GrowthStep™ Introduction                   The Playbook for Revenue Growth in 2013 and Beyond© 2011 Ephor Group | 1 (800) ...
GrowthStep™ Overview                                                                                      Ephor Group’s Co...
Q: What Are Your Growth Options?A: The Three Wedges of Growth. $ , $4,000                              Double in five year...
Ephor GrowthStep PhilosophyEfficient      •   Resource constraints                                   Cost of Client Acquis...
GrowthStep™ Results                                                                                            Clients by ...
GrowthStep™                               Gro thStep™ Case St d                                                   Study   ...
A Consolidation Platform in the Outsourced Workforce Management Market                                                    ...
Geographic Expansion           Creating a geographic footprint through the acquisition of a “select group” of regional pay...
GrowthStep™                        Gro thStep™ Case St d Software                                         Study Soft are© ...
GrowthStep℠ SaaS Case StudySituation Audit:Perquest’s mission was to p   q                       provide the first and exc...
GrowthStep Summary
The “Yellow Brick Road”: Sequential Set of Activities                                                                 Crea...
GrowthStep Valuation Methodology       Industry Comparables:       Cost of $1.00 of Revenues        Acquisition Modeling
GrowthStep Process                                                                            Segment                     ...
Ephor Group Team Snapshot                               The 2013 Market                                                   ...
Phased Approach: Follow your “Yellow Brick Road”           STRATEGY                                                       ...
Getting Started                                 Ephor@EphorGroup.com                                 E h @E h G© 2011 Epho...
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GrowthStep M&A Corporate Development Services Methodology

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Revenue strategies for growth and expansion including portfolio expansion, M&A corporate development...

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GrowthStep M&A Corporate Development Services Methodology

  1. 1. GrowthStep™ Introduction The Playbook for Revenue Growth in 2013 and Beyond© 2011 Ephor Group | 1 (800) 379-9330 | www.ephorgroup.com | 5353 W Alabama Suite 300 | Houston, TX 77056 FlightPlan | GrowthSTEP™ | Management Science | BoardWalk™
  2. 2. GrowthStep™ Overview Ephor Group’s Corporate Development Process.Congratulations! Your company is doing great and you are GrowthStep℠ was developed in the mid-90’s togrowing.growing Sales are moving incrementally up the scale and provide “asset light” technology, software, and BPO asset light service businesses a specific expertise andoutperforming your sales projections. But now you face a new set of methodology exclusively focused on growth throughchallenges. multiples routes to market. •Do you need to diversify and grow your revenue sources? •Are your revenue systems scalable? •What is the best plan for expansion? Portfolio/Geographic? What GrowthStep℠ methodology combines a precise and highly focused approach, delivered with deepOur goal is to ensure you achieve both immediate and sustainable domain experience by results proven “C” levelresults. Our approach puts capabilities in place that allow you to executives, resulting in the achievement of thenaturally and effectively handle the changes that occur in the growth and corporate development objectives of ourevolution of your business. client company. GrowthStep’s approach ensures growth is accretive to valuations and realizes the necessary timelines. GrowthSTEP takes a holistic inventory of your company’s margins and growth opportunities against your market and competitive landscape to determine the best revenue strategies for growth.. Fundamental to our success is our structured approach to creating business models that fulfill accelerating d l ti demand curves. d Our approach O h includes: 1) Routes to Market Portfolio Approach 2) M&A Corporate Development 3) Expansion: Geographic &/or Product/Solutions 4) A market analysis an investment plan and analysis, plan, the management playbook including all the strategy, execution actions, and detailed business model tactics to creates wealth. © 2013 Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046
  3. 3. Q: What Are Your Growth Options?A: The Three Wedges of Growth. $ , $4,000 Double in five years Cost of $1.00 of Revenues Varies by Channel: New Capabilities via $ , $3,000 new brands, alliances, , , 30%+% geographies, M&A 10% - 29% Better Portfolio: Revenue Waterfall Management = Greater Profits: $ , $2,000 4% - 10% additional products, new clients, or both: growth through increased venues Better Execution: Same solutions to $ , $1,000 same clients and growth through volume and price increases > Lower cost of client acquisition and greater profitability by client coupled $ $0 with predictable sales forecasting. 2010 2011 2012 2013 2014 2015 > How does your cost of client acquisition compare to competitors? Status Quo Expansion Acquisition Email ephor@ephorgroup.com for a complimentary report for your industry sector.
  4. 4. Ephor GrowthStep PhilosophyEfficient • Resource constraints Cost of Client AcquisitionGrowth is • Market noise and competition Direct • Cultural momentumHard • Unforeseen complexities Online DistributionThe • Validated revenue strategies (capital efficient sales tactics)Intersection • Alternative distribution partners are required Targetsof Strategy St ateg • Expansion i partners nd E p n ion via p tne and using mig tion theory ing migration theo Process and metrics driven with incentives& Execution • • Talented team with a proven track-record Referralsis Key The right • Assist with due diligence based on expertise Deal Team Deal Origination advisory to craft the story and manage the process Perform Diligence MAPPING team • Begin M&A or key alliance partner Alignment integration early creates Close valueBeyond useful capital, Ephor Group provides services such as M&A corporate development, Integration Execution Functionalkey account business development, management and board advisory services. Leads
  5. 5. GrowthStep™ Results Clients by Sector: • Business Process Outsourcing (BPO)  Latin American Card Services (2003-Current)Sector Sponsor & Client Transactions $ Capital Timeframe  Bradshaw Group (2011-Current)  US DataWorks (2012 – Current)1. BPO Great Hill Partners 6 $ 51m 2003-2006 PayChoice  Perquest (2007-2010)  Alsbridge (2009 20 0) l b d (2009-2010)2. HRO Baird Capital Partners 2 $ 19m 2005-2006 SmartTime  Human Resource Outsourcing (HRO)3. HBS Capstreet Group 3 $ 34m 2004-2007  Hireology (2012-Current) ADPI/InterMedix  Sentric (2011-Current)  Achilles Group (2007-Current)4. HRO Family Office: SAP Founder 2 $ 31m 2008-2010 PerQuest  Workstream Inc (2007-2011)  HR Advance (2008-2010)6. BPO Austin Ventures 3 $ 25m 2009 2011 2009-2011 Project Twinning  TalentTree (2005-2008)  SmartTime (2003-2008)7. BPO Prospect Partners 1 pending $ 11m 2011-Current Axios (Close  Institutional Funds 12.2011)  Glencoe Capital (2011-Current) Total 19 $171m  Austin Ventures (2008-2010)  CCGVP (2008-2010)  Baird Capital Partners (2005-2009)  Great Hill Partners (2008-2009)  CapStreet Group (2002-2008)  Healthcare Business Services (HBS)  GeBBS (2012 – Current)  HRAdvance (2008-2010)  Healthcare Coding Resources (2007-2008)  ADPI (2003-2008)  Certus (2002-2007)  Marketing Services (MSO)  Canidium (2011-Current)  JDM Marketing (2007-Current)  HRMarketer (2007-Current)  JPG (2006-2010)  SalesNet (2005-2008)  IT Outsourcing (ITO)  Extreme Tech (2009-Current) Revenue Strategy Routes to Market  Serenity (2008-2011) Management Science Wealth Creation  BluWare (2010-2011) FlightPlan GrowthSTEP  Broadleaf (2010)
  6. 6. GrowthStep™ Gro thStep™ Case St d Study HR Staffing & Payroll Services© 2011 Ephor Group | 1 (800) 379-9330 | www.ephorgroup.com | 5353 W Alabama Suite 300 | Houston, TX 77056 FlightPlan | GrowthSTEP™ | Management Science | BoardWalk™
  7. 7. A Consolidation Platform in the Outsourced Workforce Management Market Investm ent Returns Market Landscape Revenue Multiple 2 .5 x 3 .0 x 3 .5 x 4 .0 x 4 .5 x 5 .0 x Revenue 2016 $63,842,663 $63,842,663 $63,842,663 $63,842,663 $63,842,663 $63,842,663 Enterprise Value $161,717,581 $193,789,114 $225,860,648 $257,932,181 $290,003,714 $322,075,247 Net Debt ($4,171,353) ($4,171,353) ($4,171,353) ($4,171,353) ($4,171,353) ($4,171,353) To tal Value $ 1 6 5 ,8 8 8 ,9 3 4 $ 1 9 7 ,9 6 0 ,4 6 7 $ 2 3 0 ,0 3 2 ,0 0 1 $ 2 6 2 ,1 0 3 ,5 3 4 $ 2 9 4 ,1 7 5 ,0 6 7 $ 3 2 6 ,2 4 6 ,6 0 0 Sponsor Ownership 76.4% 76.4% 76.4% 76.4% 76.4% 76.4% Preferred Return $39,176,138 $39,176,138 $39,176,138 $39,176,138 $39,176,138 $39,176,138 To tal Payo ut $ 1 3 0 ,6 2 9 ,4 3 1 $ 1 5 5 ,1 1 9 ,4 7 8 $ 1 7 9 ,6 0 9 ,5 2 4 $ 2 0 4 ,0 9 9 ,5 7 1 $ 2 2 8 ,5 8 9 ,6 1 7 $ 2 5 3 ,0 7 9 ,6 6 4 IRR 3 6 .1 % 4 0 .8 % 4 5 .0 % 4 8 .8 % 5 2 .2 % 5 5 .3 % M ultiple of M oney 4 .7 x 5 .5 x 6 .4 x 7 .3 x 8 .2 x 9 .0 x C apitaliz ation Table Sources / Uses Ho lder C ost Basis $ Invested Ownership % So urces Uses Mgmt/Common 1.0 x – 10.1% Sponsor $20,557,956 Seller Liquidity $18,677,268 Ephor/Founders 1.0 x $1,962,801 13.5% Mgmt $1,962,801 Mgmt Rollover $1,962,801 Financial Sponsor 1.0 x $20,557,956 76.4% Debt – Working Capital $750,000 Fees $1,130,688 Total $ 2 2 ,5 2 0 ,7 5 7 100% To tal $ 2 2 ,5 2 0 ,7 5 7 Total $ 2 2 ,5 2 0 ,7 5 7 Notes: * 2012 acquisition funded with additional sponsor equity of $7.4M raising total new investor equity to ~$27.8M. * Additional acquisitions funded with cash flow + access to revolver with max cap of $5.0M @ 5.5%.Acquisition Pipeline Location $LTM $ Status/Merits of PurchaseLong Island, NY 5.8m Near LOI Stage: Transformational Asset: ↑ WFM CapabilitiesSolon, OH 2.6m Near LOI Stage: Focus on Franchise & HospitalityWalnut CA 1.9m Solid Relationship: High Potential after Funding Solid Relationship: Transformational Asset: ↑ WFMTrenton, NJ 3.2m CapabilitiesOrange County, CA 2.0m Potential Succession Seller in 2012-2013Winston-Salem, NC 3.4m Potential Succession Seller in 2012-2013Louisville, KY 3.5m Potential Retirement Seller in 2013-2014Salt Lake City, UT 4.6m Divestiture of Software Company Orphan Total in Millions $27.0m
  8. 8. Geographic Expansion Creating a geographic footprint through the acquisition of a “select group” of regional payroll services. Rigorous evaluation process for identifying attractive and “transactable” acquisitions. Based on identified, essential Weighted criteria (0-100%) adjusts for the most important factors New Location / Acquisition Checklist and Criteria Weighting 1) Licensee 20% 2) Customers fully converted 10% PCS 3) Attractiveness of MSA 15% 4) Quality of revenue / fit with SME strategy 20% 5) Willing Seller / realistic price expectations 20% 6) Day to day operator remains with Scienta 5% Long Island, NY 7) High quality customer service / low attrition rates 10% Pittsburgh, PA Trenton, NJ T t Solon, OH Sandy, UT Walnut Creek, CA CPS Louisville, KY SPS Winston-Salem, NC Wi t S l Orange County. CAMap Key Existing Regional Offices $2 - $6 M Rev. Opportunities Sub $2M Rev. Opportunities
  9. 9. GrowthStep™ Gro thStep™ Case St d Software Study Soft are© 2011 Ephor Group | 1 (800) 379-9330 | www.ephorgroup.com | 5353 W Alabama Suite 300 | Houston, TX 77056 FlightPlan | GrowthSTEP™ | Management Science | BoardWalk™
  10. 10. GrowthStep℠ SaaS Case StudySituation Audit:Perquest’s mission was to p q provide the first and exclusive software-as-a-service (SaaS) HRO services to small and large ( ) gbusinesses 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.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 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 targets 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.II Six (6) acquisition targets were identified and signed Letter of Intent within 180 days Letter-of-Intent days.
  11. 11. GrowthStep Summary
  12. 12. The “Yellow Brick Road”: Sequential Set of Activities Create Operating Assessment of Create Financial Plans tied to the Financials & Reporting reflecting Financial Plan KPIs Fi i l Pl KPI Administration the Business Model (Management Practices And KPI’s Science) Create Financial Document Growth Returns & Outcomes: Prepare Due Stage Milestones & Size Long Term & Diligence & Data Targets g Near term Near-term Capital Room need GoToMarket to Profiled & Targeted Investors Day 30 Day 60 Day 90 Day 120 Day 150 Day 180 Investor Due Company Diligence Successful Funding of Presentations Capital Requirement Continuous month over month improving performance of the business.
  13. 13. GrowthStep Valuation Methodology Industry Comparables: Cost of $1.00 of Revenues Acquisition Modeling
  14. 14. GrowthStep Process Segment Segment A B Perquest Yellow Brick Road, it s as Simple as 1, 2, 3: Road it’s 1 2 Segment C > Develop Targeted Acquisition Pipeline (Size and Scope Each Potential) 1. Step One: Step Project MAPPING a. Handicap All Potential M&A Potentials & Compare Potentials to Strategy Segm 2. Step Two: Creating a Seller Process Segm ent B ent A > Implement Acquisition Outreach Program Segm a. Create Sellers ent C b. Confirmatory Due Diligence 3. Step Three: Due Diligence and Integration: c. d. “Yellow Brick Road” Intro Presentation “Happy Ending” & Constituency Alignment Discussion Mapping the Highest Probability Targets: > “Yellow Brick Road Playbook” a. Precise Valuation Model b. b Integration Plans COMPANY CLUSTER Revenues AVERAGE NBR OF ANNUAL W- c. Due Diligence WSE CUSTOMERS 2S d. Closing DocumentsNO CAL TOTAL $ 10,450,000 55 655 61000 B > TransactionsSO CAL TOTAL $ 10,300,000 52 662 233333 AFLORIDA TOTAL $ 1,100,000 51 295 na Acquisition Integration Timeline: Seg ment CMIDWEST TOTAL $ 32,040,000 89 1686 93200MINNESOTA TOTAL $ 5,000,000 73 467 51667N DAKOTA TOTAL $ 1,000,000 30 640 984000NJ NY TOTAL $ 12,100,000 187 540 55833PENN TOTAL $ 28,200,000 73 1104 1209500TX OK TOTAL $ 31,600,000 47 1317 201250 Qualified InvestmentDESERT TOTAL $ 9,280,000 53 588 65500VAC TOTAL $ 9,400,000 38 1135 128750
  15. 15. Ephor Group Team Snapshot The 2013 Market Even in a slow growth economy, newRevenue M&A emerging enterprises and market leaders will grow and prosper. And the market will continue to bifurcate into market leaders and laggards with none M&A Research left in the middle. Online Brand Strategy Intelligence Ephor Focus & Expertise: Market Intelligence M&A Sourcing M&A Integration Go To Market Go-To-Market Change Agent Ch A t Routes to Market M&A Corporate DevelopmentEmail us for case studies for your industry sector @Ephor[at]EphorGroup.com
  16. 16. Phased Approach: Follow your “Yellow Brick Road” STRATEGY 3 GrowthSTEPSM THE YELLOW 1 2 Go-To-Market 4 PHASE (Growth Venues & Alternative Distribution) BRICK ROADSM Initiates with a detailed Brand Penetration New Markets / New Products  Branded leader known for Revenue Growth Plan. productized recurring Financial, Strategic Product/Service Routes to Market & Portfolio Geographic Expansion solutions. Positioning, Operational Measurement and Metric Benchmarks are Prescribed. Client Lifecycle Management Solutions approach. Channel Strategies  Engaged community & Brand & Solutions Strategy community leader. Productization of Services into Client Acquisition Process Alternative Distribution solutions and corresponding connected to Client Lifecycle Revenue processes on messaging. Management & Raving Fan Corporate Development M&A autopilot. Asset Development Client Satisfaction Process. A “Community” of Targets is Created, Profiled, and Prioritized and all growth assets de e oped developed. Revenue Campaigns Phase I Outcomes include: 1. Revenue Strategy. 2. Revenue P 2 R Processes and d Revenue Waterfall Portfolio Effects to support Programs including Opportunity your GrowthSTEP generation, eMarketing, Demand Wealth strategy alignment Generation, Sales Support, PR, with budget and all Communication, & Promotions. constituencies.
  17. 17. Getting Started Ephor@EphorGroup.com E h @E h G© 2011 Ephor Group | 1 (800) 379-9330 | www.ephorgroup.com | 5353 W Alabama Suite 300 | Houston, TX 77056 FlightPlan | GrowthSTEP™ | Management Science | BoardWalk™
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