1. BUSINESS CASE STUDY – BLACKWATER USA
Company Formation
Growth
Capitalization
Revenue Model
Steady State
Risk/Decline
Founder’s Exit

2. COMPANY FORMATION
INITIAL BUSINESS “NEED”: (Blackwater Lodge & Training Center)
365 ranges shut down for insufficient SDZ’s in 1996.
SEAL Teams lack nearby firearms training location.
First Two “Business Units” -
Blackwater Lodge and Training (Training)
Raven Development (Construction)
FIRST EVOLUTION: (Blackwater Target Systems)
BW destroys commercially-available firearms targets.
Company learns the value of Vertical Integration.
Company builds initial manufacturing capability
COMPANY ALWAYS FOCUSED ON “BUILDING CAPABILITY”

3. 2001: 9-11 ATTACK COMBAT OPERATIONS OEF – 2001 OIF - 2003
GROWTH
2001: ATTACK
2000:USS COLE BOMBING
2005: HURRICANE KATRINA
COMBAT OPERATIONS
OEF – 2001
OIF

4. GROWTH – Global Events Drive Demand
Training Facility for SEAL Teams
Executive Outings
(Revenue: $0-1m)
Navy Training Contract (Cole Bombing)
Other Military Training
(Revenue: $1-6m)
OGA Security Work (9-11 Attacks/OEF)
CPA Security Work (OIF commences)
(Revenue: $6-175m)
DoS Security Work (OIF Transitions)
Foreign GWOT Training (GWOT Expands)
Hurricane Katrina
(Revenue $175m-950m)

5. GROWTH - Revenue
Blackwater’s DYNAMIC revenue growth presented countless financial and operational challenges.

6. CAPITALIZATION
PRIVATE CAPITAL ($6M): Used to Purchase Land/Construct Facility/ Commence Operations. *Bake Sales*
(Revenue: $0-1m)
FIRST BANK LINE ($10M): First Debt Facility not received until after Navy Training Contract.
(Revenue: $1-6m)
OWNERS EQUITY/SYNDICATED BANK LINE ($50M): The Owner agreed to retain 90% of the Company’s Earnings. First Syndicated Debt Facility. **Aircraft Financing**
(Revenue: $6-175m)
EXPANDED DEBT FACILITY ($200M): Additional banks join debt facility. Line increased to support burgeoning operations.
(Revenue $175m-950m)

7. REVENUE MODEL
Government Contracts do not ordinarily award “mobility” or “start up” expenses. This required the company to finance the revenue “trough” at the outset of every contract.

8. STEADY STATE: Blackwater Organization
Blackwater Training Centers
Blackwater East (Moyock, NC)
Blackwater North (Freemont, IL)
Blackwater West (San Diego Co., CA)
Blackwater Manufacturing
Blackwater Target Systems
Blackwater Armor
Blackwater Airships
Blackwater Gear
Blackwater Security Consulting
Blackwater Aviation
Blackwater Logistics
Raven Development Group
Greystone International
Terrorism Research Center

9. STEADY STATE: Major Clients
US Government
Law Enforcement
Allied Governments
Department of Defense
US Navy
US Marine Corp
US Army
US Air Force
CNTPO
CENTCOM
Department of State
Department of Homeland Security
Department of Energy
Department of Justice
United States
NYPD
Connecticut State Police
Virginia Beach Police
New Orleans Police
Allied Police Detachments
Royal Canadian Mounted Police
Colombian Police
Italian Police
Chilean Police
Kuwait SWAT
Canadian Military
Azeri Military
Afghani Narcotics Police
Jordanian Military
UAE Military

10. RISK/DECLINE: Politics and Pundits

11. RISK/DECLINE: 2003: Attack in Fallujah 2007: Nissor Square
2007: Congress
2012: OGA Attack in Khost

12. COMPANY ULTIMATELY SOLD FOR 20% OF HIGHEST VALUE
FOUNDER’S EXIT:
2005: Received a $2.6b valuation from major Wall Street Hedge Fund.
Offer was rejected by Owner
Hedge Fund later dramatically over-payed for competitor
2010: Company sold in two transactions.
Aviation assets sold to AAR Global for $200m
Remaining Assets sold to investment fund for $300m
COMPANY ULTIMATELY SOLD FOR 20% OF HIGHEST VALUE

13. QUESTIONS