Chicago, Illinois New Delhi, India ChangAn, China www.pfingstenpartners.comwww.pfingstenpartners.comConfidentialConfidentialMarch30,2011March30,2011BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII11TableofContentsI. I.PrivateEquityOverviewPrivateEquityOverviewII.II.PfingstenPartners,L.L.CPfingstenPartners,L.L.CIII.III.HowDoesPrivateEquityWork?HowDoesPrivateEquityWork?IV.IV.CaseStudiesCaseStudiesV.V.PreparingforaCareerinPrivateEquityPreparingforaCareerinPrivateEquityPrivateEquityOverviewBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII33PrivateEquityOverviewPublicEquities(Stocks)ReturnExpectations:9%PublicFixedIncome(Bonds)ReturnExpectations:6%AlternativesReturnExpectations:15%to20%WheredoesPrivateEquityfitinanassetallocationmodel?PrivateEquityHedgeFundsDistressedDebtGovernmentCorporateDomesticInternationalEmergingMarketsCommoditiesNaturalResourcesRealEstateBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII44PrivateEquityOverviewAssetAllocationModelB$60(9%)=$60(9%)=$5.45.4AlternativesStocksBondsAssetAllocationModelA30(6%)=30(6%)=1.81.810(20%)=10(20%)=2.02.0$50(9%)=$50(9%)=$4.54.520(6%)=20(6%)=1.21.230(20%)=30(20%)=6.06.0$100$9.2$100$9.2(9.2%)(9.2%)$100$11.7$100$11.7(11.7%)(11.7%)($inmillions)($inmillions)BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII55PrivateEquityOverview PrivateEquityispartofthealternativePrivateEquityispartofthealternativeassetclassassetclass PrivateEquityfirmsmakeandmanagePrivateEquityfirmsmakeandmanageinvestmentsinprivatecompaniesinvestmentsinprivatecompaniesWhatisPrivateEquity?BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII66PrivateEquityOverview IndustrysegmentsIndustrysegments TransactionsizeTransactionsize GeographyGeography InvestmentstageInvestmentstage TypeoftransactionTypeoftransaction LevelofeconomicorlegalcontrolLevelofeconomicorlegalcontrolThePrivateEquityindustryusesawidevarietyofinvestmentstrategiesPrivateEquitytransactionshavecommoninvestmentcharacteristics PrivatelynegotiatedtransactionsPrivatelynegotiatedtransactions Long-term,illiquidinvestmentsLong-term,illiquidinvestments PartnershipwithmanagementPartnershipwithmanagement Activeboard-levelcontrolorActiveboard-levelcontrolorinfluenceinfluenceBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII77LiquidateLiquidateInvestmentInvestmentManageInvestmentManageInvestmentPortfolioPortfolioGenerateInvestmentGenerateInvestmentOpportunitiesOpportunitiesandandProcessTransactionsProcessTransactionsPrivateEquityOverviewWhatisthePrivateEquityfundcycle?RaiseCapitalRaiseCapital1to2years10to13yearsFundFundClosingClosingInitiateInitiateFundraisiFundraisingngFinalFinalDistributiDistributiononBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII88PrivateEquityOverviewHowbigistheU.S.PrivateEquitymarket? Over$2.0trillionincapitalcommitmentsOver$2.0trillionincapitalcommitments Over3,000firmsintheU.S.Over3,000firmsintheU.S.WhatarethemarketsegmentsinPrivateEquity?Sources:WorldFederationofExchangesandDow Jones Private Equity Analyst Galantes Venture Capital and Private Equity Directory BuyoutsandMezzanineBuyoutsandMezzanine70%70% VentureCapitalVentureCapital30%30%HowbigistheU.S.publicequitymarket? Over$16.7trillionmarketvalueasofOver$16.7trillionmarketvalueasofNovember30,2010November30,2010 Approximately5,000listeddomesticApproximately5,000listeddomesticcompaniescompaniesBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII99Source:Dow Jones Private Equity AnalystMarketSourceShare(est.)qPublicandPrivatePensionFunds40%qFinancialInstitutions20%qFundofFunds15%qHighNetWorthIndividualsandFamilies10%qEndowmentFundsandFoundations10%qOther(Governments,Corporations,GPsetc.)5%100%PrivateEquityOverviewWhoprovidesthecapitalforPrivateEquity?BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII1010PrivateEquityOverviewWhomakesPrivateEquityInvestments? FundManagementFirmsFundManagementFirms HighNetWorthIndividualsandFamiliesHighNetWorthIndividualsandFamilies CorporationsCorporations EndowmentsEndowments FoundationsFoundations FundofFundsManagersFundofFundsManagers GovernmentEntitiesGovernmentEntities BanksBanks Non-bankFinancialInstitutionsNon-bankFinancialInstitutions InvestmentBanksInvestmentBanks InsuranceCompaniesInsuranceCompaniesInvestmentProfessionalsat:InvestmentProfessionalsat: BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII1111PrivateEquityOverviewSource:Bain&CompanyGlobalPrivateEquityReport2010WhereisPrivateEquitycapitalinvested?GlobalPrivateEquityInvestmentsGlobalPrivateEquityInvestments(1998through2009)(1998through2009)BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII1212WhataretheNetReturnexpectations?PrivateEquityOverview(1)NetReturns:pre-taxcompoundedreturns(compoundedmonthly)netofallfees,expensesandcarriedinterest(2)Source:LimitedPartnersofPfingstenPartners,L.L.C.(3)Source:ICMARetirementCorporation(4)Source:IbbotsonAssociatesqqBuyoutsBuyouts15%to15%to18%18%qqMezzanineMezzanine10%10%to15%to15%qqVentureCapitalVentureCapital18%18%to22%to22%qqPublicEquityPublicEquity 9%9%qqAAACorporateBondsAAACorporateBonds6%6%(1)(2)(2)(2)(2)(2)(2)(3)(3)(4)(4)BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII1313PrivateEquityOverviewCurrentIssuesandTrends CapitalcommitmentoverhangCapitalcommitmentoverhang LPfocusonvaluecreationdriversLPfocusonvaluecreationdrivers PrivateequityshakeoutPrivateequityshakeout Transparency(FASB157“FairValue”)Transparency(FASB157“FairValue”) NotasprivateasitusedtobeNotasprivateasitusedtobe-PresscoverageofmegabuyoutsPresscoverageofmegabuyouts-CongressionalhearingsCongressionalhearings-MandatorySECregistrationin2011MandatorySECregistrationin2011 TaxissuesTaxissues-CapitalgainsCapitalgains-CarriedinterestCarriedinterest IndustrynewslettersIndustrynewsletters-Private Equity Private Equity publishedbyDowJonespublishedbyDowJones-Buyout Buyout publishedbyThomsonFinancialpublishedbyThomsonFinancialPfingstenPartners,L.L.CBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII1515CreateafirmcombiningoperatingandfinancialexpertiseCreateafirmcombiningoperatingandfinancialexpertiseInvestinmiddlemarketmanufacturing,distributionandbusinessInvestinmiddlemarketmanufacturing,distributionandbusinessservicecompaniesservicecompaniesBuildvaluelargelythroughoperationalimprovements,Buildvaluelargelythroughoperationalimprovements,professionalmanagementpractices,globalcapabilitiesandprofessionalmanagementpractices,globalcapabilitiesandprofitablebusinessgrowthversusfinancialengineeringprofitablebusinessgrowthversusfinancialengineeringPfingstenPartners,L.L.C.Foundedin1989to:Chicago, IllinoisNew Delhi, IndiaChangAn, ChinaBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII1616PfingstenPartners,L.L.C.OperationalCapabilitiesOperationalCapabilitiesOperatingprofessionalsrepresentapproximatelyhalfoftheOperatingprofessionalsrepresentapproximatelyhalfoftheprofessionalstaffprofessionalstaffContinuousimprovementtrainingprogramsContinuousimprovementtrainingprogramsBestpracticesforumsBestpracticesforumsOperatingExecutivesbenchOperatingExecutivesbenchGlobalCapabilitiesGlobalCapabilitiesOfficesinChangAn,ChinaandNewDelhi,IndiaOfficesinChangAn,ChinaandNewDelhi,IndiaOver50directfactoryrelationshipsinAsiaOver50directfactoryrelationshipsinAsiaMarketentryservicesMarketentryservicesFunctionalsupportservicesFunctionalsupportservicesMultipleinternationaladd-onacquisitionsMultipleinternationaladd-onacquisitionsConservativeCapitalStructuresConservativeCapitalStructuresMinimum50%equityinthecapitalstructureofeachplatformMinimum50%equityinthecapitalstructureofeachplatforminvestmentinvestmentBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII1717PfingstenPartners,L.L.C.ThomasS.BagleyFounder and Senior Managing DirectorJohnH.UnderwoodSenior Managing DirectorAlexE.GregorVice PresidentMatthewP.SchloopVice PresidentMicahK.WickersheimAssociateAaronD.HabrigaAnalystCORPORATEFINANCEBUSINESSDEVELOPMENTADMINISTRATIONOPERATIONSPhilD.BronsteatterVice PresidentPatrickA.RileyAnalystRobertA.GladdenVice PresidentScottA.FineganManaging DirectorJamesJ.NortonSenior Managing DirectorJonathanE.LeimanSr. Vice PresidentJeffreyA.CoteCFOAndrewW.PetriControllerLoriA.CunninghamVice PresidentDenioR.BolzanManaging DirectorJohnJ.StarcevichManaging DirectorLawrenceE.TaylorVice President HRBrendaLeeLallyVice President HRDavidH.JohnstonVice PresidentJohnW.MattheiVice President HRBarbaraP.FuzesiOperational AnalystCraigJ.TompkinsVice PresidentJenniferS.ChristensenAssociateNickR.JohanssonAnalystTinaM.TromiczakVice President NormaL.CanalesOffice ManagerBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII1818PfingstenPartners,L.L.C.PortfolioCompanyFacilitiesPortfolioCompanyFacilitiesCurrent:Netherlands,Germany,England,Poland,Spain,China,CanadaCurrent:Netherlands,Germany,England,Poland,Spain,China,CanadaFormer:Taiwan,SouthAmericaFormer:Taiwan,SouthAmericaOfficesOfficesChangAn,China(22people)ChangAn,China(22people)NewDelhi,India(3people)NewDelhi,India(3people)Zhuhai, ChinaNew Delhi, IndiaChangAn, ChinaGlobalFacilitiesBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII1919PfingstenPartners,L.L.C.ProductSourcingProductSourcingProductidentificationandspecificationProductidentificationandspecificationSupplieridentificationandqualificationSupplieridentificationandqualificationEngineeringsupportfornewproductdevelopmentEngineeringsupportfornewproductdevelopmentQualityassuranceandcontrolQualityassuranceandcontrolLogisticsandshippingLogisticsandshippingMarketEntryMarketEntryMarketresearchandcompetitiveanalysisMarketresearchandcompetitiveanalysisIncubationcapabilityforsales,marketing,engineering,Incubationcapabilityforsales,marketing,engineering,administration,administration,manufacturingand/ordistributionmanufacturingand/ordistributionFunctionalSupportFunctionalSupportEngineering,salesandmarketingEngineering,salesandmarketingAdd-onacquisitionsAdd-onacquisitionsGlobalServicesBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII2020PfingstenPartners,L.L.C.Minimum50%equityinthecapitalMinimum50%equityinthecapitalstructureofeachplatformcompanystructureofeachplatformcompanyMaximizesoperationalflexibilityMaximizesoperationalflexibilityProvidescapacitytoweatherProvidescapacitytoweathereconomicdownturnsandeconomicdownturnsandcompetitivethreatscompetitivethreatsIncreasesourabilitytocloseIncreasesourabilitytoclosetransactionstransactionsPfingstenhasneverfailedtoclosePfingstenhasneverfailedtocloseatransactionduetofinancingatransactionduetofinancingPlatformCompaniesCapitalStructureEquity%HappControls55%RxLabel51%PremiereGlobalSports100%AllPoints55%TSE59%Powervar55%Closets100%Tropitone58%SpeeCo52%Technibus58%Garretson63%AP&M70%Hy-Bon57%Marlen56%FireKing65%CurtManufacturing65%OnServices100%TPCWire&Cable65%Superior50%BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII2121PfingstenPartners,L.L.C.$525.0million$525.0million($millions)($millions)($millions)($millions)CompositionofFundIVInvestorsBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII2222FUNDIVFUNDIIIFUNDIIPfingstenPartners,L.L.C.FUNDI1991-19991997-20062004-Present$26.3Million$100.0Million$285.0Million6Platforms9Add-ons4Platforms20Add-ons12Platforms17Add-onsAllportfoliocompaniesexitedActivelyseekingadd-oninvestmentsFundSizeInvestmentActivityStatusAllportfoliocompaniesexited2009-Present$525.0Million7PlatformsActivelyseekingplatforminvestmentsInvestmentHistoryBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII2323PfingstenPartners,L.L.C.DeliveraNetIRRequaltoorgreaterthan20%andaNetCashDeliveraNetIRRequaltoorgreaterthan20%andaNetCashMultipleequaltoorgreaterthan2.0timestolimitedpartnersMultipleequaltoorgreaterthan2.0timestolimitedpartnersCompleteallinitialplatformcompanyinvestmentswithintheFundsfiveCompleteallinitialplatformcompanyinvestmentswithintheFundsfiveandonehalfyearinvestmentperiodandonehalfyearinvestmentperiodBuildvalueprimarilythroughoperationalimprovements,professionalBuildvalueprimarilythroughoperationalimprovements,professionalmanagementpractices,globalcapabilitiesandprofitablebusinessmanagementpractices,globalcapabilitiesandprofitablebusinessgrowthgrowthAchieveliquidityforeachplatformcompanyinvestment,onaverage,Achieveliquidityforeachplatformcompanyinvestment,onaverage,withinfourtosevenyearswithinfourtosevenyearsOnlycloseinvestmentsthatmeettheFundsstatedinvestmentcriteriaOnlycloseinvestmentsthatmeettheFundsstatedinvestmentcriteriaCommunicateactivelywithlimitedpartnersCommunicateactivelywithlimitedpartnersPerformanceStandardsBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII2424GlobalGlobalmanufacturermanufacturerofofvaporvaporrecoveryrecoveryunitsunitsandandreplacementreplacementpartspartsandandproviderproviderofofrelatedrelatedfieldfieldandandemissionsemissionstestingtestingservicesservicesforforthetheoiloilproduction,production,biogas,biogas,andandindustrialmarkets.AcquiredJune2009.industrialmarkets.AcquiredJune2009.www.hy-bon.comwww.hy-bon.comPfingstenPartners,L.L.C.GlobalGlobalmanufacturermanufacturerofofcommercialcommercialandandindustrialindustrialfoodfoodprocessingprocessingequipmentequipmentandandpartspartsforforthethemeat,meat,poultry,poultry,fish,fish,vegetable,vegetable,fruit,fruit,bakery,bakery,confectionery,confectionery,snack,snack,andanddairymarkets.AcquiredDecember2009.dairymarkets.AcquiredDecember2009.www.marlen.comwww.marlen.comLeadingmanufactureranddistributoroflighttowingproducts,includingtrailerhitches,Leadingmanufactureranddistributoroflighttowingproducts,includingtrailerhitches,ballmounts,ballmounts,electricalproducts,andotheraccessories.AcquiredDecember2010.electricalproducts,andotheraccessories.AcquiredDecember2010.www.curtmfg.comwww.curtmfg.comNationalindependentserviceandequipmentproviderformissioncriticalpowerNationalindependentserviceandequipmentproviderformissioncriticalpowerequipmentofferingafullrangeofpreventative,remedialandemergencyequipmentofferingafullrangeofpreventative,remedialandemergencymaintenanceservicesforuninterruptiblepowersupplies.AcquiredJanuary2011.maintenanceservicesforuninterruptiblepowersupplies.AcquiredJanuary2011.www.gowithon.comwww.gowithon.comLeadingsupplierofhigh-performancewire,cableandconnectorsusedinharshLeadingsupplierofhigh-performancewire,cableandconnectorsusedinharshindustrialenvironments.AcquiredJanuary2011.industrialenvironments.AcquiredJanuary2011.www.tpcwire.comwww.tpcwire.comGlobalmanufacturerandnationalserviceproviderofsecurity,safetyandassetGlobalmanufacturerandnationalserviceproviderofsecurity,safetyandassetprotectionproducts.protectionproducts.AcquiredSeptember2010.AcquiredSeptember2010.www.fireking.comwww.fireking.comGlobaldesigner,manufactureranddistributorofplaygroundandrecreationalGlobaldesigner,manufactureranddistributorofplaygroundandrecreationalproductsandsiteamenitysolutionsforavarietyofendmarkets.AcquiredMarchproductsandsiteamenitysolutionsforavarietyofendmarkets.AcquiredMarch2011.2011.www.buysii.comwww.buysii.comFundIVPlatformInvestmentsBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII2525GlobalGlobalmanufacturermanufacturerandanddistributordistributorofofpartspartsandandaccessoriesaccessoriesforforthethegaming,gaming,amusement,amusement,vendingvendingandindustrialmarkets.AcquiredJune2004.andindustrialmarkets.AcquiredJune2004.www.suzohapp.comwww.suzohapp.comDistributorDistributorofofreplacementreplacementpartspartsandandrelatedrelatedsuppliessuppliesforforthethefoodservicefoodserviceequipmentequipmentmarket.market.AcquiredAcquiredApril2006.DivestedNovember2010.April2006.DivestedNovember2010.PfingstenPartners,L.L.C.Fullservicemarketingfirmprovidingcustomizedsportsandentertainmentprograms,sportstravelFullservicemarketingfirmprovidingcustomizedsportsandentertainmentprograms,sportstravelpackagesandeventticketstocorporateandretailclients.AcquiredJanuary2006.packagesandeventticketstocorporateandretailclients.AcquiredJanuary2006.www.premieresports.comwww.premieresports.comGlobalGlobalmanufacturermanufacturerofofcustomcustomengineeredengineeredinterconnectinterconnectsolutionssolutionsforforthethemedicalmedicaldevice,device,testtestandandinstrumentation,andaerospacemarkets.AcquiredJune2006.DivestedJune2010.instrumentation,andaerospacemarkets.AcquiredJune2006.DivestedJune2010.ManufacturerofpressuresensitiveprescriptionlabelsfortheU.S.retailpharmacymarket.AcquiredManufacturerofpressuresensitiveprescriptionlabelsfortheU.S.retailpharmacymarket.AcquiredJune2004.June2004.DivestedJuly2006.DivestedJuly2006.GlobalGlobalmanufacturermanufacturerandanddistributordistributorofofelectricalelectricalpowerpowerconditioningconditioningequipmentequipmentforforthethemedical,medical,retailretailpoint-of-sale,industrial,andothermarkets.AcquiredSeptember2006.point-of-sale,industrial,andothermarkets.AcquiredSeptember2006.www.powervar.comwww.powervar.comManufacturerManufacturerofofclosetclosetandandhomehomeorganizationorganizationsolutionssolutionsforforthetheresidentialresidentialconstructionconstructionandandremodelingremodelingmarketsAcquiredMarch2007.marketsAcquiredMarch2007.www.closetworks.comwww.closetworks.comDesignerandmanufacturerofupscalecasualoutdoorfurnitureforthespecialtyretailandcommercialDesignerandmanufacturerofupscalecasualoutdoorfurnitureforthespecialtyretailandcommercialmarkets.markets.AcquiredOctober2007.AcquiredOctober2007.www.tropitone.comwww.tropitone.comGlobalmanufacturerofagriculturalimplementsandtractorreplacementpartsforfarm,ranch,andGlobalmanufacturerofagriculturalimplementsandtractorreplacementpartsforfarm,ranch,andrelatedmarkets.AcquiredJune2008.DivestedAugust2010.relatedmarkets.AcquiredJune2008.DivestedAugust2010.Manufacturerofcustom-engineered,metalenclosedbusductsolutionsforthepowergeneration,Manufacturerofcustom-engineered,metalenclosedbusductsolutionsforthepowergeneration,petrochemical,commercialandindustrialmarkets.AcquiredSeptember2008.petrochemical,commercialandindustrialmarkets.AcquiredSeptember2008.www.technibus.comwww.technibus.comNationaldistributorofpartsandcomponentsandproviderofrelatedrepairservicesforaeroderivativegasNationaldistributorofpartsandcomponentsandproviderofrelatedrepairservicesforaeroderivativegasturbineenginesusedinthepowergeneration,industrial,marinepropulsion,andoilandgasmarkets.turbineenginesusedinthepowergeneration,industrial,marinepropulsion,andoilandgasmarkets.AcquiredDecember2008.AcquiredDecember2008.www.apm4parts.comwww.apm4parts.comFullserviceproviderofparty-neutral,outsourcedsettlementadministrationservicesforthehealthcareFullserviceproviderofparty-neutral,outsourcedsettlementadministrationservicesforthehealthcaremarket.AcquiredDecember2008.market.AcquiredDecember2008.www.garretsonfirm.comwww.garretsonfirm.comFundIIIPlatformInvestmentsBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII2626PfingstenPartners,L.L.C.Business-to-businessBusiness-to-businessmediamediacompanycompanyservingservingthethefinancialfinancialservices,services,art,art,andandindustrialindustrialmarkets.markets.AcquiredApril1998.DivestedNovember2006.AcquiredApril1998.DivestedNovember2006.ManufacturerManufacturerofofkitchenkitchenandandbathroombathroomcabinetrycabinetryforforthethenewnewconstructionconstructionandandremodelingremodelingmarkets.markets.AcquiredJune1998.DivestedOctober2003.AcquiredJune1998.DivestedOctober2003.DistributorDistributorofofautomotive,automotive,electronic,electronic,entertainmententertainmentandandgeneralgeneralmerchandisemerchandiseproductsproductstototraveltravelcenters,centers,carcarwashes,washes,massmassmerchants,merchants,convenienceconveniencestores,stores,andandotherotherrelatedrelatedchannels.channels.AcquiredAcquiredMay1999.DivestedMay2004.May1999.DivestedMay2004.CatalogCatalogandandinternetinternetdistributordistributorofofautomotiveautomotiveaftermarketaftermarketproductsproductsforforspecialtyspecialtyvehiclesvehiclesincludingincludingJeep,Porsche,Mercedes,andToyotatruck.AcquiredApril2000.DivestedFebruary2006.Jeep,Porsche,Mercedes,andToyotatruck.AcquiredApril2000.DivestedFebruary2006.Publisherofrecreationalvehicleparkandcampgrounddirectories.AcquiredJanuary1991.DivestedMay1994.Distributorofeducationalsupplies,teachingaids,furnitureandequipmenttoprimaryandsecondaryschoolsandearlylearningcenters.AcquiredMarch1993.DivestedDecember1997.Manufacturerofthermochromicliquidcrystalproductsandirreversiblecolorchangeindicatorsforthemedical,industrial,andconsumerproductsmarkets.AcquiredNovember1992.DivestedDecember1997.Business-to-business magazine publishing company serving the manufacturing and processindustries.AcquiredJune1993.DivestedJanuary1997.Manufactureroffoodandbeverageproductsservingfoodservice,in-storebakeries,contractpackingandprivatelabelretailmarkets.AcquiredMay1991.DivestedJuly1998.FundIandIIPlatformInvestmentsHowdoesPrivateEquitywork?BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII2828PfingstenPartners,L.L.C.FundCyclesNA8.8years9.3years11.0yearsprojectedFundI1.3yrs$26MFundII2.0yrs$100MFundIII2.1yrs$285MFundIV1.0yr $525MLiquidateLiquidateInvestmentInvestmentManageManageInvestmentInvestmentPortfolioPortfolioGenerateInvestmentGenerateInvestmentOpportunitiesOpportunitiesandandProcessTransactionsProcessTransactionsRaiseCapitalRaiseCapitalBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII2929Total2009Transactions:350Total2009Transactions:3501%Closed1%Closed2Platformsand2Add-ons2Platformsand2Add-onsStepI:GenerateInvestmentOpportunitiesIndirectMarketingProgramDirectMarketingProgramHowdowebuycompanies?Total2010Transactions:427Total2010Transactions:4271%Closed1%Closed2Platformsand2Add-ons2Platformsand2Add-onsGenerateInvestmentOpportunitiesGenerateInvestmentOpportunitiesandandProcessTransactionsProcessTransactionsBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII3030StepII:ScreenInvestmentOpportunitiesInvestmentCriteriaInvestmentCharacteristicsHowdowebuycompanies?GenerateInvestmentOpportunitiesGenerateInvestmentOpportunitiesandandProcessTransactionsProcessTransactionsBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII3131Nogeographicpreferenceforadd-onacquisitionsManufacturing,distributionandbusinessservicecompaniesBetween$15and$100millionAllplatformcompaniesmustbeheadquarteredintheUnitedStatesEstablishedandprofitablePrivatecompaniesundergoinganownershiptransition,recapitalizationorrequiringgrowthcapital;Required(aloneorwithacompatibleco-investor)We have not made, nor do we intend to make, direct investments in real estate; natural resource companies; highly regulated businesses such as We have not made, nor do we intend to make, direct investments in real estate; natural resource companies; highly regulated businesses such as banks, insurance companies and utilities; retail businesses; restaurant chains or technology, telecommunications or Internet companies. banks, insurance companies and utilities; retail businesses; restaurant chains or technology, telecommunications or Internet companies. corporatedivestitures;strategicadd-onacquisitions;selectfinancialrestructuringsorturnaroundsEBITDATransactionTypesRevenueGeographicPreferenceControlInvestmentStageIndustrySegmentsTransactionValueBetween$20and$150millionBetween$3and$12millionWhatisthePfingstenPartnersinvestmentcriteria?GenerateInvestmentOpportunitiesGenerateInvestmentOpportunitiesandandProcessTransactionsProcessTransactionsBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII3232StableanddiversecustomerbaseandproductlinesDefensiblemarketpositionCompanyculturecompatiblewith:change,opencommunicationandteam-basedmanagementapproachOpportunitytoatleastdoublenetrevenuesoftheplatformcompanyduringownershipGrossmarginsreflectingvalue-addedproductsorservicesOpportunitiestoreducecostorimproveproductivityRevenueStabilityandConcentrationMarketPositionCultureGrowthGrossMarginsCostImprovementAssetManagementExitOptionsOpportunitiestoimproveworkingcapitalorfixedassetmanagementPotentialformultiplestrategicorfinancialbuyersuponexitMarketPositionGenerateInvestmentOpportunitiesGenerateInvestmentOpportunitiesandandProcessTransactionsProcessTransactionsWhatdowelookforinaninvestment?BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII3333GenerateInvestmentOpportunitiesGenerateInvestmentOpportunitiesandandProcessTransactionsProcessTransactionsStepIII:ProcessTransactionsIndicationofInterestLetterofIntentDueDiligenceFinancingDocumentationCloseHowdowebuycompanies?BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII3434ThreeValueCreationModelsinPrivateEquityBuyLowSellHighFinancialEngineeringBuildaBetterBusinessHowdowecreatevalue?ManageInvestmentPortfolioManageInvestmentPortfolioBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII3535BUILD Strategic ValueOperationalImprovementsProfessionalManagementPracticesGlobalCapabilitiesProfitableBusinessGrowthSELL for Cash toStrategicorFinancialBuyerAt point of acquisition, businesses often lack:CapitalOperatingandfinancialmanagementdepthInfrastructureGlobalvisionandcapabilitiesProfessionalmanagementpracticesStrategic,tacticalandfinancialplanningprocessesAt point of divestiture, businesses are:LargerMoreprofitableMorecompetitiveStrategicallysignificantasaplatform(financialbuyer)oradd-onacquisition(strategicbuyer)TheDifferenceFour to Seven YearsSix to Twelve MonthsBUY Middle Market BusinessesManufacturingDistributionBusinessServicesSix to Twelve MonthsWhatisourinvestmentstrategy?ManageInvestmentPortfolioManageInvestmentPortfolioBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII3636BeginsduringduediligenceCrossFunctionalTeamBasedStrategicPlanObjectivesGrowthCustomersatisfactionEmployeesatisfactionCostmanagementFinancialmanagementVisualmetricsStakeholderalignmentContinuousProcessPlan-Do-Check-ActAssessBusinessMeasureResultsRe-evaluateObjectivesManagementAlignmentExecuteStrategic andTactical PlansDevelopStrategic andTacticalPlansCulturalEconomicWhatisouroperatingmodel?ManageInvestmentPortfolioManageInvestmentPortfolioBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII3737Howdidwecreatevalue?ManageInvestmentPortfolioManageInvestmentPortfolioRepresentsAllRealizedRepresentsAllRealizedTransactionsTransactionsBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII3838Howdoourreturnscomparetoalternativeinvestments?LiquidateLiquidateFundIVintage1991AsofDecember31,2006FundIIVintage1997AsofDecember31,200636.2%36.2%22.3%22.3%NetIRRGrossIRRNetIRRGrossIRRS&P500andRussell2000returndatarepresentshypotheticalIRRsassumingFundinvestorshadinvestedintheS&P500andRussell2000indices(withS&P500andRussell2000returndatarepresentshypotheticalIRRsassumingFundinvestorshadinvestedintheS&P500andRussell2000indices(withdividendsreinvested)ratherthanFund.PurchasesoftheindicesareassumedtobemadeinthesameamountandoccuratthesametimeasFunddividendsreinvested)ratherthanFund.PurchasesoftheindicesareassumedtobemadeinthesameamountandoccuratthesametimeasFundinvestments(includingmanagementfeesandexpenses)andsalesoftheindexareassumedtobemadeatthesametimeasindividualFundportfolioinvestments(includingmanagementfeesandexpenses)andsalesoftheindexareassumedtobemadeatthesametimeasindividualFundportfoliocompanyexits(inproportiontotheamountinvested).companyexits(inproportiontotheamountinvested).Topquartile,medianandlowerquartileprivateequityrepresentNetIRRsfromthe2007InvestmentBenchmarksReport:BuyoutsandOtherPrivateTopquartile,medianandlowerquartileprivateequityrepresentNetIRRsfromthe2007InvestmentBenchmarksReport:BuyoutsandOtherPrivateEquitybyThomsonFinancialasofDecember31,2006forfundswithlessthan$250millionincommittedcapitalformedduring1997.EquitybyThomsonFinancialasofDecember31,2006forfundswithlessthan$250millionincommittedcapitalformedduring1997.BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII3939PfingstenPartners,L.L.C.OverviewCaseStudiesBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII4141CaseStudy:RxLabelTechnologyCorp.Investment Consideration:Investment Consideration:MarketMarketleaderleaderforforthetheU.S.U.S.retailretailpharmacypharmacyprescriptionprescriptionlabellabelmarketmarketGrowingGrowingindustryindustrydrivendrivenbybyananagingagingpopulation,population,stringentstringenthealthcarehealthcareregulationsregulationsandandincreasedincreaseddemanddemandforforlifestylelifestyledrugsdrugssuchasthosetotreathairloss,impotencyandobesitysuchasthosetotreathairloss,impotencyandobesityAttractiveAttractivepurchasepurchasepricepricemultiplemultipleofof4.04.0timestimesadjustedadjustedEBITDAEBITDAforthefiscalyearendedMarch31,2004forthefiscalyearendedMarch31,2004HighmarginnichemarketHighmarginnichemarketGrowthGrowthopportunitiesopportunities(mail(mailorder,order,hospitalshospitalsandandnewnewretailretailpharmacies,pharmacies,includingincludingtwotwoofofthethetoptopthreethreepharmacies,pharmacies,WalgreenWalgreenCo.andRiteAidCorp.)Co.andRiteAidCorp.)RecognizedasthemarketinnovatorwithabroadproductofferingRecognizedasthemarketinnovatorwithabroadproductofferingPatentedPatentedandandpatentpatentpendingpendingtechnologiestechnologiestotoproduceproduceallallthreethreeprimaryprimaryprescriptionprescriptionlabellabeltechnologiestechnologies(simplex,(simplex,duplexduplexandandthermal)thermal)Well-managedWell-managedfacilityfacilitywithwithaastrongstrongplantplantmanagermanagerandandtalentedtalentedworkforceworkforceBusiness:Business:RxRxLabelLabelTechnologyTechnologyCorp.Corp.(“Rx(“RxLabel”)Label”)producesproducespressurepressuresensitivesensitiveprescriptionprescriptionlabelslabelsforformassmassmerchandisersmerchandisers(29%),(29%),grocerygrocerystoresstores(28%),(28%),drugstoresdrugstores(28%),(28%),independentindependentpharmaciespharmaciesandandhospitals,andhospitals,andothercustomers(8%)othercustomers(8%)RxRxLabelLabelwaswasformedformedbybyPfingstenPfingstenandandHilcoHilcoEquityEquityPartners,Partners,L.P.L.P.(“Hilco”)(“Hilco”)totoacquireacquirethethepharmaceuticalpharmaceuticallabelinglabelingassetsassetsofofConvergentConvergentLabelLabelTechnology,Technology,Inc.Inc.RxRxLabelLabelwaswasthethefirstfirstLexmarkLexmarkqualifiedqualifiedmanufacturermanufacturerofofprescriptionprescriptionlabelslabelsandandoneoneofoffewfewconvertersconverterswithwiththethecapabilitycapabilitytotoproduceproduceallallthreethreeprimaryprimaryprescriptionprescriptionlabels:labels:simplex,duplexandthermalrollsimplex,duplexandthermalrollQuick Facts:Quick Facts:Headquarters:Headquarters:Joplin,MOJoplin,MOAcquisitionDate:AcquisitionDate:JuneJune25,200425,2004DivestitureDate:DivestitureDate:July12,2006July12,2006Employees:Employees:110110BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII4242CaseStudy:RxLabelTechnologyCorp.Source of TransactionSource of TransactionPfingstenPfingstenwaswasintroducedintroducedtotothethecompanycompanyononaadirectdirectbasisbasisbybyHilco.Hilco.HilcoHilcoconcludedconcludedititrequiredrequiredananinvestmentinvestmentpartnerpartnerwithwithaafullfullcomplementcomplementofofoperationaloperationalcapabilitiescapabilitiestotomanagemanagethetheoperationaloperationalchallengeschallengesofofcarvingcarvingoutoutthetheRxRxLabelLabelbusinessfromitsdistressedparentbusinessfromitsdistressedparentAdd-on Acquisitions:Add-on Acquisitions:NoneNoneValue CreationValue CreationFollowingFollowingthetheacquisition,acquisition,PfingstenPfingstenbuiltbuiltRxRxLabelLabelintointoaastandalonebusinesswithinsixmonthsby:standalonebusinesswithinsixmonthsby:qqDoublingthesizeoftheJoplin,MOfacilityDoublingthesizeoftheJoplin,MOfacilityqqConsolidatingConsolidatingthetheTampa,Tampa,FLFLproductionproductionlineslinesintointotheJoplin,MOfacilitytheJoplin,MOfacilityqqCreatinganewstand-aloneMISsystemCreatinganewstand-aloneMISsystemqqHiringaseniormanagementteamHiringaseniormanagementteamFosteredFosteredaacontinuouscontinuousimprovementimprovementcultureculturebybytrainingtraining66TeamTeamLeaders:Leaders:dailydailycommunicationcommunicationbetweenbetweenmanagementmanagementandandworkforce;workforce;safetysafetyinitiatives;initiatives;rewardsrewardsandandmeritmeritbasebasecompensationprogramscompensationprogramsDuringDuringourourtwotwoyearyearownership,ownership,thethecompanycompanygeneratedgeneratedrevenueandEBITDAgrowthof37%and57%,respectivelyrevenueandEBITDAgrowthof37%and57%,respectivelyDivestitureDivestitureRxRxLabelLabelwaswassoldsoldtotoCenveo,Cenveo,Inc.Inc.(NYSE:CVO),(NYSE:CVO),aastrategicbuyer,onJuly12,2006strategicbuyer,onJuly12,2006Investment Investment Return Return Summary Summary ($ ($ in in thousands)thousands)BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII4343CaseStudy:TSECompanies,L.L.C.Investment Consideration:Investment Consideration:Attractivenichepositioninahigh-growthmedicalmarketAttractivenichepositioninahigh-growthmedicalmarketEntrenchedEntrenchedrelationshipsrelationshipswithwithblue-chip,blue-chip,medicalmedicalcustomerscustomers(e.g.(e.g.Medtronic,St.JudeMedicalandGEHealthcare)Medtronic,St.JudeMedicalandGEHealthcare)BroadBroadproductproductofferingofferingwithwithmediummediumtotohighendhighendcustomcustomengineeredapplicationsrequiringtechnicalexpertiseengineeredapplicationsrequiringtechnicalexpertiseConsistentConsistentgrossgrossmarginsmarginsandandEBITDAEBITDAmarginsmarginsaveragingaveragingapproximatelyapproximately30%30%andand10%,10%,respectively,respectively,withwithsignificantsignificantroomroomforimprovementforimprovementHighlyHighlyscalablescalablebusinessbusinessmodelmodelwithwithpotentialpotentialtotoexpandexpandbybyaddingaddingsalessalesandandmarketingmarketingresourcesresourcesininnewnewgeographies;geographies;addingaddingengineeringengineeringresourcesresourcestotoimproveimprovefront-endfront-endproductproductdesigndesignandandprototypingprototypingcapabilities,capabilities,improvingimprovingdistributiondistributionmarginsmarginsthroughthroughPfingstensPfingstensdirectdirectsourcingsourcingrelationshipsrelationshipsoverseas;overseas;andandimprovingimprovingdatadatagathering,gathering,measurementmeasurementandandwarehousingwarehousingprocessesprocessesTargetedadd-onacquisitionopportunitiesTargetedadd-onacquisitionopportunitiesBusiness:Business:TSETSECompanies,Companies,L.L.C.L.L.C.(“TSE”)(“TSE”)manufacturesmanufacturesandanddistributesdistributescustomcustomengineeredengineeredinterconnectinterconnectproductsproductsforforaavarietyvarietyofofmissionmissioncriticalcriticalapplications,applications,specializingspecializinginincustomcustommoldedmoldedwirewireandandcablecableproductsproductsforforpatientcriticalpatientcriticalmedicalmedicaldevicesdevicesandandmeasurementmeasurementinstrumentation.instrumentation.TSETSEsellssellsitsitsproductsproductstotocustomerscustomersthroughthroughaavarietyvarietyofofendendmarkets,markets,including:including:medicalmedical(71%),(71%),testtestandandinstrumentation(14%)andaerospaceandother(15%)instrumentation(14%)andaerospaceandother(15%)TSETSEcompetescompeteswithinwithinthethebroaderbroaderinterconnectinterconnectcomponentscomponentsindustry,industry,ahighlyfragmentedmarketwithover1,500competingfirmsahighlyfragmentedmarketwithover1,500competingfirmsQuick Facts:Quick Facts:Headquarters:Headquarters:Arlington,MNArlington,MNAcquisitionDate:AcquisitionDate:June28,2006June28,2006DivestitureDate:DivestitureDate:June1,2010June1,2010Employees:Employees:344344BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII4444CaseStudy:TSECompanies,L.L.C.Source of TransactionSource of TransactionPfingstenPfingstenwaswasintroducedintroducedtotothethecompanycompanyononananindirectindirectbasisbasisbybyFranklinFranklinCapitalCapitalPartners,Partners,aaMinneapolis-basedMinneapolis-basedmiddle-middle-marketinvestmentbankmarketinvestmentbankAdd-on Acquisitions:Add-on Acquisitions:InnovativeInterconnectTechnologies,Inc.InnovativeInterconnectTechnologies,Inc.Beaverton,ORBeaverton,ORd/b/aConnect-Techd/b/aConnect-TechValue CreationValue CreationFocusedFocusedTSETSEonontherapeutictherapeutic(i.e.,(i.e.,non-discretionary)non-discretionary)segmentssegmentsofofthethemedicalmedicaldevicedeviceindustry,industry,includingincludingneurostimulationandcardiovascularmarketsneurostimulationandcardiovascularmarketsCreatedCreatedcustomercustomerfocusfocusteamsteamswithwithcrosscrossfunctionalfunctionaldisciplines,disciplines,responsibleresponsibleforformanagingmanagingcustomerscustomersrequirementsrequirementsfromdevelopmentthroughfullscaleproductionfromdevelopmentthroughfullscaleproductionFormalizedFormalizedcontinuouscontinuousimprovementimprovementprocessprocessthroughthroughopeningopeningaa“learning“learningcenter”,center”,aafacilityfacilityusedusedbybythetheContinuousContinuousImprovementTrainingandDevelopmentteamsImprovementTrainingandDevelopmentteamsTSETSEaddedaddedmanufacturingmanufacturingatatitsitsTaiwanTaiwanfacilityfacilityandandcreatedcreatedaadetailedplantoestablishaChinesefacilitydetailedplantoestablishaChinesefacilityAcquiredAcquiredConnect-TechConnect-Techtotoexpandexpandfinefinewirewiremanufacturingmanufacturingcapabilities,capabilities,servingservingaa$350$350millionmillionmarketmarketforformedicalmedicalultrasoundcablesultrasoundcablesDivestitureDivestitureTSETSEwaswassoldsoldtotoAMETEK,AMETEK,Inc.Inc.(NYSE:(NYSE:AME),AME),aaleadingleadingglobalglobalmanufacturermanufacturerofofelectronicelectronicinstrumentsinstrumentsandandelectro-mechanicalelectro-mechanicaldevicesdeviceswithwith20092009revenuerevenueofof$2.1$2.1billionbillionInvestment Investment Return Return Summary Summary ($ ($ in in thousands)thousands)BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII4545CaseStudy:SpeeCoCompanies,L.L.C.Investment Consideration:Investment Consideration:Attractivenichepositioninahighlyfragmented,growingmarketAttractivenichepositioninahighlyfragmented,growingmarketHighlyHighlyscalablescalablebusinessbusinessmodelmodelwithwithpotentialpotentialtotoexpandexpandthroughthroughnewproductintroductionsandexpansionofdistributionchannelsnewproductintroductionsandexpansionofdistributionchannelsLongstandingLongstandingcustomercustomerrelationshipsrelationshipsincludingincluding50+50+yearsyearswithwithTractorSupplyCompanyTractorSupplyCompanyHigh-caliberHigh-calibermanagementmanagementteamteamandandestablishedestablishedbusinessbusinessinfrastructureinfrastructureAsiansourcingcapabilitiesAsiansourcingcapabilities15yearsofuninterruptedrevenueandEBITDAgrowth15yearsofuninterruptedrevenueandEBITDAgrowthTargetedadd-onacquisitionopportunitiesTargetedadd-onacquisitionopportunitiesBusiness:Business:SpeeCoSpeeCoCompanies,Companies,L.L.C.L.L.C.(“SpeeCo”)(“SpeeCo”)isisaaleadingleadingglobalglobalmanufacturermanufacturerandandsuppliersupplierofofbrandedbrandedandandprivateprivatelabellabelagriculturalagriculturalimplementsimplementsandandtractortractorreplacementreplacementpartspartsforforthethefarm,farm,ranchranchandandrelatedrelatedmarkets.markets.SpeeCosSpeeCosproductsproductsincludeincludeloglogsplitterssplitters(51%),(51%),accessories(35%),diggers(7%),andOEMparts(7%)accessories(35%),diggers(7%),andOEMparts(7%)TheThecompanycompanyisisaapartpartofofaalarge,large,growinggrowingandandhighlyhighlyfragmentedfragmentedagriculturalagriculturalmachinerymachineryandandpartspartsmarket,market,withwithproductproductdemanddemandprimarilyprimarilydrivendrivenbybyruralruralpopulationpopulationgrowth,growth,energyenergypricespricesandandbybythetheinstalledbaseandageoftractorsandimplementsinstalledbaseandageoftractorsandimplementsQuick Facts:Quick Facts:Headquarters:Headquarters:Golden,COGolden,COAcquisitionDate:AcquisitionDate:June30,2008June30,2008DivestitureDate:DivestitureDate:August10,2010August10,2010Employees:Employees:134134BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII4646CaseStudy:SpeeCoCompanies,L.L.C.Source of TransactionSource of TransactionPfingstenPfingstenwaswasintroducedintroducedtotothethecompanycompanyononananindirectindirectbasisbasisbybySt.St.CharlesCharlesCapital,Capital,L.L.C.,L.L.C.,aaDenver-basedDenver-basedmiddlemiddlemarketmarketinvestmentbankinvestmentbankAdd-on Acquisitions:Add-on Acquisitions:NoneNoneValue CreationValue CreationFollowingFollowingthetheacquisition,acquisition,SpeeCoSpeeCoincreasedincreasedAsianAsiansourcing,sourcing,hiredhiredananOEMOEMSalesSalesRepresentativeRepresentativeandandexpandedexpandedproductproductofferingthroughnewproductdevelopmentofferingthroughnewproductdevelopmentSpeeCoSpeeCowaswasnamednamedSeasonalSeasonalSupplierSupplierofofthetheYearYearbybyTractorTractorSupplyandCategorySupplieroftheYearbyDo-It-BestSupplyandCategorySupplieroftheYearbyDo-It-BestHiredHirednewnewCFOCFOtotoupgradeupgradefinancialfinancialreportingreportingandandsystemssystemsincludingnewwarehouseinventorymanagementsystemincludingnewwarehouseinventorymanagementsystemEstablishedEstablishednineninecontinuouscontinuousimprovementimprovementteams,teams,providedprovidedtrainingtrainingtotonearlynearly10%10%ofofthetheworkforceworkforcethroughthroughPfingstenPfingstentrainingprogramstrainingprogramsDivestitureDivestitureSpeeCoSpeeCowaswassoldsoldtotoBlountBlountInternational,International,Inc.Inc.(NYSE:(NYSE:BLT),BLT),aaleadingleadingmanufacturer,manufacturer,marketermarketerandanddistributordistributorofofreplacementreplacementparts,parts,equipmentequipmentandandaccessoriesaccessoriesforforthetheglobalglobalforestry,forestry,lawnlawnandandgarden,garden,andandconstructionconstructionindustrieswith2009revenueof$500millionindustrieswith2009revenueof$500millionInvestment Investment Return Return Summary Summary ($ ($ in in thousands)thousands)BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII4747CaseStudy:AllPointsFoodserviceParts&SuppliesInvestment Consideration:Investment Consideration:Broadproductofferingwithover9,000stockandnon-stockitemsBroadproductofferingwithover9,000stockandnon-stockitemsAttractivenichepositioninahighlyfragmented,growingmarketAttractivenichepositioninahighlyfragmented,growingmarketConsistentgrossmarginsaveraging35%Consistentgrossmarginsaveraging35%HighlyHighlyscalablescalablebusinessbusinessmodelmodelwithwithpotentialpotentialtotoexpandexpandbybyaddingaddingsalessalesandandmarketingmarketingresources,resources,improvingimprovingdistributiondistributionoperationsoperationsandandaddingaddingmanagementmanagementresourcesresourcesacrossacrossfunctionalfunctionalareasareasOpportunityOpportunitytotobroadenbroadenproductproductofferingofferingviaviaincreasedincreasedfocusfocusononrefrigerationandplumbingcategoriesrefrigerationandplumbingcategoriesStrongStrongreputationreputationamongamongtoptopcustomerscustomerswithwithaalowlowcustomercustomerconcentrationconcentrationRecession-resistantRecession-resistantmodelmodeldueduetoto100%100%replacementreplacementpartspartsnaturenatureofbusinessesofbusinessesTargetedadd-onacquisitionopportunitiesTargetedadd-onacquisitionopportunitiesBusiness:Business:ConsolidatedConsolidatedCommercialCommercialControls,Controls,L.L.C.L.L.C.d/b/ad/b/aAllPointsAllPointsFoodserviceFoodservicePartsPartsandandSuppliesSupplies(“AllPoints”)(“AllPoints”)isisaaleadingleadingdistributordistributorofoffoodservicefoodserviceequipmentequipmentreplacementreplacementpartspartsandandrelatedrelatedsupplies,supplies,primarilyprimarilyforforcookingcookingandandwarmingwarmingequipmentequipmentasaswellwellasasplumbing,plumbing,refrigerationandware-washingequipmentrefrigerationandware-washingequipmentQuick Facts:Quick Facts:Headquarters:Headquarters:MountProspect,MountProspect,ILILAcquisitionDate:AcquisitionDate:April28,2006April28,2006DivestitureDate:DivestitureDate:November30,2010November30,2010Employees:Employees:204204BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII4848CaseStudy:AllPointsFoodserviceParts&SuppliesSource of TransactionSource of TransactionPfingstenPfingstenwaswasintroducedintroducedtotothethecompanycompanyononaadirectdirectbasisbasisbybyitsitsretainedretainedbusinessbusinessbroker,broker,DinanDinan&CompanyCompanyananinvestmentinvestmentbankingserviceprovidertotheM&AindustrybankingserviceprovidertotheM&AindustryValue CreationValue CreationFollowingFollowingthetheacquisition,acquisition,PfingstenPfingstenhiredhiredseniorseniormanagementmanagementpersonnel,personnel,includingincludingaanewnewCEO,CEO,CFO,CFO,VPVPofofSales,Sales,PurchasingManager,andITManagerPurchasingManager,andITManagerInstalledInstallednewnewmanagementmanagementinformationinformationsystems,systems,telephonetelephonesystemandwebsitesystemandwebsiteModernizedModernizedheadquartersheadquartersthroughthroughaarelocationrelocationandandexpandedexpandedwestcoastdistributionfacilitywestcoastdistributionfacilityDoubledDoubledthethepartspartsproductproductoffering,offering,launchedlaunchedaarefrigerationrefrigerationpartscatalog,andestablishedanoutboundsalescallcenterpartscatalog,andestablishedanoutboundsalescallcenterAcquiredAcquireddirectdirectcompetitor,competitor,InternationalInternationalCommercialCommercialSupplySupply(“ICS”),(“ICS”),moremorethanthandoublingdoublingsalessalesandandcreatingcreatingaanationalnationaldistributiondistributionplatform.platform.IntegrationIntegrationofofICSICSacquisitionacquisitionresultedresultedininover$3.2millionofintegrationcostsavingsover$3.2millionofintegrationcostsavingsAcquisitionAcquisitionofofTundraTundraSpecialtiesSpecialtiesprovidedprovidedAllPointsAllPointswithwithimmediateimmediateaccessaccesstotoend-usersend-usersandandfoodservicefoodserviceoperators.operators.IntegrationIntegrationsavingssavingsofof$1.5$1.5millionmillionachievedachievedwithinwithinsixsixmonthsmonthsofacquisitionofacquisitionTrainedTrained1111continuouscontinuousimprovementimprovementTeamTeamLeadersLeadersthroughthroughPfingstentrainingprogramPfingstentrainingprogramDivestitureDivestitureAllPointsAllPointswaswassoldsoldtotoKRGKRGCapitalCapitalPartners,Partners,L.L.C.,L.L.C.,aaDenver-basedDenver-basedprivateprivateequityequityinvestmentinvestmentfirmfirmwithwithnearlynearly$5billionofcapitalundermanagement$5billionofcapitalundermanagementAdd-on Acquisitions:Add-on Acquisitions:InternationalCommercialSupplyCorporation,L.L.C.InternationalCommercialSupplyCorporation,L.L.C.Winsted,CTWinsted,CTTundraSpecialties,Inc.TundraSpecialties,Inc.Boulder,COBoulder,COInvestment Investment Return Return Summary Summary ($ ($ in in thousands)thousands)PreparingforacareerinPrivateEquityBUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII5050PreparingforaCareerinPrivateEquityForeignExchangeForeignExchangeBusinessEthicsBusinessEthicsInvestmentTheoryInvestmentTheoryEconomicsEconomicsMacroeconomicsMacroeconomicsMicroeconomicsMicroeconomicsAccountingAccountingFinancialReportingFinancialReportingManagerialAccountingManagerialAccountingAlgebraAlgebraStatisticsStatisticsNecessaryCourseworkMarketingMarketingCorporateManagementCorporateManagementOperationsManagementOperationsManagementTradeFinanceTradeFinanceSuggestedAdditionalCourseworkTheoryofinterest,presentTheoryofinterest,presentvaluesandfuturevaluesvaluesandfuturevaluesCorporateFinanceCorporateFinanceIntroductoryIntroductoryCasestudiesCasestudiesFinancialMarketsFinancialMarketsFinancialStatementFinancialStatementAnalysisAnalysisToolsMicrosoftOfficeSuite(Excel,PowerPoint,Word,Outlook)MicrosoftOfficeSuite(Excel,PowerPoint,Word,Outlook)ResearchDatabases(OneSource,Hoovers,ABI/INFORM)ResearchDatabases(OneSource,Hoovers,ABI/INFORM)BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII5151PreparingforaCareerinPrivateEquityIndustryresearchIndustryresearchFinancialmodelingFinancialmodelingPortfoliomanagementsupportPortfoliomanagementsupportTransactiongenerationsupportTransactiongenerationsupportInvestorreportingsupportInvestorreportingsupportActivitiesConcentrationinfinancewithextensiveaccountingcourseworkConcentrationinfinancewithextensiveaccountingcourseworkPriorworkexperienceininvestmentbanking,commercialPriorworkexperienceininvestmentbanking,commercialbankingoraccountingbankingoraccountingExceptionalworkethicExceptionalworkethicKeenanalyticalcapabilitiesKeenanalyticalcapabilitiesIntellectualcuriosityIntellectualcuriosityStrongverbalandwrittencommunicationskillsStrongverbalandwrittencommunicationskillsQualificationsWhatdoesanentry-levelfinancialanalystdo?BUILDINGBETTERBUSINESSESBUILDINGBETTERBUSINESSESII5252PreparingforaCareerinPrivateEquityFourbookfictionalseriesbyStephenFrey:FourbookfictionalseriesbyStephenFrey:The ChairmanThe ChairmanThe Power BrokerThe Power BrokerThe ProtgThe ProtgThe SuccessorThe SuccessorKing of Capital King of Capital (CareyandMorris)(CareyandMorris)AnythingbyJohnC.MaxwellAnythingbyJohnC.MaxwellHow to Win Friends and Influence PeopleHow to Win Friends and Influence People(DaleCarnegie)(DaleCarnegie)FunReadingLeadership,EthicsandPeopleSkillsIndustryPublicationsPrivate Equity AnalystPrivate Equity Analyst(newsletter)publishedbyDowJones(newsletter)publishedbyDowJonesGalantes Venture Capital and Private Equity Directory Galantes Venture Capital and Private Equity Directory publishedpublished byby DowJonesDowJonesBuyouts Buyouts (newsletter)publishedbyThompsonFinancial(newsletter)publishedbyThompsonFinancialVentureEconomicsresearchreportsandindustrystatisticsVentureEconomicsresearchreportsandindustrystatisticsTextBooksIntroduction to Private Equity Introduction to Private Equity (Demaria)(Demaria)Private Equity Private Equity (Cendrowski,Martin,PettroandWadecki)(Cendrowski,Martin,PettroandWadecki)Handbook of Alternative Assets Handbook of Alternative Assets (Anson)(Anson)Inside Private Equity Inside Private Equity (Kocis,Bachman,LongandNickels)(Kocis,Bachman,LongandNickels)Private Equity as an Asset Class Private Equity as an Asset Class (FraserSampson)(FraserSampson)Principles of Private Firm ValuationsPrinciples of Private Firm Valuations(FeldmanFeldman)The Masters of Private Equity and Venture Capital The Masters of Private Equity and Venture Capital (Finkel)(Finkel)The Private Equity Edge The Private Equity Edge (Laffer,HassandPryor)(Laffer,HassandPryor)Pioneering Portfolio Management Pioneering Portfolio Management (Swensen)(Swensen)