1. a Client Name Sub Head Banker Info Banker Title MERGERS & ACQUISITIONS BUSINESS VALUATION CORPORATE FINANCE MARKET INTELLIGENCE Investment Bankers To The Middle Market and Hospitality c Travel and Hospitality Positioning Your Franchise Company for Capital or Sale Mark Dayman, Managing Director The McLean Group, LLC January 26, 2011

2. Confidential and Proprietary Need Early Focus of Attention (Ready, Aim, Shoot): Whats the objective? Are you seeking an exit?? Or are you looking for an expansion opportunity?? Or seeking core capital? Whats it worth? How can value be enhanced in the short run?? Positioning for Capital or Sale 2

3. Confidential and Proprietary If you want to sell – each type of exit carries different value outcomes 1. Family transfers –Fair Market Value is the driver. –Host of inter-family issues to overcome. The Objective – Sell or Expand?? 3

4. Confidential and Proprietary If you want to sell – each type of exit carries different value outcomes The Objective – Sell or Expand?? 4 2. Sell to third parties – Employees 3. Sell to third parties- Management

5. Confidential and Proprietary If you want to sell – each type of exit carries different value outcomes The Objective – Sell or Expand?? 5 4. Sell to third parties – Working investors 5. Sell to third parties- Financial investors (Individuals, Small Groups, PEGs)

6. Confidential and Proprietary If you want to sell – each type of exit carries different value outcomes The Objective – Sell or Expand?? 6 6. Sell to third parties – Strategic Buyers

7. Confidential and Proprietary The Objective – Sell or Expand?? 7 Middle Market Buyer Trends

8. Confidential and Proprietary Recaps – Sell Some, Expand Some The Objective – Alternatives 8 Take some of the current investment off the table, provide new capital, take business to new level. Capital sources may require equity of 25-75%. Use new capital for expansion. Resell company in 3-5 years, everybody exits. Attractive to investors seeking high quality and stable management, proven product & market trends, can overcome barriers to growth.

9. Confidential and Proprietary Core Capital The Objective – Alternatives 9 It is the most difficult capital to raise. AKA early stage, venture capital. Might want 25% +/- of equity with upside rewards. Common is tech, biomed/healthcare, Pharma. Other fields require more than simply potential monetary rewards – previous track record, aspirational investors with BIG EGOs.

10. Confidential and Proprietary Value Drivers The Objective – Whats It Worth? 10 Earnings potential – frequently EBITDA Risk delineated in terms of multiples Terms of the deal

11. Confidential and Proprietary Value Drivers The Objective – Whats It Worth? 11 Earnings potential – frequently EBITDA Historic performance Clean v. a mess Normalized Projected performance Documented and continuing trends? New concepts and strategies

12. Confidential and Proprietary Value Drivers The Objective – Whats It Worth? 12 Risk Buyers/investors perception Market and buyer demands for returns Likelihood that expected performance can be achieved (versus alternative opportunities) Transparency – how easy is it for a buyer or capital source to see the value? Size matters. Industry matters.

13. Confidential and Proprietary Value Drivers The Objective – Whats It Worth? 13 Terms of the Deal Buyers and sellers perceptions of value are normally balanced by the terms of the deal. Sellers are normally forced to take paper back. Variances to balance: 1. Earnings - potential v. actual 2. Perceived risks 3. Skin in the deal 4. Other issues – taxes, credit, classifications

14. Confidential and Proprietary How Can I Enhance Value?? The Objective – Make It Better 14 Enhance EBITDA 1. Make it bigger and better and sustainable. 2. Clean up P&L and B/S. 3. Clean up the operations – customers, markets, products, distribution systems, etc. 4. Develop a strategic business plan and start implementing the action plan.

15. Confidential and Proprietary How Can I Enhance Value?? The Objective – Make It Better 15 Reduce perceived risks 1. Develop a strategic business plan and start implementing the action plan. Simplicity, focus, measurable results, scalability. 2. Create & enhance transparency. Make it easy for capital sources to see and understand your business and where the value is. 3. Make yourself obsolete, especially in a sale. 4. Have a close team of advisors – lawyer, CPA, investment banker.

16. Confidential and Proprietary Wrap-Up 16 Decide what it is you want to accomplish? Stay and build? Sell now? If you seek core capital, youll need an especially robust compelling message. Enhance value Build EBTIDA Develop a business plan, implement it Reduce perceived risk