Ephor Group Introduction

Ephor Group Introduction In ancient Sparta, Ephor’s were advisors who were Founded in 2003 by y responsible for the execution of critical decrees. Ephor’s p p swore to carry out their decrees and also supervised Garry E. Meier, Ephor meetings of the council and assembly. What is an Group provides Today, Ephor’s develop organizations wherever they are Ephor? strategic advisory situated in their business lifecycle - with advisory scope that covers operating support to strategic positioning. services to  TeXchange Board (nonprofit 5013c) for Technology institutional backed Entrepreneurs and Executives (2010-present).  Economic Small Business Advisory Council to US technology and Senate Committee (2009-present) service businesses to  Speaking Engagements: expand revenue o TriNet, The State of HR and the Future of Human Resources Outsourcing (HRO), 2006 models and create o Greater Houston Partnership, Client Acquisition Revenue Models, 2007 History Greater Houston Partnership, Channel Building, Channel wealth. o Development, and Channel Management: Alternative Distribution Best Practices, 2008 o Austin UT Club, The Playbook for Success, 2009 o High Tech Texan, How To Create Wealth, 2011  Founded in 2003 by Garry E. Meier after several successful private and public company CEO assignments and a little “beach and golf time.”

Ephor Group Clients: A track record of results Solving the Value Equation.Client engagements: Brand Refresh and GoToMarket: Sentric (Workforce Management Technology) Product Launch: ProBenchmark (SaaS) Polus Group (FAO) Bullseye (SaaS) (SaaS), (FAO), Recent Client Accomplishments: M&A Corporate Development: Serenity (IT MSP), Moderor (HRO) Expansion: Bluware (Staffing), Novo (Call Center, Contact Center, BPO). • Grew provider from $1M to $9M in 18 months and then strategic investment by Hewitt.Board Advisory Clients: Administrative & Transactional Ad i i t ti T ti l Functional F ti l • P j t oriented t Projects i t d transactionall tiOutsource Int. (OSI) (HRO/PEO) Tandem/(OSI) (Recruiting & Staffing) business transitioned into recurring Chairman/CEO 1998-2001  Chairman 1998-2001 solutions provider. o Revenue: $480m Turnaround o Division Revenue from $180m to o Exit: Divestiture of Brands $280m • Acquired add-on “book of business”  Strategic Buyer: TeamStaff o Exit: Financial Buyer: Cerberus which added additional revenues,  Strategic Buyer: Spherion clients, and team members.HR America (ASO) Talent Tree (Recruiting & Staffing) Chairman 2002-2006  Chairman/CEO 2002-2005 • Received $2.56M in funding capital o Revenue from $3m to $22m o Revenue from $90m to $145m o Exit: Strategic Buyer: Gevity o Exit: Financial Buyer: Chrystal raise.SmartTime Software (T&L Mgmt) HR Advance (Benefit Admin) • Rolled up $30M of p y service p payroll Chairman/Interim CEO 2004-2007  BOD Advisor 2008-2010 providers to create a national provider o Revenue from $6m to $15m o Revenue from $9m – $19m o Exit: Strategic Buyer: Kronos o Exit: Strategic Buyer: Hewitt/AON of “Workforce Management Solutions.”Perquest (Payroll/WFM) Achilles (HRO) • Doubled staffing provider revenues BOD Advisor 2007-2011  Chairman 2007-Current from $40M to $80M. o Revenue from $4m to $19m o Revenue from $4m to $11m o Exit: Strategic Buyer: ADP E it St t i B o Exit: Current H ldi E it C t Holdings

HRO ExpertiseProcessing & Administration g Functional Support pp Payroll & Tax Recruiting & Staffing Outsource International  OSI/Tandem Staffing Perquest  Talent Tree Work Management: Time & Labor Labor, “Supporting the Supporting Benefit Eli ibilit and B fit Eligibility d Productivity Mgmt. Needs of the Administration Worker” SmartTime Software WorkPlace Solutions  HRAdvance Administrative Service Departmental HR Organization (ASO) PEO Outsourcing HRAmerica HRA i  Achilles A hill  Synadyne

BPO ExpertiseProcessing & Administration g Functional Expertise p SaaS Contact Center ERP, Workforce Management  Eligibility, Call Center Administration Point Solutions Platform Departmental Outsourcing RPO, SPM, EPM  Financial, HR, Recruiting, Marketingg Administrative Services Advisory Services Financial Administration Payroll, AP, AR, Expense  GoToMarket, M&A  Outsourced Billing and Corporate Development, Financial Reporting Board Governance

Calls to Action Economic Alternative1.1 Examine your Strategy. A Effective Strategy E i St t An Eff ti St t Distribution Efficient Model is Required including Brand Asset Management, Go-To-Market, Product Management, and Channel Management. Star Performer Capabilities2. Have a Market Validated Growth Strategy. Focus on expansion via a portfolio of products and revenue sources.3. Do Not Accept Mediocrity. Mediocrity Promotes Failure! © 2011 Ephor Group LLC | 1 (800) 379-9330 | www.ephorgroup.com

“In 2012 and beyond, wealth will be created for those unique revenue models that are the most models, economically efficient, promote and excel at owing their communities, and focus on key strategic initiatives (i.e. customer satisfaction).” -Garry E. Meier, Ephor Group Founder> Download additional resources at: http://www.ephorgroup.com/resources.asp

Revenue Advisory Services Since 2006, we conduct quarterly research surveys on utilization and best practices for technology and outsourcing buyers.Whether you need interim help, a Chief Revenue Advisor We also, interview 400 businesses every year to determine the market landscape, forecast, and landscape forecastor Chief Strategy Officer, there are proven, pragmatic opportunities.methods for expanding revenues. Defining the SME Middle-Market Buyer: The mid-market is significant as the table illustrates the potential universe of SME & mid- market employers with 50 to 10,000 full-time W- p y ,Mid-MarketMid Market Research Findings 2011: 2 employees:I. The drivers have shifted from license software to SaaS solutions, from cost savings to capability enabling solutions, and from TARGET Americas India & Asia Europe (thousands) Middle East functional specific to business-centric. Mid-market 100,000 10,000 25,000 100,000II. Utilization improving based on adaption of technology to meet p g p gy What will satisfy the needs of the SME market is today’s work requirements (flattening span of control, global simplifying the technology and functional multi-location complexities, younger workforce, mobile and processes with a business-centric mindset. contingent workforce). The majority of businesses consider themselvesIII. Recurring oriented business models are the market leaders. mid-market enterprises. They have multiple Portfolio and distribution key contributors vendors complicated by changing business demands and evolving landscape, and lack to more efficient model leaders. efficient and effective processes and expertise to adequately fit their needs. The ideal customer buys to simplify their business, while valuing the solutions based approach coupled with industry vertical specific h l d ith i d t ti l ifi domain expertise. By making the buying process easy, the long- term profitability potential is great.

Ephor Group is a strategic advisory firm which helps our clients(technology and outsourcing providers) create wealth by achieving their growth objectives.Benefits of our methodology approach gy pp Ephor was created as an(as opposed to traditional consulting, coaching or iBanking) includes alternative to traditionalour Methodologies and our Perform Model. consulting. We put our own “skin in the game” and trulyEphor Perform Business Process™ methodologies: work in the company’s interest FlightPlan™ for GoToMarket ensures effective/efficient revenue strategy. FlightPlan as part of our Perform Model and we insource ourGrowthSTEP™ guides companies to their next plateau inclluding Methodologies to our clients.Alliances, Distribution and/or M&A Corporate Development. Ephor Group was founded asBoardwalk Management Science™ provides Controls and Intelligence the “family office for Garry E. family office”and ensures optimum asset creation, monetization and value realization. Meier and other high net worth individuals to provideRead more about our methodologies online. advisory services to our investments and portfolio of clients. Ephor Group’s approach is Intelligence Controls Assets pragmatic, proven, and •Market Research •Landscape: •Governance •Brand performance-oriented. Ephor Boardwalk •Sources of Revenue Competitive and Buyers •Management g •Insourcing approach works with technology and •Wealth Creation Science Reporting creates processes outsourcing providers. We have Drivers •PayforPerformance •Industry Comparables led, advised, and invested in •Competitive Intelligence some of the most successful •Pricing Intelligence business service companies in the Americas.

FlightPlan FlightDirector G l h l l h GoToMarket: k Benefits of “TARGETING” to Expand RevenuesThe Business Case: “TARGETING” Case Study Highlight:Today’s market and economicenvironment requires a provenmethodology that increasesthe probability of consistent success. Strategic Effectiveness + Programmatic Execution creates exponential wealth. i.e. success comes from your brand being #1 or #2 in each targeted community, plus assets are effectively deployed, and ongoing operational execution seeks consistent improvement.By implementing effective Go-To-Marketprograms clients have found:† Improved personnel productivity† Decreased sales cycle times† Improved conversion rates† Increased year one revenues† Higher total net lifetime value

FlightPlan FlightDirector GoToMarket:Benefits of “TARGETING” to Expand Revenues By targeting multiple partners that can generate significant revenues our client companies expand into additional regions, communities, and offerings.

FlightPlan FlightDirector GoToMarket Case Studies Brand Assets improves awareness and interest which improves resource efficiency, conversion rates, and net lifetime client revenues.

Ephor Group’s GrowthSTEP™ Methodology Introduction Proprietary & Confidential. @ Copyright Ephor Group, LLC 2011.

GrowthStep℠ SaaS Case StudySituation Audit:Perquest’s mission was to provide the first and exclusive software-as-a-service (SaaS) HRO servicesto small and large businesses via a single technology platform.Ephor Process, Approach, and Sequence of Events:I. Opportunity & Outcomes >> The attractive investment returns in the payroll business are generated by acquiring annuity streams of recurring revenue at a low cost, and reselling the revenue at exit at higher multiples multiples.II. Creating a Seller >> Ephor identified an opportunity in the market: the legacy payroll providers have been unsuccessful in providing clients with a combination of state-of-the-art technology, coupled with business centric services, premier end-user friendliness and superior customer se ce a d suppo t service and support.III. The “Yellow Brick Road” >> Ephor conducted the research, presentation, and negotiations and signed up numerous qualified acquisition targets. And then facilitated the integration efforts and ensured integration milestones were on-track and effectively managed.Results:I. Within 30 days a short-list of targets was researched and handicapped, and the corresponding Playbooks, Financial Acquisition Model, and Integration Plan was created.II. Six (6) acquisition targets were identified and signed Letter-of-Intent within 180 days.III. Perquest was acquired by ADP in 2010.

GrowthStep℠: Ephor Group’s Corporate Development Process. GrowthStep℠ was developed in the mid-90’s to provide “asset light” p p p g technology and service businesses a specific expertise and methodology exclusively focused on growth through alliance, acquisition, and portfolio and distribution expansion. Ephor’s GrowthStep℠ methodology combines a precise and highly focused approach, delivered with deep domain experience by results proven “C” level executives, resulting in the achievement of the growth and corporate development objectives of our client company company. GrowthStep’s approach ensures acquisitions are accretive to valuations and realize the necessary timelines and results.

GrowthSTEP™: M&A Corporate Development Case Study Unlike traditional M&A, our approach targets multiple acquisitions of teams, capabilities, and partners so our client company creates dominance in a region, niche, or community.

GrowthStep Valuation Methodology Industry Comparables: Cost of $1.00 of Revenues Acquisition Modeling

GrowthStep ProcessPerquest Yellow Brick Road it s as Simple as 1, 2, 3: Road, it’s 1 21. Step One: Step Project MAPPING2. Step Two: Creating a Seller Process3. Step Three: Due Diligence and Integration: Mapping the Highest Probability Targets: Acquisition Integration Timeline: COMPANY CLUSTER Revenues AVERAGE NBR OF ANNUAL W- WSE CUSTOMERS 2S NO CAL TOTAL $ 10,450,000 55 655 61000 SO CAL TOTAL $ 10,300,000 52 662 233333 FLORIDA TOTAL $ 1,100,000 51 295 na MIDWEST TOTAL $ 32,040,000 89 1686 93200 MINNESOTA TOTAL $ 5,000,000 73 467 51667 N DAKOTA TOTAL $ 1,000,000 30 640 984000 NJ NY TOTAL $ 12,100,000 187 540 55833 PENN TOTAL $ 28,200,000 73 1104 1209500 TX OK TOTAL $ 31 600 000 31,600,000 47 1317 201250 DESERT TOTAL $ 9,280,000 53 588 65500 VAC TOTAL $ 9,400,000 38 1135 128750 2 0

GrowthSTEP Corporate Development Methodology Garry Meier and his associates developed the methodology to steer Segment A > Develop Targeted Acquisition platform companies in Pipeline (Size and Scope Each their corporate Segment B development efforts. Segment Potential) C a. Handicap All Potential M&A Potentials & The methodology traces Compare Potentials to Strategy its roots back to IBM IBM, Edward Jones & Co, Technology Service Segm ent B Segm ent A > Implement Acquisition Outreach Solutions. It is a lock-step Segm Program program for ensuring ent C a. Create Sellers corporate development b. b Confirmatory D C fi t Due Diligence Dili activities are highly c. “Yellow Brick Road” Intro Presentation profiled, qualified, d. “Happy Ending” & Constituency Alignment acquired, and integrated. Discussion A B > “Yellow Brick Road Playbook” “Y ll B i k R d Pl b k” Seg ment C a. Precise Valuation Model b. Integration Plans c. Due Diligence d. Closing Documents Qualified Investment > Transactions

Q: What should be your top priorities & considerations?This economy demandsan effective strategy,illustrated improvementin your business model model,coupled with processexcellence in order tocreate wealth.“Process Excellence” includesefficient and scalableprocesses which requiresoutsourcing, increasedmanagement science, andenhanced workforcemanagement and training.

We Understand Perform Businesses Managing a service as a product may lead to Labor Intensive Business Characteristics sales but not profits. With each engagement l b t t fit h t Factors unique to most labor intensive businesses that we perform an assessment and analysis, create create challenges in optimizing profitability: a project plan, and then support the execution efforts through our operating support and Cottage nature requires high touch management advisory guidance. Cyclical industry fundamentals are driven by end-user profitability and d fit bilit d demand f end user goods and services d for d d d i Our evaluation of the needs of the company, in as well as industry specific factors conjunction with its owners and managers, Employee profile and employee motivation – tendency to determines the resources we bring to bear on attract and reward mediocrity each phase. We work with the company to execute its performance improvement within Excessive customer acquisition costs Excessive this disciplined, metric-oriented framework using timelines that create mutual Profitability driven by mass and density inside geographic accountability. markets Sales process is price sensitive because of current laborBusiness Needs: imbalancea) Wealth Creation Roadmap against the Strong desire for immediate fixes vs. positioning the opportunity business for long-term value maximization (expectationb) Branded “Franchise Effects” gap)c) Risk Mitigation Failure to create ‘Productization’ of services including Productizationd) Strategic Optionality recurring revenue model, portfolio effects, and customere) Capital and Financing Management lifecycle maturity management model Under-performing companies are often entitlement oriented and change is not easily accepted by organization

Ephor Group’s Track Record of Success Our track-record of model improvement as seen through KPI (key performance indicators): Return on Invested Capital  Avg. Avg = 300% Valuation Improvement  From <4X to >8X EBITDA Corporate Performance Brand Value, Brand Equities  > Margins & Retention Market Positioning  #1 or #2 Field Level EBITDA  >30%+ Operating Performance Profit Per Employee  >$25k per EE Revenue Per Partner  >$500k Revenues per Executive  >500k Revenues per Account Manager  >300k Functional Performance Cost Per Lead  <$100 Cost Per Sell (new client)  1X first year revenues

Ephor Group Introduction

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