Granite Equity Partners: Introduction & Orientation


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Granite Equity Partners: Introduction & Orientation

  1. 1. Granite Equity Partners Introduction & Orientation CERTS 2009 February 2009
  2. 2. “Generic” Private Equity Model • $600 - $700 billion in investments per year, on a global basis. -2-
  3. 3. Granite Equity invests to advance select companies…and benefit all stakeholders. Mission: Values: We: We invest human and financial capital from our community of • Strive to provide a superior, risk- adjusted return on investment. investors, executives, and advisors to advance select • Consider the community value of investments, preferring those that add companies in our region toward large, positive, and sustainable value. their full potential. • Collaborate with management teams and add value through disciplined processes for due diligence, investing, financing, and governance. Vision: • Communicate openly, regularly and Over generations, we will govern effectively with stakeholders. and grow exceptional companies, • Respect the dignity of the people we striving to benefit all stakeholders. encounter. -3-
  4. 4. We invest $1 million to $5 million or more in equity in profitable, growing, and transitioning companies within drive time of our offices. Our Service Area: Ideal Investment Criteria: • Facing a transition: owner retirement or rapid growth or both • Located within drive time of our offices, emphasizing Greater MN • $10 million to $100 million in revenue and $1 million to $8 million in EBITDA. • A strong management team interested in partnering and co-investing with us. • An attractive industry with manageable risks & real opportunities. • Have a strategic plan providing strong returns to stockholders and stakeholders. -4-
  5. 5. To date, our Fund II committed capital into seven companies. Our most recent… -5-
  6. 6. CASE STUDY ONE – GEOTEK Stewartville, MN • GEOTEK is a leading manufacturer of pultruded fiberglass construction components that are used by electrical utility companies in the construction and maintenance of transmission and distribution powerlines and substations. -6-
  7. 7. CASE STUDY TWO – XL Specialized Trailers Manchester, Iowa -7-
  8. 8. So, our Fund II is well along in identifying & investing in exceptional companies, creating a diversified mutual fund of private companies. Granite Equity II LLLP Portfolio Planning: Portfolio Diversification: • Company Diversification All Flex – 10 to 12 distinct companies Circuit • Industry Diversification Check – Investments across manufacturing, distribution, business services, information services, healthcare, media, and other sectors XL Specialized • Style Diversification – Blend of Value-Oriented, Cash Generators and Growth-Oriented, Gazelles MicroBioLogics • Control Orientation – Majority “control” acquisitions (51% or more), and minority “minority” investments Atomic • Securities Orientation Learning – Mostly straight “preferred equity” securities to maximize upside ECI – Occasional equity with “convertible subordinated debt” to protect downside & secure interest income -8-
  9. 9. And, with 1,500+ companies within drive time, and with 40% of them soon facing leadership & ownership successions, we see ample opportunity to complete our portfolio of 10 to 12 exceptional companies. Large Private Business Base: Dramatic Demographic Shift: • 39% of businesses will face a change in leadership in the next 5 years – 2003 estimate, likely higher today • 12% of businesses will face a partial change in leadership and semi- retirement of the CEO • Baby-boomers begin turning 62 in 2007 – 2008 • Conclusions: – In the next 5 years, 40% - 50% of CEOs will retire or semi-retire – In private, family or closely-held businesses, Leadership succession often necessitates ownership transfer Source: Dun & Bradstreet, 2006. Sources: American Family Business Survey, 2003. U.S. Census Bureau. -9-
  10. 10. The Granite Equity Advisory Board has hundreds of years of business experience to help govern and grow our companies. Granite Equity Advisory Board Lee Hanson, Board Chair Kathy Gaalswyk Mike Roth Shareholder, Gray, Plant Mooty President, Initiative Foundation Former CEO, Phillips Recycling Bob Anderson Dennis Gregory Jim Schueller Former CEO, Anderson Farms COO/CFO, Automotive Parts HQ’s CEO, S.J. Louis Construction Rollie Anderson Don Helgeson Bill Sexton CEO, Anderson Trucking Former CEO, Goldn’ Plump Poultry Former CEO, Old Northwest Agents Jerry Bauerly Arnold Johnson Ed Silker Former President, Bauerly Brothers CEO, Johnson Enterprises CEO, Deerwood Dental Dan Coborn Brett Keith Nancy Straw Chairman, Coborn’s Inc. Managing Partner, Rockwood Equity President, West Central Initiative Glenn Cook Al Kern Jim Swenson CEO, Guests Incorporated Founding Partner, KDV CEO, St. Cloud Cold Storage Rose Ann Faber Bob McLean Lee Torborg Chair, Viking Coca-Cola Bottling Co. General Manager, Hunt Utilities Group Former CEO, Torborg Apartments Wade Fauth Jim Miller Don Weeres Executive, Blandin Foundation CEO, Miller Properties & Investments CEO, Spee-Dee Delivery Peter Ferber Pat Mitchell John Weitzel CEO, Ferber, Inc Former President, Cold Spring Granite Former CEO, Bankers Systems Bob Ferche Nancy Norr Gene Windfeldt President, Ferche Family Dev. Board Member, Northland Foundation Chairman, Preferred Credit - 10 -
  11. 11. The General Partners have invested & committed their own equity and experience. Pat Edeburn, MBA Art Monaghan Rick Bauerly, MBA/MPA • Partner, GEP • Partner, GEP • Managing Partner, GEP • Expertise in Growth: Strategy, • Expertise in Controls: Finance, • Expertise in Governance: Leadership, Marketing, & Sales Accounting, & Audit/Risk Mgmt Organization, & Operations • Director, Medtronic Corporation • Principal, Norwest Equity • Founder, Venture Allies • Associate, Deloitte Consulting • Founder, Computer Guidance • Director, Bauerly Companies • Carleton College, Harvard MBA • Associate, Andersen Consulting • Associate, Deloitte Consulting • Science Initiative, Vinylite, • University of Notre Dame • Saint Johns, Harvard MBA & MPA Anderson Center Boards • All-Flex, Heartland, Center for • Boards: Centracare Finance Chair, • Lives in Sartell MN, roots on Philanthropy Boards DeZURIK Lead Director, Anderson Pillager MN farm (GEP North Entrepreneurial Center Board Chair • Lives in Northfield MN (GEP Region), married, 3 children. South Region), roots on NE Iowa • Lives in and roots in Sauk Rapids MN farm farm, married, 3 children. (GEP Central Region), married, 2 children. - 11 -
  12. 12. Granite Contact Information: Pat Edeburn Partner (320) 251-1800 See: - 12 -