Acquisition Criteria - Private Capital Research

General Investment Criteria: Acquisition opportunities of companies with EBITDA from $3 to $50 million with talented, committed management. Mature companies that have substantial opportunities for growth – internally or through acquisitions of complementary businesses. We seek companies with strong positions in niche markets, or a clearly defined potential to create market leadership.

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	Private Equity Client 1: New York-Based Private Equity Group

	Founded in 1998, this private investment firm with over $300 million in their current fund is focused on making equity investments in America's smaller middle-market companies. They seek to generate long-term capital appreciation through a value oriented investment strategy. Their ultimate goal is to create value – for customers, employees, suppliers, lenders and shareholders. Their objective is to help management move their companies to a better, more profitable position.

	*General Criteria:* Revenues: $40 - 200mm EBITDA Range: $8 - 30mm Margins: 13% + EBITDA margins Geography: Nationwide Structure: • Control positions, always partner with management • Utilize senior debt only (no mezzanine or sub-debt), in addition to their equity investment which is usually 30% to 60% of the capital structure initially		Target Industries: Stable demand industries that possess: • Strong defensible market positions • High operating margins • Strong operating management • Multiple growth opportunities

	*Past And Current Portfolio Companies Include:* Financial advisor/asset manager to state and local governments; dining and entertainment cruises; independent specialty retailer catering to resorts and casinos; folded carton packaging manufacturer; shelf stable bakery products for the military, eyewear and eye care accessory products; premium Asian appetizers and entrees; promotional products/home-based solution network.


	Private Equity Client 2: Mid-Atlantic-Based Family Office

	Private Capital Research LLC is currently retained by a private investment management company/family office that is seeking to acquire branded product manufacturing companies that are U.S. based. The Company currently has platforms in two business segments: dental equipment and supplies; and outdoor power equipment for lawn and gardening.

	General Criteria: Branded Products that are domestically manufactured Revenue Range: $25 – 500mm EBITDA Range: $5 - 40mm Gross Margins: 30% or greater Geography: Anywhere in the USA Management & Staff: Prefer that management stay but not necesary Investment Type: 100% buyouts preferred		Target Industries: Branded product manufacturers that are focused on targeted industry niches. Any industry, business-to business or business-to-consumer. Target Descriptions: Wide range of industry interests, but the products must be branded and have brand equity. Iconic brands that are out of favor but have inherent staying power. Groups of various brands that are related in their industry, that have multiple distribution channels (direct, one-step, two-step, etc) are preferred.

	*Past And Current Portfolio Companies Include:* Lawn and Garden Equipment Manufacturing platform with seven leading brands in niches including edgers, hedge trimmers, blowers, composters, dethatchers, commercial mowers, sod cutters, leaf and debris vacuums, tillers, tractors, turf aerators, turf seeders, truck loaders, etc. Dental Equipment Manufacturing platform with multiple leading brands in niches including high-speed handpieces, fiber optics, chairs, stools, lights, vacuum/blower systems, dust collectors, water pumps, compressors, workstations, modular systems etc.


	Private Equity Client 3: Mid-Atlantic-Based ESOP Holding Company

	An ESOP Holding Company that seeks to partner with both ESOP and non-ESOP owned companies. Uses a diversified holding company structure with the holding company acting as a sponsor of the ESOP, rather than the individual operating companies. This structure diversifies participants’ retirement benefits and shifts fiduciary responsibilities and ESOP administration from the operating company level to the holding company. Under this structure, senior management of each operating company is compensated through equity-based incentive programs independent of the ESOP structure.

	*General Criteria* Revenue: Between $15 – 150mm; if target is currently ESOP-owned, size criteria is less of a focus due to potential stock exchange EBITDA: Between $2 – 10mm Transaction Type: Recapitalizations, Acquisitions Transaction Structure: Must acquire at least 80% post acquisition; if seller not selling 100%, seller may reinvest at the operating company level. A phantom stock equity plan may be used as an incentive for management of operating company. Growth: Proven earnings history; sustainable cash flows Geography: North America		Target Industries: Mature and profitable industrial, construction products or commercial manufacturing companies.

	*Past And Current Portfolio Companies Include:* Concrete pole manufacturer; PVC pipe manufacturer; traffic control enclosure manufacturer; industrial air/gas blower and vacuum manufacturer, electronic manufacturing services (EMS) company for OEMs.


	Private Equity Client 4: Mid-Atlantic Based Private Equity Group

	Private Capital Research LLC is currently retained by a successful, niche private equity firm that adheres to a disciplined investment approach focused on making investments in small, profitable, domestic manufacturing companies. The team has a long history of seeking out niche manufacturing businesses and collaborating with family owners and management teams to maximize revenue growth potential and enhance competitive advantages to realize operating margin improvements and value creation.

	General Criteria: Domestic niche manufacturing companies Revenue Size: $25mm or more, but have considered smaller revenue levels coupled with high profitability. Gross Margins: 20% or greater EBITDA: $5 - 15mm historical performance. Equity Check: $35mm max initially Geography: East of the Rockies: Northeast, Southeast and Midwest preferred Management & Staff: Require management to co-invest a meaningful amount Investment Type: Buyouts, Majority Recaps		Target Industry Niche Focus: Capital Equipment, aerospace/defense/security, medical products, building products, material solution providers, robotics and industrial components. Not contract manufacturing or low-tech commodity-type products. Target Descriptions: Actively looking for companies or divisions of larger corporations that manufacture unique or highly engineered products to either a niche market or a diverse customer base. Works well with private, family owned businesses as well as corporate divestitures. Collaborates with existing management to enhance company performance.

	*Current Portfolio Companies Include:* A provider of high quality water purification and heat transger solutions to the military, pharmaceutical, energy and bottled water industries. A designer and manufacturer of tactical shelters, containers and subsystems noted for mobility, and used in both critical emergency and military applications. A manufacturer of critical, specialty components for bridges, elevated roadways, highways, airfield pavement structures and other elements of the transportation infrastructure. A world wide supplier of equipment for the industrial and hydraulic hose industry. A producer of mineral wool insulation products for commercial and industrial applications.


	Private Equity Client 5: Mid-Atlantic Family-Backed Private Equity Firm

	Focused on taking a controlling interest in specialty manufacturing, value-added distribution and niche service companies that have a definable business model, a proprietary product, process or market coupled with a substantial opportunity for growth and value creation. The firm seeks to partner with strong management teams already in place. With no outside limited partners, the office seeks to create a structure designed for long term success past the usual five year holding period of traditional private equity funds.

	*General Criteria:* Revenue Range: $15 – 100mm EBITDA Range: $2 – 15mm Margins: Profitable Valuation: Reasonable, market purchase multiples Growth: Minimum 10% annual growth projections Geography: Eastern US		*Target Industries:* Largely opportunistic as to industry.

	*Past And Current Portfolio Companies Include:* Residential and commercial security, fire, medical and CCTV alarm system sales, installation, maintenance and monitoring, as well as aggregation of central station monitoring contracts; Military and student housing; Wholesale lending services.


	Private Equity Client 6 New York Based Family-Backed Holding Company

	This privately held investment firm is structured as a holding company, not as a limited partnership,with more than $200mm in equity available for investment, and seeks to make investments in companies with up to $75mm in total enterprise value that are leaders in a niche industry and offer proprietary competitive advantages. They excel using a "buy, build, and hold" strategy by joining with management to help solidify and grow already strong entities over an indefinite holding period. Their "hands-off" approach to the day-to-day operations allows management to run the companies,while they focus at the board level.

	*General Criteria:* Revenue: $15 – 100mm EBITDA: $2 - 15mm Transaction Type: Control Investments, select non-control Need: • Proprietary Competitive Advantages • Strong Barriers to Entry • Stable Cash Flow • High Margins Relative to Industry Norms Geography: Mid-Atlantic, Midwest, Southeast		Target Industries : • Manufacturing • Commercial Distribution • Car/Taxi Dispatch Services • Consumer Products/Services • Intellectual Property/Content • Specialty Publishing • Restaurants • Infrastructure

	*Past And Current Portfolio Companies Include:* A leading supplier of replacement industrial/commercial HVAC condensers and coils; two marine supply businesses that distribute heavy anchors, chain, wire rope and related hardware to, among others, the shipping, oil and gas and commercial fishing industries; a manufacturer of commercial and navel mooring hardware, includng chain, anchors, and related fittings; a leading consumer-focused Lincoln Town Car dispatch service; an aluminum and zinc die-casting business that manufactures sacrificial anodes for recreational marine applications; electricity submetering company that manufactures submeters and interval data recorders and develops automatic meter reading and analysis software.


	Private Equity Client 7 Midwest-Based Private Equity Group

	Founded nearly 40 years ago, and investing from their ninth fund, this Private Investment Firm invests patient capital from several families and a few fiancial institutions in high-quality, closely-held and family-owned companies with the flexibility to consider a longer investment horizon, and when appropriate, retain portfolio companies for many more years than a typical investment firm. The Firm's unique approach of identifying executives with outstanding industry knowledge and past performance has led to the financing of 200+ family business transitions over the past 35 years..

	General Criteria: Revenues: $50 - 250mm EBITDA: $5 - 25mm Total Enterprise Value: $50 - 150mm Investment Size: $20 - 75mm capital over the life of investment Transaction Type: Control Position through Buyout or Recapitalization Holding Period: 5 - 10 years, typically Geography: North America		Target Industries: Seeking scalable, profitable, well-managed companies positioned for long-term growth organically, through acquisition, or both, often partnering with owners and operators who retain partial ownership. Generally opportunistic as to industry. Business services companies tend to fit well.

	*Past And Current Portfolio Companies Include:* information and compliance services to corporate Environmental Health and Safety (EH&S) departments; specialty infusion and injectable pharmacy services; outsourced janitorial and facilities maintenance services; oupatient cancer services, including imaging and treatment; legal information management services; distributor of equipment components and parts to the mining and construction industries; outsourced staffing services to hotels; a healthcare-focused marketing and communications agency; diversified channel marketing services including marketing administration activity, automation, marketing communications, event marketing and creative services; a face-to-face marketing services company; technology and engineering services to government agencies; importer and master distributor of ductile iron and cast iron fittings, restraints, municipal castings; computer systems maintenance services; payment processing systems to financial and commercial customers.


	Private Equity Client 8: Mid-Atlantic-Based Private Equity Group

	Founded 1999, this Private Equity Group provides capital and trusted counsel in partnership with proven managers to drive the growth of promising companies into outstanding enterprises. They will acquire a majority interest in partnership with proven managers, and are also comfortable supporting managers as a non-control investor, providing flexible investment structures designed to uniquely meet the needs of both the company and its owners.

	*General Criteria:* Revenues: $10 - 75mm Investment Size: $3 - 10mm Transaction Type: Buyouts, recapitalizations, non-control growth equity investments Geography: Mid-Atlantic and Eastern US; will consider Midwest and Southeastern US		Target Industries: Seeking growing, well-managed companies which need counsel and support as they grow into market leaders. Always strong partner with existing/recapping management. Opportunistic as to industry. Interested in opportunities with complications or unique attributes that may repel other potential buyers. Business and consumer services and products tend to fit well

	*Past And Current Portfolio Companies Include:* Special event digital photography services; point-of-sale products and lifecycle support services for retailer store automation; fragrance, bath and body products; portable x-ray and mobile diagnostic health services; private cable operator and broadband solutions provider; janitorial and maintenance services provider; regional railroad system; designer, seller and distributor of active wear; regional provider of home infusion and respiratory therapy services; toxicology laboratory.


	Corporate Client - Strategic Buyer Custom and Pre-Engineered Bearings Company

	Private Capital Research LLC is currently retained by a world leading manufacturer of both custom and pre-engineered bearings. Our client is focused on both bearings and related technology. They are looking to expand by acquiring a business in the Precision Equipment Manufacturing and Repair Industry.

	General Criteria: Revenue Size: $5.0 - 20mm Gross Margins: >30% for product manufacturers; but can be lower for MRO and Parts sales companies. Growth: GDP growth or better EBITDA: $1 - 4mm historical - no distressed situations. EBITDA Margins: 10%+ Customers: Diversified customer base Geography: USA based targets only, with a focus on Mid-Atlantic, Houston TX, Indiana, Ohio Management & Staff: Key management personnel will be retained for at least one year post acquisition. Investment Type: 100% ownership preferred with some flexibility. Asset purchase preferred.		Target Industries Niche Focus: Primary NAICS Codes: • 332991 - Ball and Roller Bearing Manufacturing • 33361 - Engine, Turbine and Power Transmission Equipment Manufacturing • 333613 - Mechanical Power Transmission Equipment Manufacturing • 811219 - Other Electronic and Precision Equipment Repair and Maintenance Additional Target Descriptions: • Precision Equipment Manufacturing and Repair • Bearings and Seals Manufacturing, Repair, Services • Rotating Components Manufacturing, Service • Turbine Parts and Components (blades and rotating parts) Manufacturing, Service, Maintenance • Power Transmission Equipment Manufacturing, Services, Maintenance • Oil and Gas Industry Equipment and Services • Navel and US Government Equipment Suppliers and Manufacturers. • OEM or Aftermarket Businesses with a preference to growing the Aftermarket Business