This document provides an overview of acquiring the Barbasol brand from its parent company Perio Inc. Key points include: - Barbasol is well-positioned to capitalize on consumers continuing to buy lower-priced products post-recession. - Acquiring Perio would obtain Barbasol, which generates 89% of Perio's revenue, as well as other personal care brands. - Recommendations include raising Barbasol foam prices and launching an economy gel product to enter a profitable market segment. - Valuing Perio at $52.7M currently, the acquisition price range is estimated at $45-68.8M, with an expected 13.6

1. Barbasol Acquisition Pitch BookFor: Diversified Products Inc.Prepared by: Rook Consulting Cohort C – Team 2December 13, 2010Rook Consulting Project Team:Hythem AbdelwahabTejas AtawaneEszter HamoriKevin HarderMolly PlimptonCarl Uttaro

2. Executive Summary

3. Company Profile

4. Shaving industry overview

5. Current Valuation

6. Adjust Pricing

7. Launch Economy Gel Product

8. Valuation of Acquisition

9. ReferencesTable Of Contents

10. Executive Summary

11. iExecutive SummaryPlease Note: Because Barbasol provides 89% of the manufacturer revenue for its parent company Perio Inc., it is proposed that Diversified Products Inc. purchases Perio in its entirety. As a result, The financial valuations in this pitch book are based off of the entire Perio, Inc. organization. However, all other analyses relate specifically to the Barbasol brand and its competitors among the men’s shaving cream market only.IntroductionThe recent US economic recession has shifted consumer purchasing towards economy products, a trend which is forecasted to persist for the foreseeable future. In a recent study, 94% of consumers surveyed stated they were “likely” or “very likely” to continue buying lower-priced products. As Barbasol is the dominant low price men’s shaving product, it is uniquely positioned to capitalize on the post-recession consumer. Company ProfileBarbasol was founded in 1919 by MIT professor Frank Shields and was an instant innovator being the first pre-lathered shaving cream. The brand is well-known for its “barber-pole” striped packaging and has been famous throughout the years being endorsed by male figures such as baseball star Babe Ruth and football coach Knute Rockne. The company was run independently for its first 43 years until it was acquired by pharmaceutical giant Pfizer from 1962. Barbasol was then purchased by Perio Inc. in 2001. The company has seen increasing revenues from $18 million in 2001 to approximately $26.7 million in the most recent 12 months. This success is in spite of the recent US economic recession and the failed launch of a Barbasol Ultra line which was misaligned with corporate strategy and culture.Industry Overview & CompetitionThe $338M men’s shaving cream market, a segment of the personal care and grooming products industry, is comprised primarily of two major product segments – shaving gel accounting for 66% and shaving foam accounting for 29% of retail sales. Barbasol is positioned as a low-price, high volume product within the men’s shaving foam market – Barbasol products account for 49% of foam units sold but only 37% of foam retail sales dollars. Barbasol’s largest competitor in the men’s shaving foam market is Gillette, a subsidiary of Proctor & Gamble Co. (PG), which offers two foam product lines, Gillette Foamy and Gillette Series Foam, which account for 45% of foam units but 51% of foam retail sales respectively. Although Barbasol is very successful in the foam segment, the market share of foam units sold compared to the entire industry has been decreasing steadily.n = 69Gel/Foam Usage by AgeNote: Data for responses other than gel or foam preferences (such as cream, oil or water) are not shown on chart. Source: Rook Consulting Shaving Cream Survey 2010

12. iiExecutive Summary Gillette and Edge – a subsidiary of Energizer Co. (ENR) – have captured much of the younger age segments by offering several types of shaving gel, a product used on average more than twice as often by 18-34 year old males as foam. As a market segment, gel accounts for 66% of retail sales for all shaving cream product types, showing the high margins that the product offers. Because Barbasol does not currently offer a gel product, it is not taking advantage of a large and profitable area of the industry. Adjust the pricing of existing foam productsRook Consulting’s first recommendation upon acquiring Barbasol is to raise the price of its current products in order to capture untapped value in the market. Although Barbasol is the primary low-price shaving foam, there is room for a price increase because of the 7-cent gap in per unit price between Barbasol and Gillette Series Foam. After analyzing price elasticity, Barbasol foam products can be increased 0.5-cents per ounce in order to maximize profits. This price adjustment will result in a 1% loss of unit sales in the first year but generate $0.86M additional contribution margin in the first year and increase the firm’s value in perpetuity by $2.3M. Launch Shaving Gel productUS men’s shaving consumers, particularly 18-34 year old males, clearly prefer gel products as shown by the disproportionate breakdown in sales figures between the two categories. We believe that Barbasol must re-enter the gel market after their failed attempt at a premium line and do so using a similar positioning and strategy that has been successful in foam – low price and high value. There are very few brands in the gel economy segment and there is an opportunity to provide a lower price alternative to Gillette Series gel and Edge Gel. Barbasol will be able to maintain a cost advantage over Gillette and Edge because they have 50% spare capacity.A gel product launch will generate $2.5 million in the first year and increase the firm’s value by $21.5 million.ConclusionBarbasol is a stable and fairly strong brand as it currently stands, but under its current management and strategy, it is not taking full advantage of the opportunities in the market, specifically in regards to price and product availability. Rook Consulting estimates the total current value of Perio to be $52.7 million. With our projected future growth opportunities, the range of prices that DPI should offer are between $45 million and $68.8 million. Based on this investment, Barbasol is an attractive acquisition target that we estimate to produce an ROI of between 73% and 13.6% over the next five years.US Male Shaver Facts:79%Purchase shaving cream themselves.Think all grooming products work the sameOccasionally or regularly try new shaving productsBuy shaving cream and razor from the same brand55%51%23%Source: Mintel Data

13. Company Profile

14. Barbasol was introduced to the market by the Napco Corporation. Barbasol quickly took off in popularity among US shavers and Frank Shields, the inventor (see sidebar), established The Barbasol Company in 1920. The Barbasol Company owned the brand for the next 42 years. Barbasol’s innovative product immediately helped it become a market leader. Throughout the years, Barbasol was even endorsed by various sports superstars, such as Babe Ruth in 1923 (pictured right).The company changed the product format from a thick cream in a tube to a “softer, fluffier” composition we now recognize as shaving foam and began packaging in the aerosol cans that are ubiquitous today. Throughout Barbasol’s history, the brand has been identified by the characteristic red stripes of traditional barber shop poles.“No brush, no lather, no rub in.”- Original 1920 Barbasol slogan1An Old and Well Known Shaving BrandBarbasol Original Shaving Cream in a Tube (1920) Success through InnovationSource: Perio Inc. Company home pageEarly Barbasol Advertising MessagesBarbasol InventorIn 1919, MIT Professor Frank Shields succeeded with the invention of a shaving cream that did not have to be worked into a lather. Source:Babe Ruth Barbasol endorsement (1923); Perio Inc. Company homepageFor Best Results: shave with Barbasol (1949); Westervin.com.Source: Perio Inc. Company homepageCompany Profile

15. 22008 Recession Boosted Value Oriented ProductsBarbasol Unit Sales Market ShareRecession has Changed ConsumersWhen Asked: “How likely are you to continue buying lower-priced products?”94%“Likely” or “Very Likely”Highlights:Consumers are more likely than ever to be buying lower-price shaving cream products.Source: Bernstein US Consumer SurveySource: Nielsen DataBarbasol Brand History2001: Barbasol bought by1949:Created Aerosol Shaving Cans1919:Barbasol InventedBackground on Perio2007: Launch Barbasol UltraPerio, Inc. began as Columbus Dental in 1903. In 2001 they transformed from a dental company to a shaving products company by purchasing Barbasol in 2001. Perio now owns aftershaves and body wash.1962: Barbasol bought by1923:Babe Ruth endorses Barbosal2010: Barbasol Ultra Pulled191019201930194019501960197019801990200020102020Company Profile

16. 3Company Has Expanded AccordinglyPerio Inc. Senior Management TeamA Company That Stands on American ValuesBuilding the CommunityBoth management and workforce are hired predominantly from Ohio

17. Local town applicants first in line for new jobsConservative valuesKeeping Jobs in Ohio and America

18. Family-oriented operations“The Perio company reflects the values and attitudes that we so cherish here in Ohio.”- U.S. Rep. John BoccieriConsumer Perception of the Company“I was impressed with the fact that the president began the groundbreaking ceremony with prayer. That's an indication of the type of company they are and will be.”“[The speech given by the CEO o Perio at the grounding of the new Ohio factory was] impressive and I hope is a true indication of how the company is run.”New Barbasol Factory"This is a family-oriented operation and a great place to work." Source: Ashville Times Gazette. Barbasol press release: May 25, 2010Organizational StructureSenior management team is vertically-oriented

19. Total employees have grown from 4 to 35 since 2006, due to increasing growth and in-house manufacturing

20. Majority of staff managed under Operations Group August 13, 2009: Perio senior management with local Political leaders at the ground breaking of a new plant in Ashville, OH.Source: Ashville Times Gazette. Source: Perio Inc. LinkedIn Company ProfileCompany Profile

21. Expansion of Shaving Product Portfolio - Mixed ResultsCurrent Perio Manufacturer Revenue by ProductBarbasol AftershaveHighlights:89% of Perio Inc. revenues from the Barbasol brand.

22. Perio’s other products include a women’s shaving gel and body wash.

23. Because of the single Management Team, we recommend buying Perio as a whole.

24. Barbasol Soothing Aloe is #1 retail SKU of all men’s shaving cream products.

25. Uniform packaging shows characteristic stripes modeled after traditional barber’s pole.Barbasol Ultra(Discontinued in 2010)9Source: Nielsen Data adjusted for Wal-Mart Barbasol OriginalSource: Barbasol.comCompany Profile4

26. 5Failure of Previous Product Launch - Barbasol UltraMisalignment with Company Strategy and Core ValuesBrand “Echo”Highlights:New product line was not aligned with corporate strategy & culture.

27. Barbasol is a “historic brand”

28. Barbasol is “inexpensive and works well with my skin.”

29. I chose this shaving cream brand because it’s “cheap, old fashioned and works”.

30. “It [Original Barbasol] is effective and priced the way a daily use product should be priced: reasonably.”

31. I chose Barbasol because of its “price”, it’s “cheap”.

32. “I think it’s good quality”.90% of respondents who took this survey age between 24-34 years.Company specifically positions itself as a “value brand” according to VP of Product Management, Jill Crumbacher.

33. Barbasol’s strategy and competitive advantage has always been cost leadership, not differentiation.

34. Barbasol “Ultra” product line originally launched in 2007 as a premium brand of foam with higher-end ingredients.Failure in Targeting ConsumersBarbasol Ultra attempted to be a premium product targeting less price sensitive consumers. However Perio failed to support the launch by advertising to a new target group.

35. Since Barbasol Ultra’s target segment was not clearly identified the new product’s inherent weakness was the cannibalization potential of Barbasol’s original product. Source: Rook Consulting Shaving Cream Survey 2010As a Result…Manufacturer sales of Barbasol Ultra in 2009 had only reached approximately $2 million or 4% of company revenues.

36. In 2010, the Company began pulling the gel product from shelves, citing poor performance and its intention to focus on core Barbasol products.Company Profile

37. 6Channel Distribution of Original Barbasol ProductsRetail Direct:Supermarket & Chain DrugWal-MartDistributorsHighlights:Manufacturer Sales Dollars by Channel:

38. Retail Direct: 36%

39. Wal-Mart: 48%

40. Distributors: 16%

41. Overall, according to Barbasol’s VP of Product Management, approximately 75% of total manufacturer sales are direct purchases by retailers.

42. Consequently, distributors are only used by smaller, independent retailers that cannot afford the minimum order shipment quantity.

43. Thus, distributors are offered the same MSP as other customers in order to maintain direct purchases from the largest buyers.Company Profile

44. 7Perio Inc.’s Key Strengths and OpportunitiesPerformance of a Target Acquisition CompanyHighlights:Perio, Inc. is a strong company, but not perfect.

45. Rook Consulting believes the company is near its maximum potential in the current state.