Re-defining Middle Market Investment Banking

Presentation By Madison Street Capital

Re-defining Middle Market Investment Banking

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

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 firm providing corporate advisory , valuation services, financial opinions, capital raising and portfolio valuation to companies. Madison & its broker-dealer Naples AIS, Inc which is a regulated by FINRA are committed to the highest level of professional standards The Madison name is synonymous with deal making expertise with more than a 100 years combined industry experience and executing several M&A transactions each year Madisons 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.
Investment Banking Mergers & Acquisitions Capital Raising Private Placements Corporate Finance Advisory Financial Restructuring ESOP Advisory Seasoned Professionals Unparalleled Leadership Decades of Experience National Footprint Highest level of Professional Standards. Independent Valuation Services Fairness & Solvency Opinions Financial Reporting Compliance Tax Compliance Portfolio Valuation Litigation Support

CLIENT FOCUS

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. Process can be taxing on limited management resources. Transaction agreements are highly customized. 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 SeniorLevel 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 financial advisory services. The Madison approach guides shareholders and management teams throughout the transaction process, leveraging years of experience and judgment to maximize value, minimize disruption to the business, and ensure that corporate strategic goals are met on the best terms. Knowledge, Experience and Networks to match Buyers , Sellers, & Alliance Partners as well as to arrange the appropriate financing and capital structures for each client situation. Madison works closely with middle-market businesses, both public and private, to optimize capital structures and utilize the lowest cost of capital available.

Financial Opinions
As an independent financial advisor, Madison is frequently engaged by Special Committees, Boards of Directors and management groups to provide independent financial opinions to both private and public companies. Continuous research and educate our clients on fairness issues related to complex transactions and regularly issue white papers on various fairness and solvency topics. Substantial expertise in analyzing data on which to base a financial opinion, including due diligence, risk analysis, deal structure, financing, potential conflicts, comparable benchmark 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 have made it mandatory for the correct and accurate measurement of value for investment companies. Madison understands the needs for Fair Value measurement for our private equity and hedge fund clients, providing them with independent fair value assessments of their investment portfolios which comply with professional accounting standards. Ability to provide quick turnaround has enabled us to become a reliable source for valuing a wide array of investment vehicles and their underlying securities. Most importantly, the Madison name is respected by auditors and investors as a trusted and independent third-party source for valuation.

Valuation Services
Madison combines analytical precision with in-depth industry knowledge to address even the most sophisticated valuation challenges. Madison valuations are objective, independent, defensible and thoroughly documented 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 issue reports 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 JVs) M&A Advisory (Buy Side and Sell Side) Debt Financing Solutions Private Equity Placements Corporate Restructuring Valuations Transaction Advisory Strategic Sourcing and Special Projects

Table of Contents
Madison Street Capital Overview Madison Street Capital India Overview Qualifying Investment Partners Madison Address & Contact

Transaction Process Overview

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 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

Leverages industry and financing experience

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 investors 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
Unrealistic pricing expectations. Historical results or projections do not support 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.

Madisons Solutions
Comprehensive analysis of financials to determine potential synergistic benefits for strategic buyers. Thoroughly discuss expectations with management as it relates to market standard deal terms, and gain an in-depth understanding 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:
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. 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.

Comparable companies (Public Comps)

Comparable Transactions (M & A Comps)

Valuation Methodologies (continued)

Discounted Cash Flows (DCF)

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.

Leveraged Buyout Analysis (LBO)

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 are the result of pairing the right partner with the client; Madisons experience lends to the following characteristics of the right partner

f e o er c en om id nf ust Co C

Ca nan pa cin bi g lit y

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SUCCESSFUL TRANSACTIONS

Tr M ans ot ac iva ti tio on n

n io on ct sa icati n ra i s t T h p So

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

USA HEADQUARTERS
105 W. Madison, Suite 1200 Chicago, Illinois 60602 Phone: (312) 529 7000, Fax: (312) 529 7001

Charles Botchway, C.E.O cbotchway@madisonstreetcapital.com

Anthony Marsala, C.O.O amarsala@madisonstreetcapital.com

GHANA
F 186/6 Labone Link, North Labone Accra, Ghana Phone: 2333 0277 4113 Tutu Kwachie, Sr. Associate Email: tkwachie@madisonstreetcapital.com

INDIA
Suite 27-28, Augusta Point Golf Course Road, Sector-53 Gurgaon 122002 Haryana, India Phone: +91 (0124) 408 5203 Contact: Jaydip Sinha, Managing Director Email: jsinha@madisonstreetcapital.com