red clay captial holdings overview 2013 slideshare

–PRIVATE and PROPRIETARY–Contains private and/or proprietary information. May not be used or disclosed outside Red Clay Capital except pursuant to a written agreement.

Red Clay Capital Holdings, LLC

2013

RED CLAY CAPITALRED CLAY CAPITALOVERVIEWOVERVIEW


Red Clay Capital

Focus

Investment Strategy

Team

Table of Contents


Red Clay focuses on an underserved market that exceeds $700 billion, driven by the 2.3 million baby-boomer business owners expected to exit over the next decade.

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Emerging Middle Market: $2.8 trillion

S.E. Market: $674 billion

Family-Owned Exits:

$270 billion

Sources: U.S. Department of Commerce, Capital IQ

Red Clay Capital

–PRIVATE and PROPRIETARY–Contains private and/or proprietary information. May not be used or disclosed outside Red Clay Capital except pursuant to a written agreement. 4

Red Clay has an attractive focus on a transitioning sector with limited competition.

Market Focus: Emerging middle market (“EMM”) companies Profile: Established, often family-owned businesses Financials: Revenues < $100 million and cash flows > $2 million Enterprise Values: $10 to $40 million

Transitioning Sector: Family owned businesses > 24 million family businesses in the U. S. 40% of family business leaders expected to retire in next 10 years 25% of family businesses will change hands in next 5 years 30% of family businesses transition to a 2nd generation, < 12% to a 3rd

Limited Competition: Most buyout investors prefer larger transactions Average buyout fund > $1.25 billion in size (2007)

Average US buyout transaction $240 million (8/2007, lowest level since 2/2005)

Sources: Private Equity Analyst, The Wall Street Journal, Harris Williams & Co.

Focus: Emerging Middle Market


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The southeastern U.S. is the fastest growing part of the country, yet very little private equity is focused in the region.

Sources: National Association of Investment Companies, Census.gov, Geomidpoint.com, Expansion Management Magazine

Focus: Southeastern Focus

Population growth in the Southeast exceeded 9% annually (vs. 7% for the country, 2000-2007)

> 20% of privately held U.S. companies are located in the Southeast

64% of population growth in the South will come from non-white ethnic groups (1995 – 2025) 32% Hispanic, 26% African American,

6% Asian

There are 40 emerging domestic market (“EDM”) private equity firms in the U.S. Red Clay will be one of a few with a focus in the Southeast.


Red Clay will invest in sectors that are easily understood and where the principals can add value.

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Investment Strategy: Overview

Industry Focus Contract Manufacturing Transportation & Logistics Infrastructure Services Value-Added Business Services and Distribution Other basic industries opportunistically

Investment Approach Change of control and growth investments Family run businesses Defensible position in clear market sectors Creative capital structures and prudent use of leverage

Professionalization Value derived by improving operating fundamentals Financial controls and metrics Enhance sales and distribution strategies Human resource management Technology evaluation and investment Operational efficiency and quality control


Red Clay will employ conservative capital structures to invest in Emerging Middle Market businesses.

Investment Criteria Revenues < $100 million EBITDA > $2 million Enterprise values of $10 to $40 million History of profitable operations; steady predictable cash flow Financeable fixed assets Sustainable business models and discernable competitive

advantages High barrier to entry Value creation by professionalization of the company Niche and fragmented market segments

Prudent use of leverage Seller financing/participation Hands-on support of investments, adding management as needed

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Investment Strategy: Investment Criteria


The Principals at Red Clay have significant experience required to execute and manage successful transactions.

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Experienced Leadership

VP w/ 4 venture backed companies Board of Directors, United Therapeutics

Mark Arnold

Investment Banking

$9 billion in transactions Bank of America and BellSouth

Private Equity

Operations Consulting w/ McKinsey & GE BellSouth: Business restructuring Nuestro Banco operations/board

Entrepreneurship Founded Nuestro Banco Founded Reconquista Capital

$1 billion in transactions Coopers & Lybrand and Bank

of America

Bank of America Capital Partners Bank of America Catalyst Fund Onyx Capital Ventures Red Clay Capital

Co-founded Catalyst Fund Founded Red Clay Capital

Red Clay Capital

Henry Hicks

–PRIVATE and PROPRIETARY–Contains private and/or proprietary information. May not be used or disclosed outside Red Clay Capital except pursuant to a written agreement. 9

For additional information please contact:

H. Beecher Hicks, [email protected]

C. Mark [email protected]

Red Clay Capital Holdings, LLC1401 Peachtree St., Suite 500 3200 West End Ave., Suite 500

Atlanta, GA 30339 Nashville, TN 37203

www.redclaycapital.com