Re-defining Middle Market Investment Banking

Presentation ByMadison Street Capital

Suite no. 27-28, First Floor, Augusta PointGolf Course Road, Sector-53, Gurgaon, 122002, Haryana

Re-defining Middle Market Investment Banking

Table of Contents:

• Madison Street Capital Overview • Madison Street Capital India Overview• Transaction Process Overview• Qualifying Investment Partners• Madison Address & Contact

Madison Street Capital Overview

• Madison Street Capital (“Madison") is a full-service investment banking firmproviding corporate advisory , valuation services, financial opinions, capital raising andportfolio valuation to companies.

• Madison & its broker-dealer MSC BD, LLC, a registered broker dealer which is aregulated by FINRA are committed to the highest level of professional standards

• The Madison name is synonymous with deal making expertise with more than a 100years combined industry experience and executing several M&A transactions each year

• Madison’s professionals have represented dozens of Boards, Special Committees,Public Companies and Private Business Owners on a broad range of financial matters.

• Current in-house deal count of more than 100 deals under exclusive contract (70%financing, 30% M&A)

- Proactive development team generating 1 to 2 new clients every week

Madison Street Capital Expertise

Madison Street Capital is a Unique Blend of Investment Banking Offerings, Independent Valuation Services and Seasoned Professionals that intersect to provide a comprehensive range of professional services to maximize value for businesses and their Shareholders.

CLIENT FOCUS

Seasoned Professionals• Unparalleled Leadership• Decades of Experience • National Footprint• Highest level of Professional

Standards.

Investment Banking• Mergers & Acquisitions• Capital Raising• Private Placements• Corporate Finance Advisory• Financial Restructuring• ESOP Advisory

Independent Valuation Services• Fairness & Solvency Opinions• Financial Reporting Compliance• Tax Compliance• Portfolio Valuation• Litigation Support

Unique Appreciation for the Middle Market

More Granular due diligence requirements.

Wide range of potential valuation outcomes.

Larger number of potential participants in process.

Business is often not a “must have” for any single investor.

Transaction agreements are highly customized.

Process can be taxing on limited management resources.

Must make room in the process for investors to get to management, sometimes even before submission of first rounds bids

More time invested in pre-launch phase of the project.

Requires anticipation of potential issues to avoid slippage in timetable and unwinding of competitive tension.

Process Matters

Requires experience to narrow the field and to interpret first round bids.

Need to walk a fine line between drawing investors into the process and conveying strengths at the same time.

GREATER SCOPE FOR ADVISOR TO ADD VALUE, NEED FOR SPECIALIZED SKILLS

Sound Strategic Advice

Madison Street Capital differentiates itself by leveraging its work experience to provide sound strategic advice at each of the critical junctures in the Transaction Process.

Dedication to Middle Market

M&A/Cap Raise

Superior Senior-Level Attention at Each Stage of

the Process

Unparalleled Attention to

Details

Outstanding Negotiating Skills

Institutional Knowledge of Strategic and

Financial Buyers

Critical Junctures in the “Front End” Marketing Process

• Identifying timing to initiate a process• Crafting the appropriate sale process• Identifying potential strategic and financial partners• Conveying the “story” and opportunities• Deciphering initial indicators• Assembling a competitive group of investors• Showcasing the company and management to

investors

Critical Junctures in the “Back End” Process

• Fully understanding of final proposals to develop a“True” comparison between bids

• Establishing the right next steps• Determining the most advantageous time to

negotiate with potential investors• Developing counter proposal(s) and the best script

with which to deliver them• Craft a process to maintain leverage through closing

Private Placement of Debt/Equity

• Madison is highly experienced in the private placement of debt/equity and has successfully completed dozens of private placements. Madison will work the Client and consider any of the following:

• Capital Restructuring • Private Placements • Strategic Alternative Studies • Regulation "D" Offerings • IPOs • Capital Raising Growth Equity • PIPES • Recapitalizations

Corporate Advisory

• Madison is focused on serving middle-market clients in need of corporate financialadvisory services.

• The Madison approach guides shareholders and management teams throughout thetransaction process, leveraging years of experience and judgment to maximize value,minimize disruption to the business, and ensure that corporate strategic goals are meton the best terms.

• Knowledge, Experience and Networks to match Buyers , Sellers, & AlliancePartners as well as to arrange the appropriate financing and capital structures for eachclient situation.

• Madison works closely with middle-market businesses, both public and private, tooptimize capital structures and utilize the lowest cost of capital available.

Financial Opinions

• As an independent financial advisor, Madison is frequently engaged by SpecialCommittees, Boards of Directors and management groups to provide independentfinancial opinions to both private and public companies.

• Continuous research and educate our clients on fairness issues related to complextransactions and regularly issue white papers on various fairness and solvency topics.

• Substantial expertise in analyzing data on which to base a financial opinion, includingdue diligence, risk analysis, deal structure, financing, potential conflicts, comparablebenchmark transactions, and timeliness.

Fairness Opinion Process

• Madison is highly experienced with all types of fairness opinions and change of control transactions. The following are considered when evaluating a change of control transaction:

• Are Directors Independent of Transaction? • Valuation Analysis - Range of Values • Transaction Analysis • Fair Process? Fair Dealing? • What are the conflicts? • Who would be potential dissidents? What is their view of Transaction? • Entire Fairness Standard / Fiduciary Duties of Board Members • Shareholder Consents Required? • Madison's Board Package and Presentation (Independent, Best Practices,

Clear Conclusions) • Documents that Directors are fulfilling their fiduciary duties. • Legal Considerations • Clear Unequivocal Fairness Opinion Letter

Portfolio Valuation

• Madison is responsive to recent Fair Value accounting pronouncements that havemade it mandatory for the correct and accurate measurement of value for investmentcompanies.

• Madison understands the needs for Fair Value measurement for our private equityand hedge fund clients, providing them with independent fair value assessments oftheir investment portfolios which comply with professional accounting standards.

• Ability to provide quick turnaround has enabled us to become a reliable source forvaluing a wide array of investment vehicles and their underlying securities.

• Most importantly, the Madison name is respected by auditors and investors as atrusted and independent third-party source for valuation.

Valuation Services

• Madison combines analytical precision with in-depth industry knowledge toaddress even the most sophisticated valuation challenges.

• Madison valuations are objective, independent, defensible and thoroughlydocumented in order to meet the heightened requirements of regulatory agencies,auditors and legal bodies.

• As Valuation Experts, we understand fundamental theory of Fair Value and issuereports that are thoroughly documented and well supported.

Transaction Practices Across Industry Practices

Some of Many Transactions Executed

Some of Many Transactions Executed (continued)

Comprehensive Resources

Comprehensive Resources (continued)

Table of Contents

• Madison Street Capital Overview

• Madison Street Capital India Overview• Transaction Process Overview• Qualifying Investment Partners• Madison Address & Contact

Madison Street Capital India Overview

India Specific Services:

• Joint Ventures & Strategic Alliances(Inbound and Outbound JV’s)

• M&A Advisory(Buy Side and Sell Side)

• Debt Financing Solutions • Private Equity Placements• Hybrid, Structured and Innovative Financing• Corporate Restructuring• Valuations• Transaction Advisory• Strategic Sourcing and Special Projects

Table of Contents

• Madison Street Capital Overview • Madison Street Capital India Overview

• Transaction Process Overview• Qualifying Investment Partners• Madison Address & Contact

Ways an Advisor Adds Value

• Serves as an intermediary in negotiations– Insulates the owners and management from the need to make immediate decisions– Ability to act as the ‘bad cop’ and not sour the buyer on the transaction or the owners and

management team– Provides the owner the ability to maintain an appropriate distance from the sales process

• Leverages industry and financing experience– Prepares a company for the transaction process and can provide suggestions on how to enhance

value in the eyes of bidders– Utilizes industry contacts and pre-existing relationships to target investors most likely to meet

shareholder objectives– Understands the implications of different deal terms and how to guard clients against

disadvantageous conditions

• Allows the management team to concentrate on the day-to-day issues of running the business

– Avoid neglecting customers, vendors, and employees– It is critical that the business continues to perform well during the transaction process

• Heightens the sophistication level of the transaction and maximizes potential value– Investors assume they can acquire stakes in companies that lack representation at bargain prices– Representation translates directly into more advantageous transaction terms

Ways an Advisor Adds Value (continued)

• Establishes a sense of urgency and an auction environment

– Without a sense of urgency, deals tend to be delayed, thereby creating an opportunity for the investor’s interest to wane

– Advisors create a specific timeline of events, and adhere to it, so that all parties are placed on an equal footing

• Avoids the dilemma of talking to one potential investor first, before marketing the company to all potential investors

– An organized process creates an auction environment and bidding pressure while deal leverage is the highest

• Helps to ensure confidentiality of transaction

– Decreases likelihood of employees questioning activities of management– Funnels potential buyer contact through an outside party and an outside office

• Aids in preparation of in-depth financial and strategic value analyses

Common Reasons Deals Fail

Critical Issues Madison’s SolutionsUnrealistic pricing expectations.• Historical results or projections do notsupport valuation.

Negative surprises uncovered during due diligence.• Issues uncovered regarding sales, profits,

customers, employees, environmental.

Inability of parties to agree on representations and warranties/indemnification language in purchase contract.

Inability of buyers to finance the purchase .• Sellers often have to be willing to offer some

type of financing or earn out arrangement.

Deterioration of financial performance during the marketing process.

• Comprehensive analysis of financials todetermine potential synergistic benefits forstrategic buyers.

• Thoroughly discuss expectations withmanagement as it relates to “ marketstandard” deal terms, and gain an in-depthunderstanding of shareholder objectives.

• Perform in depth seller due diligence to indentify problematic trends/issues and present rationale or strategy of favorable resolution of issues.

• Require potential buyers to document proposed sources and uses well in advance of the purchase agreement , and compared to current availability in the credit markets.

Valuation Methodologies

In order to provide a more accurate estimate of the enterprise value of the company; multiple valuation methodologies are employed:

Comparable companies

(Public Comps)

Description: Identify the key publicly-traded comparable companies for the company and calculate and apply multiples of Revenues, EBITDA and EBIT.Comment: A widely applied valuation technique that provide current, market based valuation information. Multiples are adjusted to reflect the premium for control and discounted for liquidity and size.

Comparable Transactions

(M & A Comps)

Description: Identify key comparable transactions for the company, and where possible, calculate and apply multiples of Revenues, EBITDA and EBIT.Comment: A popular valuation technique for measuring market valuations on a control basis. Precedent multiples are dependent on market conditions at the time of the transaction.

Valuation Methodologies (continued)

DiscountedCash Flows

(DCF)

LeveragedBuyout Analysis

(LBO)

Description: Model the free cash flows resulting from the companies financial projections and discount using an appropriate cost of capital.Comment: Arguably the most sophisticated valuation technique, providing real insight into divisional valuation drivers. Highly sensitive to numerous key assumptions.

Description: Using the same projections as the DCF, apply a suitable leveraged capital structure and solve the valuation using a 20-40% target equity rate of return. Comment: A useful alternative perspective since it applies a valuation key at which a private equity investor would typically be prepared to bid for the company.

Sale Process Parameters

Sample Process Stages – Controlled Sale

Table of Contents:

• Madison Street Capital Overview • Madison Street Capital India Overview• Transaction Process Overview

• Qualifying Investment Partners• Madison Address & Contact

Characteristics of a Successful Partner/Investor

SUCCESSFUL TRANSACTIONS

• Successful transactions are the result of pairing the right partner with the client; Madison’s experience lends to the following characteristics of the right partner

Assessing Potential Investment Partners• Number of transactions completed• Integration success of previous transactions• Integration planning effort• Marketing• Financing relationships• Credit approval process of financing source• Financing structure of current operations

– Equity available– Returns to equity participants

• Deal with the decision makers who can allocate capital• Strong strategic fit – core business:

– Strategic logic: component, module, system– Geographic reach; low cost sourcing opportunity– Capacity needs– Capable of identifying and implementing process improvements– Capable of bringing engineering and design improvements– Focused purchasing effort could generate material cost reduction– Customer diversification

Table of Contents:

• Madison Street Capital Overview • Madison Street Capital India Overview• Transaction Process Overview• Qualifying Investment Partners

• Madison Address & Contact

United States Headquarters105 W. Madison, Suite 1200, Chicago, Illinois 60602Phone: (312) 529-7000 | Fax: (312) 529-7001

Charles Botchway, CEOPhone: (312) 529-7000Email: cbotchway@madisonstreetcapital.com

Anthony Marsala, COOPhone: (312) 529-7000Email: amarsala@madisonstreetcapital.com

Ian Dolby, Senior Managing DirectorPhone: (312) 529-7000Email: idolby@madisonstreetcapital.com

Karl D'Cunha, Senior Managing DirectorPhone: (312) 529-7000Email: kdcunha@madisonstreetcapital.com

IndiaSuite No.27-28, First FloorAugusta Point, Golf Course Road Sector-53Gurgaon-122002, Haryana India

Jaydip Sinha, Managing DirectorPhone: (124) 408-5203Email: jsinha@madisonstreetcapital.com

GhanaF186/6 Labone Link, North Labone -Accra, Ghana

Tutu Kwachie, Senior AssociatePhone: 233 302774113 Email: tkwachie@madisonstreetcapital.com

Madison Street Capital, is an International Investment Banking firmthat provides Financial Advisory, Financing Services , Valuation Services, andRestructuring Services to public and private businesses as well as to assetmanagers . Madison Street Capital has focussed expertise in partneringwith Middle Market Firms to successfully navigate complex transactions andsuccessfully assist clients in optimizing their Company’s Potential. MadisonStreet Capital’s experienced professionals serve clients across the globefrom offices in North America, Asia and Africa. Expertise Spans across 23Industry segments and executed over 500 transactions for the last 15years. Refer our corporate website www.madisonstreetcapital.com to knowmore about us.

We have specialized expertise in partnering with middle-market firms inhundreds of industry verticals and niche markets to achieve the best possibleoutcome through a variety of transactions. We analyze each client’s uniqueneeds to obtain the best match between buyers and sellers, arrangeappropriate financing, and create capitalization structures that optimize theclient’s potential.