cxo executive program introduction · justin ishbia managing partner ryan kelley partner mike...

Shore Capital Partners

CXO Executive Program Introduction

Shore Capital Partners

One East Wacker, Suite 2900

Chicago, Illinois 60601

Confidential & Proprietary

Summer 2020

Shore Capital PartnersShore Capital Partners 2

Presentation Agenda

I. Introduction to Shore Capital Partners

II. CXO Executive Program Overview

III. Appendix

− Southern Veterinary Partners Case Study


Firm Overview

80+Operating

Partners

26Platform

Investments

Since Inception

$1BAssets Under

Management

7Successful Exits

Shore leverages our focused, proactive niche expertise to prioritize

sectors for investment; we have executed against our targeted

sectors across more than 250 investments over the last 11 years

We have a large team comprised of 40 dedicated internal

professionals supported by more than 80 operating partners focused

on driving differentiated value across our portfolio

We have raised over $1 billion across a broad and elite group of

institutional investors over three healthcare funds, one food &

beverage fund, and numerous other special purpose vehicles

Shore Capital Partners aspires to be the premier micro-cap

investment firm

We drive transformational growth through our post-investment

services evidenced by elite return profiles across seven successful

exits


The Shore Capital Partners TeamIn

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en

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eam

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eam

, S

ou

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am

& F

un

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Justin Ishbia

Managing Partner

Ryan Kelley

Partner

Mike Cooper

Partner

John Hennegan

Partner

Don Pierce

Partner

Chris Mioton

Partner

Richard Boos

Partner

Michael Burcham

Exec. Partner

Paul Rutledge

Exec. Partner

Tom Smithburg

Vice President

Rory Kenny

Vice President

Matt Sweeney

Vice President

Jeff Smith

Vice President

Jeff Smart

Vice President

Mickey Jiang

Vice President

Jon Tomberlin

Sr. Associate

Cole Michalek

Associate

Adam Boudjemai

Associate

Max Martineau

Associate

Colin North

Associate

Alex Fordham

Analyst

John Hazen

Analyst

Tim Sharky

Analyst

Jack Harrington

Analyst

Sarah Hirsch

CRCO1

Erik Hannemann

SRT, Director

Chase Hall

SRT, Manager

Sam Ross

SRT, Associate

Nick Wisniewski

SRT, Director

Linda Bloom

CFO, IR

Jeff Williams

COO

Keith Mika

Asst. Controller

Hailie Schroll

Exec. Asst.

Dawn Norris

Exec. Asst.

Abby Sechrist

Head of Events &

Exec. Asst.

Adam Werder

CMO

Craig Shelton

Chief Talent

Officer

Nick DeSalvo

Analyst

Dave Clancy

Analyst

Mike Oleferchik

Sr. Associate

Riley Hall

SRT, Director

Eliza Nagle

SRT, CXO

Paul Coyne

SRT, CXO

Saanchi Bhatia

Analyst3Sam Mendenhall

Analyst3Richard Rolapp

Analyst3

Malia LaFleur

PDM2

Sam Thornton

PDM2

Alex Nevill

Sr. Associate

Ankeet Patel

Sr. Associate

Sabrina Saracino

Talent Analyst

(1) Chief Revenue Cycle Officer

(2) Partnership Development Manager

(3) Joining Summer 2021

Healthcare Team Food & Beverage Team

Shore Resource Team Sourcing Team

Generalist

Fund Operations

Shore Capital PartnersShore Capital Partners

Existing Portfolio Summary

5

Note: Dates represent date of platform investment.

(1) Southern Veterinary Partners’ inception date was October 3, 2014; the platform was subsequently recapitalized via a special purpose

vehicle by Shore on May 4, 2018.

Pre-Fund: Home

Infusion

Realized Investment

Pre-Fund: Laboratory

Services

Realized Investment

Pre-Fund: Physical

Therapy

Realized Investment

Pre-Fund: Urgent Care

Realized Investment

Pre-Fund: Pediatric

Therapy

Realized Investment

HC Fund I: Veterinary

Services

Realized Investment (1)

HC Fund I: Medical

Products

February 20, 2015

HC Fund I: Dental

Services

April 7, 2015

HC Fund I: Autism

Therapy

Realized Investment

HC Fund I: Concierge

Medicine

November 2, 2015

HC Fund I: Interven-

tional Radiology

May 3, 2016

HC Fund I: Wound

Care

January 20, 2017

HC Fund I: Eye Care

Services

February 15, 2017

HC Fund II: Autism

Therapy II

June 1, 2017

HC Fund II: Urgent

Care II

October 13, 2017

HC Fund II: Addiction

Treatment

October 20, 2017

HC Fund II: Veterinary

Services II

October 27, 2017

HC Fund II: Payor

Services

October 31, 2017

HC Fund II: LTC

Ancillary Services

August 15, 2018

HC Fund II: Urgent

Care III

August 24, 2018

HC Fund II: ENT &

Allergy

March 1, 2019

HC Fund II: Physical

Therapy II

April 16, 2019

HC Fund III:

Orthodontic Services

June 20, 2019

F&B Fund I: Baked

Goods

September 16, 2019

HC Fund III: Medical

TPA

November 4, 2019


Current Portfolio & Target Sectors

Current Investments Realized Investments

6

Target

Sectors

Healthcare Food & Beverage

› Artisan & BFY Baked Goods

› Contract Beverage

Manufacturing

› Fiber-Based Packaging

› Flexible Food Packaging

› Food Safety & Water Testing

› Nutraceuticals

› Outsourced Services

› Pet Food Co-Man

› Specialty Distribution

› Specialty Ingredients

Platform

Investments

› Dental Service Organizations

› Infection Control / Sterilization

› Medical Device Outsourcing

› Oral Surgery

› Orthopedic Services

› Outpatient Mental Health

› Pharma Services

› Physical Therapy

› Podiatry

› Specialty Staffing Services

› Urology

› Women’s Health – OB/GYN

› HR & Benefits Services - PEO

› Insurance Services - Captive

Managers

› Pain Management


Several SCP Companies are Led by Female CEOs and Executives

Melanie

Michael

Allison

Therwhanger

Laura Miller

Dr. Parul Khator

Chryssy MoorKristy

Rohwedder

Hilarie Aitken

Erica Hauser (CXO)

Eliza Nagle (CXO)

(Match Pending)


The “Shore Way”

• Upon consummation of a partnership, Shore works with management to implement tried

and tested analytical and operational tools

Rob

ust

Ma

na

ge

ment

Str

uctu

re

Bu

sin

ess

De

ve

lop

ment

Le

ad

ers

hip

Fin

an

cia

l

Rep

ort

ing &

Me

tric

Mgm

t.

Why We Do It

• Forum for senior management to discuss

progress with Shore Capital

• Access to industry experts and their advice

on growing the business

• Set organizational strategy and discuss

major opportunities or obstacles

• Enables management to focus on their core

competency of running the business

• Increases success rate of de novos

• Drives organic growth

• Generate early interest from likely buyers

• Real-time metric management

• Detailed analysis of current company trends

• Anticipation of future cash needs

• Detailed financial reporting by location

• Agreed upon financial expectations

• Weekly phone calls between management

and portfolio manager

• Interim phone calls with experienced

independent board members

• Quarterly board dinners and meetings

Shore Process and Procedures

• SCP acts as the outsourced deal sourcing

and acquisition team

• Creation of repeatable de novo process

• Development of sales and marketing team

• Exit planning & meeting with potential buyers

• Daily visit and cash dashboard

• Weekly dashboard focused on KPIs (1)

• Weekly 13-week cash flow forecasts

• Monthly accrual financial reporting package

• Annual budget

Example

50

75

100

A B C D E F G

Sco

re

Market

Target

Markets

Visits v. Budget 2,453 10.0%

Mature + Emerging

110.0%

0%

50%

100%

200%

(1) Key Performance Indicators.


The SRT is responsible for

implementing the “Shore

Playbook” of standardized

processes and procedures

upon the consummation of

a partnership to enhance

portfolio company

infrastructure for growth.

Infrastructure

Enhancement

1Continued Support

4

Once the partnership is

finalized, 1-2 SRT members

will be on-site at the

company’s main office at

least once a week for the

entirety of the 100 Day Plan

On-Site Assistance3

The SRT develops a 100

Day Plan that is a mutually

agreed upon list of post-

close action items to allow

new portfolio companies to

hit the ground running

towards a value creation

plan.

100 Day Plan2

After the completion of the

100 Day Plan, the SRT is

available to provide hands-

on support on selected

strategic projects for

portfolio companies

The SRT is a group of operating professionals within Shore Capital offering flexible support to portfolio companies

SRT Value Adds

The SRT strives to build and strengthen scalable, repeatable processes for growth at Shore Capital portfolio companies by:

✓ Streamlining company onboarding

✓ Implementing and refining SCP Standard Operating Procedures (“SOPs”)

✓ Supporting portfolio company management in implementing value creation initiatives

“The 100-day process was a well-organized, in-depth look into many of the key functions of the business. It was extremely

helpful as many of the initiatives were focused in areas of the company that we did not have the time or internal resources to

complete such a thorough review prior to the deal closing”

- Chad Smith, BrightView CEO / Founder

The Shore Resource Team “SRT”


We Are Growth Investors

a) Medical products and concierge medicine investments not illustrated above and analysis only encompasses healthcare

provider portfolio companies.

• We invest in infrastructure and team members to support growth

• Every investment that Shore Capital makes is, at its core, a partnership with the employees

‒ In healthcare, the “assets” are the team members and the company’s culture

Microcap Multi-Site Healthcare Employee Growth

Job Growth at SCP Microcap Multi-Site CompaniesMicrocap Multi-Site Platform Growth Metrics

Current Investment

Growth

Exited Investment

Growth

▲489%Employee Growth

▲602%Revenue Growth

▲823%Employee Growth

▲529%Revenue Growth

2,678%2,500%

1,563% 1,555%

950% 858%

756%

533%

275% 231%

153%

47% 0%

200%

400%

600%

800%

1,000%

1,200%

1,400%

1,600%

Jo

b G

row

th S

inc

e P

art

ne

rsh

ip %


Shore Capital Partners’ Commitment to Growth

(1) According to Pitchbook’s 2019 League Tables – pitchbook’s quoted 45 deals completed which failed to account for final acquisitions made

near year end

* Assets Under Management

Audax Group Shore CapitalPartners

HarbourVestPartners

Genstar Capital Abry Partners The CarlyleGroup

KKR Insight Partners SummitPartners

HarvestPartners

87

64

58

64

45 4542 41 41

38

$26B $1B $68B $17B $13B $224B $208B $20B $19B $7B

Deals

Clo

sed

in

2019

AUM*

• Out of nearly 2000 private equity firms in the United States, Shore Capital Partners was the

2nd most active firm in 2019, outcompeting hundreds of much larger firms(1)

– This is a testament to Shore Capital’s commitment to being the premier microcap investor and first choice for

entrepreneurs seeking a partner for growth


Highly Successful Track Record – Top 1% of Peer Group

Note: Calculated as the weighted average internal rate of return (“IRR”) percentage across all exits by return.

Source: Benchmark data provided by RCP Advisors, an institutional limited partner across many private equity funds. Their data is drawn from

fundraising and diligence documents produced by general partners and public information. Their database contains over 3,400 managers and

more than 8,300 funds.

Company

Entry /

Exit Date

Sector

Shore Capital Exited Investment Performance (Average 5.9x CoC / 96% IRR(1))

Davison

Physical

Therapy

May 2012

August 2013

3.0x CoC / 129% IRR

Home Infusion

July 2010

October 2013

3.8x CoC / 64% IRR

3.8x

Urgent Care

December 2012

August 2016

7.3x CoC / 81% IRR

7.3x

Laboratory Services

September 2011

October 2016

3.8x CoC / 30% IRR

3.9x

Behavioral Health &

Special Ed. Solutions

May 2014

December 2017

7.1x CoC / 91% IRR

7.2x

Veterinary Services

October 2014

May 2018

5.4x CoC / 119% IRR

5.4x

Autism Services

August 2015

March 2020

9.4x CoC / 83% IRR

9.4x

Investment Return Investment Return Investment Return Investment Return Investment Return Investment Return Investment Return

3.0x

Return

Profile

Distribution of Cash-on-Cash Returns by Private Equity Funds Since 2010

Returns

vs.

Private

Equity

Industry SCP Returns in

Top 1% of peer group


Presentation Agenda



III. Appendix



CXO Executive Program Overview

• Mission: The CXO Executive Program seeks to place highly motivated and hungry young

executives into Chief of Staff positions throughout the country with the mentorship and

support needed to succeed, mature and grow into C-level executives

– You want to run your own company one day, but you need more mileage first

Strategy & GrowthBuild and lead execution of growth plan

OperationsLead select company projects to better serve growing customer base

Strategic FinancePartner with other executives to analyze and optimize strategic project recommendations and next steps

Potential Chief of Staff Duties

We’re Looking for the Hungriest Young Executives

You


How the CXO Executive Program Can Boost Your Career

• The CXO Executive Program will boost your career and serve as a natural next step to

apply the foundational skills built early in your career with the lessons that you’ve learned

in Business School

Gro

wth

Time

Early Career Stage:

• Worked hard

• Built foundational skills

Business School:

• Exposure to business

and leadership lessons

• Case study exercises

CXO Program:

• Start as a Chief of Staff,

opportunity to grow to C-suite

with high performance

• Roles dependent on size of

portfolio company

• Strong performers will have the

opportunity to be backed by

Shore multiple times

Established Executive:

• CXO program is a fast

track to c-suite executive

/ leadership positions

(possibly including CEO)


Who We’re Looking For

• The ideal CXO candidate is analytical and process oriented with the ability to identify and

execute on improvement opportunities

– Top candidates will have the horsepower to do the work, the motivation to succeed and weather challenges,

and the fit to become a valued member of the team

– Ability to solve problems you’ve never solved before

– Flexibility to relocate to anywhere in the United States is a must

Ideal CXO Candidate

Curious /

Asks

Questions

Relevant

Prior

Experience

Hungry

Anticipates

Next Steps

Problem

SolverAnalytical

Project

ManagerTeam Leader

Prioritize

Multiple

Projects


Key CXO Chief of Staff Responsibilities

Note: Some job responsibilities may vary by portfolio company

Executive

Sessions

Join executive team meetings on a weekly basis and Board of Directors meetings on a

quarterly basis to provide insights and recommendations

Leadership &

Strategy

As an instrumental part of the senior team, provide leadership toward additional value-

added activities and support operational and departmental excellence

Business

Development

Lead / assist with execution of growth strategies (sales, add-ons, or new store

development, as needed); this includes due diligence, capital expenditure management,

key systems implementation, site selection, and lease review / negotiation

Operational

Execution

Utilize metrics, dashboards, operational checklists and key performance indicators to drive

optimal team performance; hold weekly meetings with middle managers to identify key

operational insights and drive improvements where needed

Drive

Innovation

Provide leadership toward additional value-added activities and support operational and

departmental excellence

People

Management

Recruit, train, and manage key middle managers (e.g. Regional Managers); ensure middle

managers have all staff members complete necessary training, continuing education, and

compliance requirements

Represent

Company

Through personal example, establish the style and approach which will characterize the

company’s dealings with the marketplace

Strategic

Financial

Partner

Lead and perform growth initiative analyses, including coordinating cross-functional input,

synthesizing inputs into aligned recommendations, and supplementing recommendations

with financial modeling and analysis


CXO Introduction: Tom Romanczuk

Key Responsibilities from 1st 6 months

Leading Add-On

Integration and

Synergy Capture

Strategic Partner to Ops

and Bus Dev Teams

Internal Approval /

Authority Ctrl Structure

Inter-Company Transfer

Pricing Strategy Dev.

Leading Cross-Functional

Initiatives

Capex Approval Process

and Planning

Leading Board

Presentation Development

Leading Strategic Finance

Discussions with Board

Leading Cross-Functional

2019 Budget Process

Executive VP of

Global Finance

• Current Shore CXO Executive

• Previous VP of Finance, Hub Group

• Previous Associate, Morgan Stanley

• M.B.A., Kellogg 2016

• B.A., Indiana University (Kelley)

Tom Romanczuk

• Great opportunity to learn how a company runs

under PE ownership

• Chance to serve as the “bridge” between the PE

firm and their portfolio company

• It is a unique opportunity that I would be hard

pressed to find elsewhere in the marketplace

Tom’s Takeaways


Vice President of

Growth and

Development

• Joined the Shore CXO Program in

Summer 2019

• Previous Senior Consultant, Kaiser

Permanente


• B.A., Skidmore College

Jonathan Zeidan

Chief Development

Officer


Summer 2019

• Previous Vice President and

Associate, Atlantic Street Capital

• M.B.A. & J.D., Kellogg 2019

• B.B.A., University of Michigan (Ross)

Blake Toll

19

CXO Program Growing Quickly

Chief Strategy

Officer


Summer 2019

• Previous Deal Advisory Manager,

Financial Due Diligence, KPMG


• B.A., University of Illinois at Urbana-

Champaign

Chris Dardi, CPA

SVP – Sales,

Marketing & Finance

• Joined the Shore CXO Program in Fall

2019

• Previous Brand and Sales Manager,

Beam Suntory


• B.A., Indiana University

Alan Jannings


Chief of Staff


Summer 2020

• Previous Senior Financial Analyst, The

Home Depot


• B.S., Wake Forest University

Ross Boatwright

Chief of Staff


Summer 2020

• Previous Director of Operations –

Primary Care, Gastroenterology,

DaVita Medical Group

• M.B.A., Wharton 2020

• B.A., Brigham Young University

Will Burton

20

CXO Program Growing Quickly (cont.)

Chief of Staff


Summer 2020

• Previous Associate, Keystone Capital,

Inc.


• B.B.A., University of Iowa

Erica Hauser

Chief of Staff


Summer 2020

• Previous Senior Strategy Consultant,

Gallagher


• B.S., Brigham Young University

Mark Larsen


Starting with Shore

Resource Team,

Match Pending


Summer 2020

• Previous Senior Systems Engineer –

Flight Test Integration Lead, Lockheed

Martin


• B.S., Purdue University

Paul Coyne


Summer 2020

• Previous Senior Associate –

Operations, Cleveland Clinic Abu

Dhabi


• B.A., University of Notre Dame

Eliza Nagle

21

CXO Program Growing Quickly (cont.)

Starting with Shore

Resource Team,

Match Pending


Compensation and Mentorship

• Your compensation includes a salary, annual bonus, equity incentive units, the opportunity

to co-invest in your company, and unmatched growth opportunities

− Annual bonuses and potential raises to be made at the discretion of the CEO

(1) The equity option value is a target based on a platform’s base case scenario. Annual value is $75k assuming a 4-year hold period.

(2) Range based on Shore’s historical returns. Prior results do not guarantee future results. Annual value assumes 5x return over 4 years.

(3) Sign-on bonus paid ½ upon accepting and ½ upon starting. Paid back pro rata over 24 months if CXO leaves within 2 years of starting.

Monetary Compensation

4-Year Avg. Comp: ~$325k / year

Mentorship Compensation

Average 4-Year Comp: Priceless

• Opportunity to lead team and report to C-level

officer at early-career stage

• Attend and present in Quarterly Board of

Directors meetings

• Assigned mentor who is a seasoned executive to

help guide your personal growth with quarterly,

annual, and 5 year goal planning

• Private annual CXO summit

• Invitation to Annual Executive Leadership

Academy with senior industry executives

Base $150k per year

Annual Bonus $30k per year

Equity Options (1) ~$300k at exit

$50k Co-investment

Opportunity (2) ~$150-470k at exit

Sign-On Bonus (3) $25k one time


CXO Program = Senior Executive Role + Upside Opportunities

• The CXO program is a great option for hungry executives that want significant leadership

experience, mentorship, and “skin in the game” without the risk of pursuing a search fund

Sources: 2018 Stanford Search Fund Study, Kellogg / Booth Employment Report, Shore Capital Research.

Note: Excludes sign-on bonuses.

Average Job

Post-MBA

Direct Report to CEO No Yes You are the CEO

Assigned Mentor Maybe Mid-Level Exec CEO or Board Member Sometimes

Attend & Present in

Exec / BOD MeetingsNo Yes Yes

Search Fund

Conferences

Attend Fund Exec.

Leadership AcademyNo Yes

CXO Program Search Fund / ETA

Base + Bonus ~$180k per year $180k per year ~$100k per year ->

~$275k per year

Equity Options n/a ~$300k at exit ~$0-10M+

$50k Co-investment

Opportunityn/a ~$150-470k at exit Included above

Search Time /

Investment Hold Timen/a

0 Years

4-6 years

1-2 Years

6-8 Years

Average Returns n/a 3.0 to 9.4x 0-13x

Job Certainty Day 1 100% 100%69%

31% of searches fail


Matching Process / Relocation Requirement

• The CXO program includes a relocatability requirement whereby executives are expected

to move to the company HQ to maximize the value of their leadership experience

• Generally, Shore locates company headquarters in major metros, but this is not guaranteed

• Shore’s matching process aims to:

• Create a win / win / win match for the CXO / the company / Shore Capital

• Maximize the CXOs career trajectory with senior executive responsibilities and challenges

• Result in a positive work / life experience for CXOs and their families

• Create a transparent and flexible process that finalizes matches by Q1 or early Q2 where possible

CXO / Company Matching Process

1. Opportunity List

Shore sends draft CXO

opportunity list with offer letters

2. CXO Accepts Offer /

Chooses Cities

CXO chooses 3-4 cities from

opportunity list (4 with Chicago)

3. Shore Proposes Match

Shore reviews CXO preferences

and management team input to

propose final matches to CXOs

4. CXO / Mgmt. Meeting

CXO meets with the management

team onsite; both parties confirm

match is a fit

5. Match Finalized

Shore, company, and CXO work

together to complete option and

equity co-investment; CXO starts

on mutually agreed upon date

6. Shore Resource Team Match

If no match made, Shore honors

compensation package and CXO

works on Shore Resource Team

until match complete


HC Fund II: Autism

Therapy II

Dallas, TX

CXO: Chris Dardi

CXO Matches Typically In Major Metro Markets

25

Pre-Fund: Home

Infusion

Phoenix, AZ*

Pre-Fund: Laboratory

Services

Syracuse, NY*

Pre-Fund: Physical

Therapy

Detroit, MI*

Pre-Fund: Urgent Care

Nashville, TN*

Pre-Fund: Pediatric

Therapy

Chicago, IL*

HC Fund I: Veterinary

Services

Birmingham, AL

HC Fund I: Medical

Products

St. Paul, MNCXO: Tom Romanczuk

HC Fund I: Dental

Services

Chicago, IL

HC Fund I: Autism

Therapy

Orlando, FL*

HC Fund I: Concierge

Medicine

Highland Park, IL

HC Fund I: Interven-

tional Radiology

Baltimore, MD

HC Fund I: Wound

Care

Geneva, IL

HC Fund I: Eye Care

Services

Atlanta, GA

HC Fund II: Urgent

Care II

Lafayette, LACXO: Jonathan Zeidan

HC Fund II: Addiction

Treatment

Cincinnati, OH

CXO: Will Burton

HC Fund II: Veterinary

Services II

Detroit, MI

HC Fund II: Payor

Services

Seattle, WA

HC Fund II: LTC

Ancillary Services

Chicago, IL

CXO: Blake Toll

HC Fund II: Urgent

Care III

Eugene, OR

CXO: Erica Hauser

HC Fund II: ENT &

Allergy

Atlanta, GA

HC Fund II: Physical

Therapy II

Modesto, CA

HC Fund III:

Orthodontic Services

Nashville, TNCXO: Ross Boatwright

F&B Fund I: Baked

Goods

Akron, OH

CXO: Alan Jannings

HC Fund III: Medical TPA

Eau Claire, WI

CXO: Mark Larsen

85% of Company HQs are in a Top 100 US MSA

• * Denotes Realized Investment

• Note: Paul Coyne and Eliza Nagle’s matches are in progress.


CXO On-Campus Recruiting Next Steps and Key Dates

• The recruiting process formally begins in September as students complete their resume drops and then

concludes in mid-November when students receive their offers

Class of 2021 CXO On-Campus Interview Process & Dates

Resume

Drop

9/27

9/28

10/2

10/2

Career

Website

1st Round

Interview

10/7

10/16

10/13

10/12

Virtual

Skills Test /

Personality

Test

For select

candidates

only

Virtual

2nd Round

Interviews

(VPs)

10/28 or

10/30

Virtual

3rd Round

Interviews

(Partners)

11/5

In-Person in

Chicago

Offers

Made

11/9

Virtual

Offer

Decisions

Due

1/8

Virtual

Small

Group

Sessions

Mid-

September

Short

application

required to

join

Details to

Follow

Virtual

Note: Excludes school specific info sessions or similar events.

Large

Group

Sessions

9/9 / 9/10

One per

candidate

Virtual


Thank you

Questions & Answers?


Presentation Agenda



III. Appendix



Partnership With Southern Veterinary Partners

• Shore realized a 120% internal rate of return and 5.5x cash-on-cash return from its

veterinary services investment; the platform’s growth resulted from:

− Developing a strong management team and implementing several metric management tools / processes

− An aggressive business development strategy acquiring 46 hospitals complemented by significant organic

growth across vintages

Investment Thesis Value Creation Initiatives Strong Returns

❑ Built company through the acquisition of 46

hospitals growing from 3 locations in

Alabama to 49 across 10 states in the

Southeast

❑ Investment in business development and

operations staff (from 2 to 21 FTEs)

accelerating acquisition and integration

activity each year since inception

❑ Focus on client and clinically-focused

service sustains consistent same store

sales growth

» SVP matured into a highly attractive target

for in an active M&A environment

» Within 4 years, Shore and its co-investors

realized a 5.5x cash-on-cash or 120% gross

IRR by growing EBITDA from $1M to $18M

» Tremendous runway for future growth as

there has been substantial corporate

investment leading up to close and

independent hospitals continue to comprise

the majority of market share in our current

and prospective geographies

Vet Services Expenditures ($s in billions) Diversified Platform Growth Strong Revenue and EBITDA Growth

✓ Strong human-animal bond as pet owners

treat their pets as members of the family

✓ Veterinary services are perceived as

necessities rather than luxuries

✓ The industry is almost exclusively cash

business, pet insurance is uncommon in the

U.S. and there is no exposure to

reimbursement risk

✓ The animal hospital market is highly

fragmented with national consolidators

comprising 9% of the market

$27

$36

$46

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6E

201

7P

201

8P

201

9P

202

0P

202

1P

2015

6 Locations

2016

16 Locations

2017

39 Locations

May-18

49 Locations

$4

$101

$1

$18

$0

$10

$20

$30

$40

$50

$60

$0

$20

$40

$60

$80

$100

$120

Entry Exit

EB

ITD

A ($

in m

illions)

Revenue (

$ in

mill

ions)

Revenue EBITDA

Source: IBIS World.


Compelling Market Dynamics Inspired Proactive Search

Source: Harris Williams.

• In 2013, Shore began actively seeking investments in the general practice veterinary

services industry after thorough research indicated many positive secular trends

− Veterinary sector benefits from consistent growth, recession-resistant characteristics and no reimbursement risk

− Highly fragmented industry creates compelling growth and consolidation opportunities for platforms of scale

− Aging landscape of practicing veterinarians combined with the high accumulation of student debt and the increased

desire for work-life balance has created a market imbalance for practice ownership

− An aging pet population will require more frequent and extensive care; yearly maintenance and ownership costs

escalate due to increased visit frequency and the need for special diets and medication

Increasing Pet Lifespans & Ownership CostFragmented Veterinary Market

33%

25%

22%

20%

16%

9%

Optical

Phys. Ther.

Home Health

ASC

Dental

Vet

To

p P

rovid

er

Ma

rke

t S

ha

re

86%

14%

Independent Hospital

Consolidator Ownership

Vet

Consolidator

Ownership

2025P 10.6

10.911.0

12.0

Dogs Cats

2002 2012

$400$300

$500

$800

$450

$1,200

Kitten AdultCat

SeniorCat

Puppy AdultDog

SeniorDog

Average Pet Lifespan (Years) Average Yearly Pet Ownership Cost


Established Corporate Infrastructure for Growth

At Investment

(October 2014)

At Exit

(May 2018)

Geographic

Scope

Org

Chart

Revenue

($M)

EBITDA

($M)

Employees

Jay Price

Owner

Veterinarians

(6)

Scott Welch

Consultant

Board of Directors

Jay Price

Chief Executive

Officer

Stacey Leonard

Chief Client

Officer

Barron Lakeman

Chief Dev. Officer

Jeff Falone

Chief Medical

Officer

Jeff Wilson

COO

Bryan Wetta

CFO

Jennifer

Majewski

VP, HR

Lacey Bacchus

Marketing /

Communications

Regional

Medical

Directors (3)

Krista Henson

Acquisition

Manager

Regional

Operations

Directors (6)

Zach Evans

Controller

$4.0M

$1.0M

36

$101.0M

$17.7M

1,000+

• Wellness Exams

• Senior Pet Care

• Vaccinations

• Surgery

• Allergies &

Dermatology

• Oncology

• Ophthalmology

• Nutritional

Counseling

Ethan Ott

BI Manager

Existing

Employee

Post-Close

Hire

• Shore and the Board of Directors recruited talented executives to rapidly scale the business

− In addition, established local and regional leadership structure to transition the business from a “line of sight”

management model to a scalable infrastructure capable of transformational growth


Building a World Class Board of Directors

• Shore Capital recruited independent industry experts with meaningful veterinary services

experience and broader expertise scaling healthcare services companies

Director Background & Expertise

Vet Services

General

Healthcare and

Multi-Site

Operations

Board Member Specific Value-Add to SVP Background and Experience

Dan Lorimer (Clinical Expertise)

+ Veterinarian by training; sold to private equity twice

+ Exited at over $1 billion valuation with nearly 60

locations

Darin Nelson (Acquisition Acumen)

+ 25-year head of M&A for largest vet company in the US

+ Acute focus diagnosing and assessing practice health

Dylan Bates (Leadership at Scale)

+ Made the transition from treating-clinician to clinically-

trained CEO

+ Sold to private equity four times (recent multi-billion

dollar sale to Advent)

Tim Martin (Operations Execution)

+ Built two, billion dollar-plus, multi-site healthcare roll-

ups

+ Part of leadership team (COO) that took one of the

nation’s largest dialysis providers public

Dino Eliopoulos (Finance Stewardship)

+ Multi-site healthcare expertise

+ Former CFO of nation’s largest urgent care company

+ Focus on metric management and scaling systems

Jim Forrest (Growth Catalysis)

+ 30 years experience in private equity

+ Expertise in scaling multiple businesses to over $1

billion

Dan Lorimer,

DVM

Dan Lorimer

» Partner, Board Member and Medical Director at

BluePearl

Darin Nelson

» Partner at Pathway Partners

» Chief Development Officer at Veterinary Growth

Partners

» Previously SVP at VCA Antech and Trupanion

Dylan Bates

» Chief Executive Officer and President of ATI

Physical Therapy, a physical therapy company

with over 600 clinics across 24 states

Tim Martin

» CEO of Nashville Healthcare Investments

» Previously Founder and CEO of Ambulatory

Services of America

» EVP and Chief Operating Officer of publicly traded

Renal Care Group

Dino Eliopoulos

» Former SVP and CFO of Provista

» Former CFO of MedExpress

Jim Forrest

» Chairman at Shore Capital Partners

» Former Managing Director of Wind Point Partners;

sat on over 30 boards

» Former President, Gould Incorporated, Recording

Systems

Darin Nelson

Dylan Bates

Tim Martin

Dino

Eliopoulos

Jim Forrest


Streamlined Business Development Engine

Business Development Engine

Evaluate1

Pre-Closing Process

Benchmark2 Diligence3 Integrate4

Closing

• Developed a succinct process to attract

and engage add-ons

• Internal database of all add-on

candidates in the Southeast; nurtured

by outside business development reps

• Initial diligence informs offer based on

future growth opportunities and value

profile

Opportunities to Create Value Prospective Hospital Scorecard

• As part of the diligence process,

management completes a scorecard on

each add-on once enough information

has been gathered

• Scores are benchmarked against one

another and ranked by aggregate score

across five categories: location,

competition, site, staff and deal

dynamic

• SVP streamlined due diligence and

legal processes to more quickly and

efficiently complete acquisitions

• Operational and legal diligence are

accelerated without sacrificing fidelity

• Refined protocols over more than 40

unique transactions

Diligence Process Optimization

• The SVP operations team coordinates

with local hospital leaders to complete

key integration tasks with frequent,

scheduled communications of progress

to management

• Key tasks can often begin up to 50

days prior to close

Advance Integration Processes

• SVP is well-positioned to drive continued, predictable M&A growth

Bring

Under SVP

Supply Contracts

to Realize Cost

Savings

Expand

Service

Offerings for

Comprehensive

CareUpdate

Marketing

Strategies to Stay

Connected to

Customers

Consolidate

Inventory to

Lower

COGS

Mandatory

Customer

Follow-Ups to

Promote

Loyalty

Establis

Care Standards

to Drive Quality

Revenue

Target ~5%

Organic

Growth0%

25%

50%

75%

100%

Loc. Comp. Site

Empl. Deal Dyn.

Skinny-Down

Letter of Intent

Covered All Key

Terms

Accounting

Diligence

Desktop Review

by 3rd Party

Shortened

Asset Purchase

Agreement for

Speed & Cost

Clinical Review

by Proximal

Regional

Medical Director

Retained Single

Attorney to

Lead all

Transactions

Standardized

Insurance &

Benefits

Program via

Single Broker

-50 days

+60 days

Close

Operations

& IT

Insurance,

HR &

Benefits

Financial

Marketing


Acquisitions by Quarter

• The business development engine has evolved from executing one add-on hospital per

quarter to nearly one add-on every two weeks

− A testament to the well-developed processes and personnel that have keyed steady acceleration in deal

closing illustrated below

SVP Acquired Hospitals by Quarter (Through Close May 4, 2018)

3 45 5 6 7

1115 16

2125

3439

4749

0

4

8

12

16

0

25

50

75

100

Bus. D

ev. / O

ps. S

taffN

um

ber

of

Hospitals

Existing Add-Ons M&A / Support Team

Note: M&A / Support team represents business development personnel and operations directors.


Post-Integration Operating Efficiencies Grew Profits

Multiple Buydown (1)

• The SVP team has a long track record of improving operations post-closing

• Post-closing operating initiatives improved hospital EBITDA over time, lowering our

effective purchase multiple by more than a full turn (1.0x) of price

Piloting Ramping Impacting at Scale

▪ Additional medical services (e.g. orthopedics, ultrasound, laser,

teleradiology)

▪ Clinical trials

▪ Marketing evaluation and checklist

▪ Tactical pricing

▪ Community-based strategic plans

▪ Perfect patient experience (starting from reception)

▪ Workflow orientation

▪ Satellite hospitals and tuck-ins

Future

Initiatives

University

Recruiting

Program

ACT Training Resources

Cloud IT

Infrastructure

Online Pharmacy

Management (i.e.

Vets First Choice)

Compliance

Gap Analysis Negotiated

Vendor

Pricing

Discounts

Wellness Testing and

Broad Scale

Preventative Care

DVM

Retention

and Stability

New Technology

Capabilities (Cold

Therapy Laser, Digital

Dental X-Ray)

6.16x

5.06x

3.0x

4.0x

5.0x

6.0x

7.0x

At Closing Implied as of12/31/17

Financials

Pu

rch

ase

Pri

ce

(1) Excludes corporate overhead; representative of all hospitals acquired prior to Jul-17 (representing at least 9 months of

ownership).


Long-Term Investment Rationale

• Shore Capital is confident in moving forward with a longer-term investment strategy in SVP

as a result of (i) the platform’s corporate infrastructure, (ii) efficient operating model, (iii)

remaining whitespace and (iv) strategic peer precedents

Infrastructure1

Whitespace3

Operating Model2

Peer Precedents4

Oct-14Company

Key

Management

Positions

(additions)

• CEO

• CFO

• Chief

Development

Officer

By May-18

• CEO

‒ Regional Med.

Director (8)

• COO

‒ Regional Ops

Director (6)

• CFO

‒ Finance & Data

Team (16)

• CDO

‒ BD Team (7)

• Chief Client Off.

• VP of HR

Incremental additions will propel the Company past its next growth trap Track record of growing top and bottom-line dollars to lower effective multiples

0.00x

4.00x

8.00x

12.00x

Pla

tform

Tota

l 20

14

Ho

spita

l A

Ho

spita

l B

Ho

spita

l C

Tota

l 20

15

Ho

spita

l D

Ho

spita

l E

Ho

spita

l F

Ho

spita

l G

Ho

spita

l H

Ho

spita

l I

Ho

spita

l J

Ho

spita

l K

Ho

spita

l L

Tota

l 20

16

Ho

spita

l M

Ho

spita

l N

Ho

spita

l O

Ho

spita

l P

Ho

spita

l Q

Tota

l Q

1-1

7

Tota

l…

At Purchase Current

6.16x Closing Multiple 5.06x Effective Multiple

16

1412

11 10 109 8 8 7

5 5

3

0

5

10

15

20

25

TX VA FL NC GA SC TN AL OK KY LA MS AR

% M

ark

et S

hare

in

Sta

te

SVP Consolidators

Suggests runway for continued consolidation remains Many large players have made large or long bets on the value of vet services

Note: Operating model chart illustrative; analysis only conducted for hospitals owned for at least 9 months.


Company Overview at 2018 Exit

• Southern Veterinary Partners is a leading consolidator of veterinary hospitals in the

Southeast and an employer of choice among veterinarian graduates in the South

SVP at a Glance Strong Regional Presence & Value Proposition

Integrated Regional Network of Veterinary Hospitals

Core Services

• Wellness Exams

• Senior Pet Care

• Vaccinations

• Surgery

• Allergies & Dermatology

• Oncology

• Ophthalmology

• Nutritional Counseling

10 stateswith strong preceptorship

networks

800,000+pet visits per

year

45,000+new clients per

year

150+active

veterinarians

44.5average veterinarian

age

3%rate of regrettable turnover

to date

Key Company Statistics

✓Vet Leadership: Distinctively tenured, veterinarian-led team headquartered

in Birmingham connects more authentically with local operators

✓Flexibility: Offer flexible deal structures for transitioning veterinarian sellers

✓Brand Autonomy: Maintain local brand and community ties at the hospital

level while sharing best practices

✓Dedicated Back Office: Focus on enhancing business operations and

development allows for veterinarians to focus on practicing medicine

✓Scale: Leverage the combined platform’s size to reduce supply costs

✓Education: Connect with veterinarian peers to share valuable operational

and clinical ideas

✓Track Record: Positive relationships with all seller veterinarian-partners

who are our strongest endorsers and references


Sale Dynamics

• SVP matured into a highly attractive target in an active M&A environment

− Market became educated on the attractiveness of the veterinary services sector

− High interest in a veterinarian-led, sophisticated consolidator of choice in an otherwise underpenetrated region

Active Industry Consolidation Buyer Considerations

has received a minority

investment from

July 2017

has been acquired by

January 2017

has been acquired by

December 2017

• Veterinary services market is large, growing, and highly

fragmented

− Tremendous runway for growth in existing and prospective

markets

• Received interest from strategic and financial buyers

• Ultimately recapitalized by Shore Capital Partners in a new

special purpose vehicle (“SVP Holdings, LLC”)

− Shore has recommitted to an experienced team that has

demonstrated growth beyond expectation year after year

− Recent investments in corporate infrastructure to surround

management with a robust supporting cast reflect additional

value to be realized by SVP

− The longer hold structure of SVP Holdings allows the

Company to pilot new growth strategies and review new

avenues of growth including potential de novos


Returns Summary

• On May 4, 2018, Shore Capital Partners recapitalized Southern Veterinary partners for a total enterprise value of $275M

− Resulted in a gross 5.5x cash-on-cash return including rollover equity held at cost

Equity Returns (1)

$-thousands

$18,909

$103,042

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

Equity Invested Equity Returned

MOI: 5.5x

IRR: 120%

(1) Represents equity from Shore Capital Partners Fund I and Fund I-A, LP and co-investors; includes $1.5M escrow and rollover

equity of $38.6M.


Transformational Seller Returns

• Investors in SVP were rewarded for their faith in the Company’s vision with strong returns

which were often very meaningful for our employees and seller-partners

− No investor made less than 3.0x their rollover investment upon exit and many shareholders received more

than $1 million at second sale

5 employees / sellers

invested in the Company

at inception in October

2014Ori

gin

al

Em

plo

ye

es

Ne

w H

ire

s /

Se

lle

rs 53 other new employees

or sellers invested in SVP

over the course of 3.5

years

All 5 employees and sellers

realized more than 5.0x

cash-on-cash return on

their rollover investment

31 of these new investors

made more than 5.0 cash-

on-cash on their rollover

investment (1)

4 individuals made more

than $1 million upon

SVP’s recapitalization

15 individuals made more

than $1 million upon

SVP’s recapitalization

Among 58 employees or sellers at SVP, 19 became millionaires upon the second sale (33%)

(1) Certain other investors either invested via all or primarily preferred A stock or partnered with the Company later in the hold period

after the share price had increased.

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