.lee@smithstreetsolutions.com
Robin Kerawala
Robin Kerawala New York Office
Chief Operating Officer
Chief Operating Officer 521 Fifth Avenue, 17th Floor
New York, NY 10175
US Mobile:
US Mobile: +1 (917) 771 7153
+1 (917) 771 7153 +1 (212) 292 4420
China Mobile: +86 158 0092 2899
China Mobile: +86 158 0092 2899
Email: robin.kerawala@smithstreetsolutions.com
Email: robin.kerawala@smithstreetsolutions.com
www.smithstreetsolutions.com
www.smithstreetsolutions.com
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