Driving value creation in a Private Equity backed company' Challenges and success stories'

1

• Driving value creation in a Private Equity backed
  company. Challenges and success stories.
• Dave Lovegrove Group Commercial Manager,
  Express Logistics
• Tony Batterton Investment Director, Direct
  Capital
• Kerry McIntosh New Zealand Operating
  Partner, Ironbridge Capital
• Nigel Bingham Executive Director, Pencarrow
  Private Equity
• Moderator Tim Martin Director, ANZ Capital
  Private Equity

2
Private Equity Boosts Investment
INVESTMENT IN EUROPEAN BUY-OUT FINANCED FIRMS AS
A OF SALES
62
59
54
66
Source EVCA Centre for Management Buyouts
3
Private Equity Boosts Innovation
AUSTRALIAN PE BACKED COMPANIES - LAUNCHING NEW
PRODUCTS
Source PwC and AVCAL survey 2006
4
Private Equity Boosts Employment
JOB CREATION DATA
Source Creating New Jobs and Value With Private
Equity (AT Kearney, 2007)
5
Private Equity Boosts Revenue
REVENUE GROWTH DATA
Source AVCAL submission drawing from AFI PwC
INSEE DIANE Deutsche Beteiligungs AG BVCA
6
Private Equity backed companies on NZX

• One particularly bad example (Feltex) has
  driven recent negative sentiment
• A review of current NZX companies with previous
  PE backing, however, highlights above average to
  excellent stockmarket performance

Post Listing IRRs
33
31
29
Pumpkin Patch
Ryman
19
Freightways
Methven
12
Pacific Brands
Source NZX and Direct Capital analysis
7
Buy

• Creating a deal pipeline
• Proprietary vs. auction deals
• Access to management
• Non-monetary aspects
• Determining the investment thesis (the 3 5 big
  things)
• Due diligence
• Commercial / Assessment of management (core PE
  functions)
• Financial / Legal / Industry specific (can be
  contracted out)
• Developing the 100 day plan
• Aligning management incentives (the deal
  structure)
• Raising the debt finance

8
Manage The Investors View
9
Manage Express Logistics
Embraced Expansion
Improved Governance
Management Opportunities
Succession
Value Creation
Access to Networks
Efficient Capital Structure
Financial Discipline
Avoided Value Erosion
10
Exit
11
Audience QA
12
Final Question