Increasing the Value of Your Business

Securities offered through Burch & Company, Inc., member FINRA / SiPC. Burch & Company and Taureau Group, LLC are not affiliated entities. Principals of Taureau Group are registered

investment banking representatives with Burch & Company.

ABOUT WMEP

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➢ We are a private, non-profit professional consulting firm that focuses on helpingmanufacturing companies become more profitable and valuable.

o 35 people in our center in Wisconsin

o We all come from manufacturing, most of us managing or owning the companies at whichwe’ve worked

o We are proven solution-finders. There isn’t much one of us hasn’t seen.

o WMEP – Part of the NIST National NEP Network

➢ Every engagement concludes with a customer survey to measure the impact of ourperformance.

➢ The impact survey data is our report-card to our funding partners and determines our fundingfate. This keeps us laser focused on delivering the best possible results for our clients.

➢ Since our inception over 20 years ago, over 4,000 customers reported that we deliveredmore than $4 billion in impact. This number continues to grow as we serve 200 to 300 uniquecustomers every year.

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A.Sellers Remorse

OWNERS, PRESIDENTS, CEO'S AND VALUE

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➢ Protecting Value and Growing Value are key goals of Executiveleaders.

➢ Increasing the Company Value typically ties to executivecompensation and is integral to successful planned/unplannedchanges in ownership.

➢ Value is driven by streams of profits and the profit engine of thecompany.

➢ The Profit Risk Assessment goes beyond today’s valuation toidentify factors that put profit at risk or limit profit growth in thefuture. A strategic focus by the company will be needed to driveimprovements and reduce these risk factor(s).

PRA® MODEL

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➢ The Profit Risk Assessment looks at the business from severalvantage points:

o Financial Trends

o Customers / Markets / Products (outside – in)

o Leadership, Strategy & People (inside – out)

o Productivity

o Readiness to Scale

o Special Factors

PRA® APPROACH – TWO INDEPENDENT STREAMS, ONE FINAL REPORT OUT

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• 3-4-hour intake session with Leadership team

• No preparation preferred

• 24 individual criteria with questions

• Reach consensus on high, medium, low risk categorization

• Color coded red, yellow, green

“Valuation”

• Collect 3 years of financials

• Special adjustments made

• Comparables, Discounted Cash Flow, Balance Sheet valuation range estimated

What Drives Value Value – Snapshot in Time

FINAL REPORT OUT:

• Valuation range

• PRA report with recommendations

LEARNINGS

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Across 30+ companies, different sizes, different businesses there are consistent opportunities

Criteria # of Red # of Yellow # of Green % of Red % of Red/Yellow Average

Corporate

Governance

17 5 1 73.9% 95.7% 84.8%

Market Concentration 15 5 7 55.6% 74.1% 64.8%

Strategic Focus 10 14 3 37.0% 88.9% 63.0%

Customer

Concentration

12 10 5 44.4% 81.5% 63.0%

Key Employee

“Retention &

Succession Plan”

7 17 3 25.9% 88.9% 57.4%

New Product

Revenue

10 6 7 43.5% 69.6% 56.5%

Financials & Key

Metrics

3 17 3 13.0% 87.0% 50.0%

Revenue & Share

Growth vs.

Competition

4 19 4 14.8% 85.2% 50.0%

Manufacturing

Productivity

7 11 9 25.9% 66.7% 46.3%

Market Growth, Share

Growth

1 22 4 3.7% 85.2% 44.4%

Vision

Strategy

Execution

Corporate

Governance

Market, Share Growth

Mkt. & Customer

Concentration

New Product Revenue

Retention – Succession

Employee Value

Proposition

Key Employees

VISION, STRATEGY, MISSION, VALUES

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VISION

STRATEGY

MISSION

VALUES

VISION

STRATEGY

MISSION

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OUR VISIONAcme Anvil is the brand of choice worldwide for demanding, anvil needs and related technology solutions.

The Transformation Map

Strategic initiatives and objectives move Acme Anvil towards its vision

STRATEGY DEPLOYMENT & EXECUTION APPROACH

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MARKETS – CUSTOMERS APPROACH

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Value Proposition

Ideal Customer

Competitive Advantage

Competencies

Capabilities

Action Plans

Develop

Ideal Market(s)

Defined

Adjacent - Aspirational

Primary Research

Secondary Research

Market Size-Growth

Rates

Dynamics

Financial Segmentation

EMPLOYEE RETENTION APPROACH

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Value Proposition

Develop and Test

Skills, Competencies

Key Employees Defined

Engagement-

Retention Plans

Benchmarking

Primary Research

Secondary Research

Employee Data Collection

& Analysis

BRINGING IT ALL TOGETHER

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• Meet with Leadership Team

• Review “Valuation” and PRA Recos

• There may be 10-15 recommendations

BUT

• We recommend a path forward that focuses on the Critical Few

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A.Assessment

PRA PLUS ASSESSMENT

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PRA PLUS ASSESSMENT

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PRA Plus Purpose

• M&A transaction in a “private capital market”; owner looking to sell company to strategic or financial buyers (500+ buyers)

• Provide owner a baseline for business valuation and areas to improve using PRA Plus recommendations

• NOT indented to be used buy-out agreements, in-place of formal valuation or for any legal reason

What is your business value? - “A company is worth what someone is prepared to pay…”

• Value is a range and the target is constantly moving

• Rule of 2: given an appropriate number of buyers, oftentimes the highest offer is two times the lowest offer

• Every buyer will value your business differently

Value

$$

Liquidation

Value

Fair Market

Value

Investment

Value

Strategic

Value

Business Valuation by Buyer Type Example Offers in Private Capital Market

$9.9 (4.5x)

$12.1 (5.5x)

$11.2 (5.1x)

$12.5 (5.7x)

$1.4 (0.6x)

$12.1 (5.5x)

$14.3 (6.5x)

$13.4 (6.1x)

$15.0 (6.8x)

$1.5 (0.7x)

Multiples Analysis(3332)

Multiples Analysis(333249)

Multiples Analysis(Manufacturing)

Cash Flow Model Net Asset Value $-

$2

$4

$6

$8

$10

$12

$14

$16

$18

Mill

ions($

)

Valuation Summary (excludes real estate)

Taureau Group Est. Range

$11.4-$13.7MM

VALUATION SUMMARY

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Valuation

• Multiples analysis using prior M&A transactions based on industry (e.g., NAICS code) and size (e.g., revenue, EBITDA)

• Cash flow model is an optimization model combining a DCF and LBO

• Net asset value represents the book value of assets less liabilities

1) Multiples provided by GF Data

PROPRIETARY & CONFIDENTIAL

VALUATION FINANCIALSPro Forma Income Statement Build Up Parts of a Valuation

EBITDA Adjustments

What’s a buyer getting

Net Proceeds (money in your bank account)

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Historical Income Statements 12/31/2016 12/31/2017 12/31/2018

Net sales 15,000,000$ 17,000,000$ 19,000,000$

Net sales growth % N/A 13.3% 11.8%

Cost of goods sold 10,000,000 11,500,000 12,500,000

Gross profit 5,000,000 5,500,000 6,500,000

Gross profit % 33.3% 32.4% 34.2%

Operating expenses 4,000,000 4,250,000 5,000,000

OpEx % of net sales 26.7% 25.0% 26.3%

Operating income (EBIT) 1,000,000 1,250,000 1,500,000

EBIT margin 6.7% 7.4% 7.9%

Depreciation / amortization 500,000 600,000 550,000

EBITDA 1,500,000$ 1,850,000$ 2,050,000$

EBITDA margin 10.0% 10.9% 10.8%

EBITDA Adjustments 2016 2017 2018

One-time -$ 500,000$ -$

Owners' comp, net 100,000 100,000 100,000

Rent, net 50,000 50,000 50,000

Subtotal EBITDA adj. 150,000$ 650,000$ 150,000$

Normalized EBITDA 1,650,000$ 2,500,000$ 2,200,000$

Normalized EBITDA margin 11.0% 14.7% 11.6%

Pro Forma Income Statement 2016 2017 2018

Net sales 15,000,000$ 17,000,000$ 19,000,000$

Net sales growth % N/A 13.3% 11.8%

Adjusted COGS 10,000,000 11,000,000 12,500,000

Adjusted gross profit 5,000,000 6,000,000 6,500,000

Adj. gross profit margin 33.3% 35.3% 34.2%

Adj. operating expenses 3,850,000 4,100,000 4,850,000

Adj. OpEx % of net sales 25.7% 24.1% 25.5%

Normalized EBIT 1,150,000 1,900,000 1,650,000

Normalized EBIT margin 7.7% 11.2% 8.7%

Depreciation / amortization 500,000 600,000 550,000

Normalized EBITDA 1,650,000$ 2,500,000$ 2,200,000$

Normalized EBITDA margin 11.0% 14.7% 11.6%

Net Proceeds (Pre-Tax)

5.2x 5.7x 6.2x

Business Value 11,430,000$ 12,567,500$ 13,705,000$

Cash 674,104 674,104 674,104

Debt (2,814,768) (2,814,768) (2,814,768)

Other Assets/ (Liabilities)- Net TBD TBD TBD

Transaction fees TBD TBD TBD

Net working capital gap TBD TBD TBD

Net Proceeds (Pre-Tax) 9,289,336$ 10,426,836$ 11,564,336$

Implied EBITDA Multiple