Presentation at the European American Tax Institute Conference 2010 about Business Restructurings

6. Risk-return relation Expected return Variance

7. Risk-return trade-offs Risk premium Profit potential given up Loss potential hedged

9. Example

10. Risk-return trade-offs WACC 12% WACC 7%

11. Risk-return trade-offs (TPG 9.10): In the open market, the assumption of increased risk would also be compensated by an increase in the expected return, although the actual return may or may not increase depending on the degree to which the risks are actually realised.

14. Case study FFD Business Model Operational profit Revenu Sales ASP ($47,50-$52,50) Sales volume (850k—950k) Cost of sales ACP ($37,50) Sales volume (850k-950k) Opex Fixed Opex ($5.5m) Variable Opex Cost ratio (10%) Sales ASP ($47,50-$52,50) Sales volume (850k-950k)

15. Case study

16. Risk distribution FFD

17. Conversion FFD into commissionaire Midpoint commission rate: 2% Upper Quartile commission rate: 5% Options realistically available: Current situation:

18. Conversion FFD into commissionaire Midpoint commission rate: 2% Upper Quartile commission rate: 5% 5% commission rate 2% commission rate

20. Case study (continued) Use of WACC to evaluate after conversion TP Value Consolidated Value LRD Value Principal Forecast LRD profit LRD WACC Forecast Principal profit Principal WACC

21. Case study (continued) Use of WACC to evaluate after conversion TP

22. Case study (continued) Use of WACC to evaluate after conversion TP

23. Case study (continued) Solved on commissionaire WACC

24. Case study (continued) Solved on Principal WACC

25. Case study (continued) Solved on Commissionaire rate