Description
This document about create the opportunity actively managed private equity investments since 1969.
Established 1969
CREATE THE OPPORTUNITY
Actively Managed Private Equity Investments Since 1969
Since 1969, Founders Equity has been actively engaged in private equity investing and in assisting
the growth of small to mid cap enterprises. We’ve initiated acquisition programs, restructured
businesses, raised debt and equity in private placements and public offerings, and realized liquidity
to maximize value, both as pro-active investors and as corporate executives.
From 1969 through 2003, Founders has been responsible for investing in excess of $500 million of
debt and equity capital in 24 principal transactions and more than 80 add-on acquisitions. These
investments have generated average equity returns in excess of 40% per year.
Our principals have had significant operating experience and strive to be value-added partners
with entrepreneurial owners and management teams. We focus on recapitalizations or buyouts
of established businesses, management teams pursuing an acquisition growth strategy, and later
stage growth equity investments.
We are acutely aware of the risks inherent in smaller businesses, the critical importance of
developing management depth, and the additional support that companies require to achieve
success. Therefore, we are pro-active in considering investment opportunities, and we maintain
that posture throughout the term of our relationship with the companies we’ve invested in.
During the entire process we strive to be thorough, diligent, and rigorous in our approach,
and simultaneously we encourage management to be inventive and to challenge convention.
We like to call this Creating the Opportunity.
2
3 WE ARE THOROUGH, DILIGENT, AND RIGOROUS
IN OUR APPROACH. AT THE SAME TIME
WE ENCOURAGE MANAGEMENT TO BE
INVENTIVE AND TO CHALLENGE CONVENTION.
In contrast to many private equity firms, we are not solely financial buyers. Our
principals are entrepreneurs who have started and managed businesses. The heritage
of the firm is based on our understanding of the challenges faced by business owners/
entrepreneurs and the skills required to succeed in operations, marketing, finance,
and overall corporate strategy. We are available to actively support our portfolio
companies. However, while we strive to make a meaningful contribution to each of our
companies, the ultimate responsibility for managing the business enterprise remains
with the executives of our portfolio companies.
WARREN H. HABER Warren H. Haber co-founded Founders and has been
at the firm for over 35 years. He has equity research and
investment banking experience, having been at Merrill
Lynch and Bear Stearns. Mr. Haber has served as an
Executive Officer and/or Director with a number of
Founders portfolio companies and currently serves on
the board of directors of CoStar Group, Inc. (NASDAQ)
and Warnex, Inc. (Toronto Stock Exchange).
JOHN L. TEEGER John L. Teeger has been at Founders for over 20 years.
He has public accounting, corporate finance, and
investment banking experience with Arthur Andersen,
Anglovaal Limited, Union Acceptances, and Bear
Stearns. Mr. Teeger has served as President, Director,
and CFO of several of Founders portfolio companies.
JOHN D. WHITE John D. White, Jr. (“J.D.”) has been at Founders for
over 10 years and has served on the board of a number
of Founders portfolio companies. He was a co-founder
of a previous portfolio company and served as its
Executive Vice President and CFO when it was taken
public. He has global operating and financial experience
with Digital Equipment Corporation and investment
banking experience with PaineWebber.
4
5
Experienced Investors ACTIVELY MANAGED PRIVATE EQUITY INVESTMENTS SINCE 1969
EXPERI ENCED I NVESTORS
CREATING THE OPPORTUNITY
FOUNDERS EQUITY WORKS
WITH MANAGEMENT
TEAMS TO IDENTIFY AND
CREATE OPPORTUNITIES
Our team values the importance of strong business
relationships and the entrepreneurial spirit
We work together as partners to create generous incentives
and personal growth opportunities for management
Management is charged with day-to-day operational control
We ensure that additional capital is made available to
support future growth
We can complement a company’s internal growth when
appropriate, with targeted add-on acquisitions
We can assist management in the planning and
implementation of an appropriate exit strategy
Our team provides in-house strategic, operating,
marketing, and financial expertise
FOUNDERS HAS THE
REPUTATION AND TRACK
RECORD TO ENABLE
US TO RECRUIT
SENIOR MANAGEMENT
TEAM MEMBERS
AND VALUE-ADDED
BOARD MEMBERS
6
7
OUR SUCCESS IN WORKING WITH MANAGEMENT TEAMS
Fragmented Industry Consolidation, Buy and Build Strategy, Exploit Technology
Company: Provider of Seismic Services to Oil Companies
FOUNDERS STRATEGY
AND ACTION PLAN
• Identified shift in technology use in the industry from 2-d to 3-d
• Identified a management team and started pursuing buy and
build strategy
• Provided capital so management could purchase equipment to utilize
new technology, roll up this fragmented industry, and gain market share
• Moved swiftly to consolidate administrative functions and install state
of the art operating and financial systems
RESULTS • Revenues increased from $50 to $100 million in 18 months
• EBITDA increased 4x
• Later sold to competitor for 15x investment
Corporate Divestiture of Publicly Traded Subsidiary, Turnaround Situation
Company: Manufacturer of Uninterruptible Power Supply Systems
FOUNDERS STRATEGY
AND ACTION PLAN
• Worked with management to identify and initiate service
business—new revenue source
• Consolidated operating and sales offices
• Closed underperforming foreign offices
• Upgraded accounting and reporting systems
• Supplemented and reorganized management team
RESULTS • Turnaround completed and company profitable within
the first year of investment
• Sold to a competitor for 6x investment
Growth Strategy, Exploit Technology
Company: Provider of Database Information in the Commercial Real Estate Market
FOUNDERS STRATEGY
AND ACTION PLAN
• Invested capital so management could execute a geographic
expansion plan
• Assisted in the acquisition of data providers in various regions
• Utilized capital markets relationships to provide additional
financing through IPO and add on financings
• Supported management team in implementation of strategy
through entire investment
RESULTS • Revenues increased 40x since original investment
• Valuation increased from $12 million to over $750 million
• Company is industry leader
Management Teams ACTIVELY MANAGED PRIVATE EQUITY INVESTMENTS SINCE 1969
OUR I NVESTMENT STRATEGY
We have approximately $140 million of capital under management. We are committed to
long-term value creation that generates above average returns.
IDENTIFY INVESTMENT
OPPORTUNITIES
We continuously monitor macro-economic trends to identify
investment opportunities, and we perform in-depth industry
analysis and thorough due diligence prior to investing
EXPERTISE &
UNDERSTANDING
We invest in businesses in which we have expertise
and understanding
“ADDED VALUE” We provide “added value” to portfolio companies in the form
of strategic advice, relationships, and investment experience
GEOGRAPHICALLY
PROXIMATE
We focus on companies that are primarily located east of
the Mississippi
LEAD SPONSOR We intend to be the lead sponsor in at least 70% of
our investments
MAXIMIZE DEAL FLOW We maximize deal flow by utilizing finders, advisors, former
managers, investors, attorneys, accountants, and investment
bankers — and we pay finders fees
MAINTAIN OPEN
COMMUNICATIONS
We maintain open communications with our business managers,
intermediaries, investors, business partners, and employees
OPPORTUNISTIC,
ENTREPRENEURIAL SPIRIT
We foster an opportunistic, entrepreneurial spirit both within
our firm and in the businesses in which we invest
8
9
Our Investment Strategy ACTIVELY MANAGED PRIVATE EQUITY INVESTMENTS SINCE 1969
PRO-ACTIVE INVESTMENT
PHILOSOPHY
We are active, not passive, in identifying investment opportunities
MANAGEMENT
MANAGEMENT
MANAGEMENT
We seek managers who share our values of integrity and
transparency and who, like us, are dedicated to increasing equity
value in enterprises in which they have an ownership position
MAXIMIZE RETURN
ON CAPITAL
We strive to maximize the return on capital we deploy,
and generate superior returns
FUNCTION AS A TEAM We strive to forge an entrepreneurial spirit, while
maintaining a team approach
EMPLOY THE BEST We seek to attract and retain highly motivated people
who share our values
INTEGRITY AND
TRANSPARENCY
We conduct our activities with high integrity and transparency
Start-Up
Development and initial
implementation of business model
Early Growth
Successful “beta” version
Few customers
Accelerating Growth
Successful business model rolled out
Later-Stage Growth
Accelerating growth
Profitable business
Potential IPO
Special Situations
Growth/Mature
Turnaround situations
Financial restructuring
Enhancing management
Altering business model
Small-Cap Market
$5–$100 million acquisition with targeted
follow-on acquisitions
Middle Market
$100–$500 million
Large-Cap Market
Above $500 million
Founders
Investment
Focus
10
11
The Founders Approach ACTIVELY MANAGED PRIVATE EQUITY INVESTMENTS SINCE 1969
THE FOUNDERS APPROACH
I NVESTMENT FOCUS
EQUITY INVESTMENT • Up to $10 million per transaction
• Up to $20 million per transaction with co-investors
• Founders obtains a level of corporate control via
percentage ownership or security provisions
COMPANY SIZE • $2 to $15 million of Operating Profit (EBITDA)
• Revenues $20 to $150 million
COMPANY PARAMETERS • Above average growth prospects
• Strong barriers to entry in its market area
• Has in place or employs motivated, insightful,
incentivized management
• Demonstrates strong growth potential —
organically and/or by acquisition strategies
• Operates in fragmented industry offering
consolidation opportunities
• Utilizes technology to attain a competitive
advantage or to reposition their business
• Underperforming businesses that we believe
can be repositioned
TARGETED INDUSTRIES • Business and Marketing Services
• Outsourcing and Logistics
• Healthcare Services
• Environmental Services
• Security Systems
• Oilfield Services
• Consumer Products and Services
• Food/Food Services
• Franchising
• Niche Manufacturing
TRANSACTION FORMAT • Management Buyouts
• Recapitalizations
• Special Situations/Turnarounds
• Corporate Divestitures
• Going Private
• Buy and Build Strategies
• Accelerating Growth
• Later-Stage Growth
12
13
Investment Focus ACTIVELY MANAGED PRIVATE EQUITY INVESTMENTS SINCE 1969
Founders Equity Inc.
711 Fifth Avenue, 5th Floor
New York, NY 10022
tel (212) 829-0900
fax (212) 829-0901
[email protected]
www.fequity.com
PARTNER WITH FOUNDERS
Founders Equity encourages investment proposals from investment banks, business brokers,
industry executives and entrepreneurs, commercial banks, attorneys, accountants, and other
private equity groups. All proposals are handled in strict confidence.
We respond promptly to all investment proposals. Please contact us to discuss how we can partner
with you and “Create the Opportunity.”
Partner With Founders ACTIVELY MANAGED PRIVATE EQUITY INVESTMENTS SINCE 1969
711 Fifth Avenue, 5th Floor
New York, NY 10022
www.fequity.com
doc_924411038.pdf
This document about create the opportunity actively managed private equity investments since 1969.
Established 1969
CREATE THE OPPORTUNITY
Actively Managed Private Equity Investments Since 1969
Since 1969, Founders Equity has been actively engaged in private equity investing and in assisting
the growth of small to mid cap enterprises. We’ve initiated acquisition programs, restructured
businesses, raised debt and equity in private placements and public offerings, and realized liquidity
to maximize value, both as pro-active investors and as corporate executives.
From 1969 through 2003, Founders has been responsible for investing in excess of $500 million of
debt and equity capital in 24 principal transactions and more than 80 add-on acquisitions. These
investments have generated average equity returns in excess of 40% per year.
Our principals have had significant operating experience and strive to be value-added partners
with entrepreneurial owners and management teams. We focus on recapitalizations or buyouts
of established businesses, management teams pursuing an acquisition growth strategy, and later
stage growth equity investments.
We are acutely aware of the risks inherent in smaller businesses, the critical importance of
developing management depth, and the additional support that companies require to achieve
success. Therefore, we are pro-active in considering investment opportunities, and we maintain
that posture throughout the term of our relationship with the companies we’ve invested in.
During the entire process we strive to be thorough, diligent, and rigorous in our approach,
and simultaneously we encourage management to be inventive and to challenge convention.
We like to call this Creating the Opportunity.
2
3 WE ARE THOROUGH, DILIGENT, AND RIGOROUS
IN OUR APPROACH. AT THE SAME TIME
WE ENCOURAGE MANAGEMENT TO BE
INVENTIVE AND TO CHALLENGE CONVENTION.
In contrast to many private equity firms, we are not solely financial buyers. Our
principals are entrepreneurs who have started and managed businesses. The heritage
of the firm is based on our understanding of the challenges faced by business owners/
entrepreneurs and the skills required to succeed in operations, marketing, finance,
and overall corporate strategy. We are available to actively support our portfolio
companies. However, while we strive to make a meaningful contribution to each of our
companies, the ultimate responsibility for managing the business enterprise remains
with the executives of our portfolio companies.
WARREN H. HABER Warren H. Haber co-founded Founders and has been
at the firm for over 35 years. He has equity research and
investment banking experience, having been at Merrill
Lynch and Bear Stearns. Mr. Haber has served as an
Executive Officer and/or Director with a number of
Founders portfolio companies and currently serves on
the board of directors of CoStar Group, Inc. (NASDAQ)
and Warnex, Inc. (Toronto Stock Exchange).
JOHN L. TEEGER John L. Teeger has been at Founders for over 20 years.
He has public accounting, corporate finance, and
investment banking experience with Arthur Andersen,
Anglovaal Limited, Union Acceptances, and Bear
Stearns. Mr. Teeger has served as President, Director,
and CFO of several of Founders portfolio companies.
JOHN D. WHITE John D. White, Jr. (“J.D.”) has been at Founders for
over 10 years and has served on the board of a number
of Founders portfolio companies. He was a co-founder
of a previous portfolio company and served as its
Executive Vice President and CFO when it was taken
public. He has global operating and financial experience
with Digital Equipment Corporation and investment
banking experience with PaineWebber.
4
5
Experienced Investors ACTIVELY MANAGED PRIVATE EQUITY INVESTMENTS SINCE 1969
EXPERI ENCED I NVESTORS
CREATING THE OPPORTUNITY
FOUNDERS EQUITY WORKS
WITH MANAGEMENT
TEAMS TO IDENTIFY AND
CREATE OPPORTUNITIES
Our team values the importance of strong business
relationships and the entrepreneurial spirit
We work together as partners to create generous incentives
and personal growth opportunities for management
Management is charged with day-to-day operational control
We ensure that additional capital is made available to
support future growth
We can complement a company’s internal growth when
appropriate, with targeted add-on acquisitions
We can assist management in the planning and
implementation of an appropriate exit strategy
Our team provides in-house strategic, operating,
marketing, and financial expertise
FOUNDERS HAS THE
REPUTATION AND TRACK
RECORD TO ENABLE
US TO RECRUIT
SENIOR MANAGEMENT
TEAM MEMBERS
AND VALUE-ADDED
BOARD MEMBERS
6
7
OUR SUCCESS IN WORKING WITH MANAGEMENT TEAMS
Fragmented Industry Consolidation, Buy and Build Strategy, Exploit Technology
Company: Provider of Seismic Services to Oil Companies
FOUNDERS STRATEGY
AND ACTION PLAN
• Identified shift in technology use in the industry from 2-d to 3-d
• Identified a management team and started pursuing buy and
build strategy
• Provided capital so management could purchase equipment to utilize
new technology, roll up this fragmented industry, and gain market share
• Moved swiftly to consolidate administrative functions and install state
of the art operating and financial systems
RESULTS • Revenues increased from $50 to $100 million in 18 months
• EBITDA increased 4x
• Later sold to competitor for 15x investment
Corporate Divestiture of Publicly Traded Subsidiary, Turnaround Situation
Company: Manufacturer of Uninterruptible Power Supply Systems
FOUNDERS STRATEGY
AND ACTION PLAN
• Worked with management to identify and initiate service
business—new revenue source
• Consolidated operating and sales offices
• Closed underperforming foreign offices
• Upgraded accounting and reporting systems
• Supplemented and reorganized management team
RESULTS • Turnaround completed and company profitable within
the first year of investment
• Sold to a competitor for 6x investment
Growth Strategy, Exploit Technology
Company: Provider of Database Information in the Commercial Real Estate Market
FOUNDERS STRATEGY
AND ACTION PLAN
• Invested capital so management could execute a geographic
expansion plan
• Assisted in the acquisition of data providers in various regions
• Utilized capital markets relationships to provide additional
financing through IPO and add on financings
• Supported management team in implementation of strategy
through entire investment
RESULTS • Revenues increased 40x since original investment
• Valuation increased from $12 million to over $750 million
• Company is industry leader
Management Teams ACTIVELY MANAGED PRIVATE EQUITY INVESTMENTS SINCE 1969
OUR I NVESTMENT STRATEGY
We have approximately $140 million of capital under management. We are committed to
long-term value creation that generates above average returns.
IDENTIFY INVESTMENT
OPPORTUNITIES
We continuously monitor macro-economic trends to identify
investment opportunities, and we perform in-depth industry
analysis and thorough due diligence prior to investing
EXPERTISE &
UNDERSTANDING
We invest in businesses in which we have expertise
and understanding
“ADDED VALUE” We provide “added value” to portfolio companies in the form
of strategic advice, relationships, and investment experience
GEOGRAPHICALLY
PROXIMATE
We focus on companies that are primarily located east of
the Mississippi
LEAD SPONSOR We intend to be the lead sponsor in at least 70% of
our investments
MAXIMIZE DEAL FLOW We maximize deal flow by utilizing finders, advisors, former
managers, investors, attorneys, accountants, and investment
bankers — and we pay finders fees
MAINTAIN OPEN
COMMUNICATIONS
We maintain open communications with our business managers,
intermediaries, investors, business partners, and employees
OPPORTUNISTIC,
ENTREPRENEURIAL SPIRIT
We foster an opportunistic, entrepreneurial spirit both within
our firm and in the businesses in which we invest
8
9
Our Investment Strategy ACTIVELY MANAGED PRIVATE EQUITY INVESTMENTS SINCE 1969
PRO-ACTIVE INVESTMENT
PHILOSOPHY
We are active, not passive, in identifying investment opportunities
MANAGEMENT
MANAGEMENT
MANAGEMENT
We seek managers who share our values of integrity and
transparency and who, like us, are dedicated to increasing equity
value in enterprises in which they have an ownership position
MAXIMIZE RETURN
ON CAPITAL
We strive to maximize the return on capital we deploy,
and generate superior returns
FUNCTION AS A TEAM We strive to forge an entrepreneurial spirit, while
maintaining a team approach
EMPLOY THE BEST We seek to attract and retain highly motivated people
who share our values
INTEGRITY AND
TRANSPARENCY
We conduct our activities with high integrity and transparency
Start-Up
Development and initial
implementation of business model
Early Growth
Successful “beta” version
Few customers
Accelerating Growth
Successful business model rolled out
Later-Stage Growth
Accelerating growth
Profitable business
Potential IPO
Special Situations
Growth/Mature
Turnaround situations
Financial restructuring
Enhancing management
Altering business model
Small-Cap Market
$5–$100 million acquisition with targeted
follow-on acquisitions
Middle Market
$100–$500 million
Large-Cap Market
Above $500 million
Founders
Investment
Focus
10
11
The Founders Approach ACTIVELY MANAGED PRIVATE EQUITY INVESTMENTS SINCE 1969
THE FOUNDERS APPROACH
I NVESTMENT FOCUS
EQUITY INVESTMENT • Up to $10 million per transaction
• Up to $20 million per transaction with co-investors
• Founders obtains a level of corporate control via
percentage ownership or security provisions
COMPANY SIZE • $2 to $15 million of Operating Profit (EBITDA)
• Revenues $20 to $150 million
COMPANY PARAMETERS • Above average growth prospects
• Strong barriers to entry in its market area
• Has in place or employs motivated, insightful,
incentivized management
• Demonstrates strong growth potential —
organically and/or by acquisition strategies
• Operates in fragmented industry offering
consolidation opportunities
• Utilizes technology to attain a competitive
advantage or to reposition their business
• Underperforming businesses that we believe
can be repositioned
TARGETED INDUSTRIES • Business and Marketing Services
• Outsourcing and Logistics
• Healthcare Services
• Environmental Services
• Security Systems
• Oilfield Services
• Consumer Products and Services
• Food/Food Services
• Franchising
• Niche Manufacturing
TRANSACTION FORMAT • Management Buyouts
• Recapitalizations
• Special Situations/Turnarounds
• Corporate Divestitures
• Going Private
• Buy and Build Strategies
• Accelerating Growth
• Later-Stage Growth
12
13
Investment Focus ACTIVELY MANAGED PRIVATE EQUITY INVESTMENTS SINCE 1969
Founders Equity Inc.
711 Fifth Avenue, 5th Floor
New York, NY 10022
tel (212) 829-0900
fax (212) 829-0901
[email protected]
www.fequity.com
PARTNER WITH FOUNDERS
Founders Equity encourages investment proposals from investment banks, business brokers,
industry executives and entrepreneurs, commercial banks, attorneys, accountants, and other
private equity groups. All proposals are handled in strict confidence.
We respond promptly to all investment proposals. Please contact us to discuss how we can partner
with you and “Create the Opportunity.”
Partner With Founders ACTIVELY MANAGED PRIVATE EQUITY INVESTMENTS SINCE 1969
711 Fifth Avenue, 5th Floor
New York, NY 10022
www.fequity.com
doc_924411038.pdf