Sterling Partners Investment Thesis Challenge (SPITC) November 2011
STERLING PARTNERS: FIRM EVOLUTION Then: 1984 Now: 2011 Four entrepreneurs Total staff = 75 Six funds and ~$5 billion 1 in AUM No funds Technology and a business plan 30 portfolio companies Passionate and creative Passionate and creative 1. Includes Sterling investments across seven institutional funds and co-investments CONFIDENTIAL INFORMATION CONFIDENTIAL INFORMATION 2
STERLING PARTNERS: FIRM OVERVIEW Proven, operationally focused team with top-tier returns 25+ year history and entrepreneurial background ~$5 billion of AUM across institutional funds and co-investment program 1 Who We Are Top quartile performance in small and mid-market control funds Business model investors with an “all seasons” strategy Pre-eminent investor in education What We Do Pursue similar business models in healthcare and business services Differentiated operational approach to building businesses Dedicated resources in human capital, finance, operations, strategy, and governance How We Do It Experienced and large team (1) AUM = unrealized net asset value of our institutional funds plus uncalled committed capital plus the unrealized net asset value of co-investments in existing portfolio companies CONFIDENTIAL INFORMATION CONFIDENTIAL INFORMATION 3
STERLING PARTNERS: SECTOR EXPERIENCE & AREAS OF FOCUS Historic success and experience in our core sectors has driven our business model focus and investment strategy Education Healthcare Business Services Experience 20+ yrs Experience 20+ yrs Experience 20+ yrs # of investments 1 13 # of investments 1 14 # of investments 1 19 (1) Does not include pre-institutional fund investments as well as 12 investments classified as “Other” (e.g., specialty manufacturing, information services) CONFIDENTIAL INFORMATION CONFIDENTIAL INFORMATION 4
NEW INVESTMENT: PACIFIC INTERPRETERS Investment Thesis Explain why the market is attractive Market for investment Outline the value proposition Business Model Explain why the target company and The Target team you have selected are promising Outline your post-close strategy to win Post-Close Strategy CONFIDENTIAL INFORMATION 5
INVESTMENT THESIS: KEY ELEMENTS Investment Thesis Overview Sample Long Term Trends • Why the Industry • Population changes • Long term trends • Compliance and risk management • Market size & breakdown • Suppressed natural gas prices • Market growth • Environmental sustainability • Growth drivers • Aging infrastructure • Industry dynamics • Why the Business Model Sample Business Model Characteristics • Business model characteristics • Platform capable of high growth • Map the market & value chain • Sustainable and scalable • Addresses key pain point • Differentiated strategy • Fits PE model • Recurring revenue • Targets exist • Attractive exit alternatives • Why Now • Low customer concentration • Timing impetus • Opportunities for operational improvement • Market impetus • Entrenched customers (e.g. stickiness) • Path to invest • Defensible position/barriers to entry • POV on market evolution • Profitable and positive cash flow • Post Closing Strategy to Win • Operating leverage • Operational value adds • Minimal adoption risk • Strategy • High value proposition • Human Capital • IT • Governance • Other value adds CONFIDENTIAL INFORMATION 6
APPENDIX CONFIDENTIAL INFORMATION 7
Experienced team Brennan Barthelemy Fran Beard Doug Becker Eric Becker Javier Arrechea Philip Alphonse Special Limited Principal, Assoc. Director, Sr. Managing Director Business Development, Principal Partner Latin America Talent Acquisition Procurement Alberto Garcia Steve Chang Mike Drai John Ebersole Rick Elfman Avi Epstein Director, Firm Principal, IT Sr. Managing Director Vice President, Principal, Strategy Vice President Strategy & Operations Legal Affairs Matt Hankins Chris Hoehn-Saric Daniel Hosler Brandon Labrum Scott Glickson Mats Lederhausen Vice President Sr. Managing Director Principal Vice President Director, PCAT Operating Partner CONFIDENTIAL INFORMATION CONFIDENTIAL INFORMATION 8
Experienced team Alan Macksey Kim Vender Moffat Ricardo Prado Kevin McAllister Bob Michelson Sam Morasca Principal Managing Director Operating Partner Vice President Principal Operating Partner Beth Rahn Daniel Reisner Garrick Rice Jason Rosenberg Daniel Rosenberg Associate, Managing Director Principal Principal Managing Director Investor Relations Steven Taslitz Jeff Schechter Julie Stacey Shoshana Vernick Tom Wippman Director, Sr. Managing Director, Managing Director, Principal Managing Director Chairman CFO Talent Acquisition and General Counsel CONFIDENTIAL INFORMATION CONFIDENTIAL INFORMATION 9
Education portfolio › Ashworth : post-secondary and career-oriented distance education › Connections : operator of “virtual schools” under state contracts › Educate : provider of branded education services (e.g., Sylvan Learning) › Educate Online : online provider of live tutorial instruction › InfiLaw : consortium of independent, community based law schools › Laureate : global provider of for-profit, post-secondary education services › Meritas : network of proprietary K-12 schools › School of Rock : national provider of performance-based music education › Progressus : school-based and early intervention therapy services CONFIDENTIAL INFORMATION CONFIDENTIAL INFORMATION 10
Healthcare portfolio › Active Day : network of adult care facilities › Ameritox : specialty toxicology laboratory › Artromick : provider of medication management services and technology › Centerre : post-actue care rehabilitation hospitals › First Choice : Network of free-standing emergency rooms › Foundations Recovery Network : provider of behavioral healthcare svcs › Pacific Interpreters : provides interpreting services for healthcare › Paradigm : provider of managed care services for catastrophic injuries › Remedi : regional long-term care pharmacy › Rittenhouse : owner and operator of senior housing facilities CONFIDENTIAL INFORMATION CONFIDENTIAL INFORMATION 11
Business services / other portfolio › Avectra : provider of membership management software solutions › Continental Case : provider of refrigeration refurbishment services › Cornerstone Records : full service record and information management co. › Foundation Partners : provider of end-of-life transition services to families › GEM : provides de-gassing, vapor control and water treatment services › io : designs, builds and operates data centers › Livingston : provider of customs brokerage, transportation, and logistics svcs › Optimer Brands : builds companies with unique textile technology › Prospect Mortgage : retail mortgage consolidation business › SAVO : provider of sales enablement solutions › SecureNet : provider of credit and debit card processing CONFIDENTIAL INFORMATION CONFIDENTIAL INFORMATION 12
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