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Please download and use in Excel, not Google Sheets
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Search Fund Equity Returns Model
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SUMMARY CASH FLOW MODEL & RETURNS - INVESTOR CAPITAL STRUCTURE 1
Summary of Returns ($000s)
Summary of Operating Scenarios
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(US$ in 000s, except where noted)
InvestorsSearcherOptimisticBase CasePessimistic
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Structure 1Structure 2Structure 1Structure 2
Revenue Growth
15.0% 5.0% --
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Optimistic Case
Base Case
Pessimistic Case
Optimistic Case $ 47,383 $ 46,514 $ 15,528 $ 15,376
Annual EBITDA Margin Expansion
50 bps 25 bps --
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Operating Assumptions:
Base Case $ 27,816 $ 26,568 $ 5,555 $ 5,940
Exit Multiple
5.0x 4.5x 4.0x
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Annual Revenue Growth
20.0%12.5%0.0%Pessimistic Case $ 11,028 $ 10,366
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Annual EBITDA Margin Expansion
0.50%0.25%0.00%
Increase in Net Working Capital
20% of Revenue Growth
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Exit Valuation Multiple
7.0x 5.5x 4.0x
Cash Tax Payments
40% of Earnings Before Taxes
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Depreciation & Amortization
$500K in Year 0; fixed margin throughout
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Year 5 Sales
 $ 37,325 $ 27,030 $ 15,000
Capital Expenditures
$250K per year
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Year 5 EBITDA
 $ 8,398 $ 5,744 $ 3,000
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Exit TEV $ 58,787 $ 31,592 $ 12,000
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Less: Net Debt
 (4,125) (1,780) 972
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Total Equity
 $ 62,911 $ 33,371 $ 11,028
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Redeemable Preferred Equity
$ - $ - $ -
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Nonredeemable Preferred Equity
11,150 11,150 11,150
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Value of Common Equity
 $ 51,761 $ 22,221 $ -
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Returns:
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Investor Redeemable Preferred Equity
 $ - $ - $ -
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Investor Nonredeemable Preferred Equity
11,150 11,150 11,028
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Investor Common Equity
36,233 16,666 -
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Total Return to Investors
 $ 47,383 $ 27,816 $ 11,028
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Original Investment
 $ 7,950 $ 7,950 $ 7,950
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Return on Invested Capital
6.0x 3.5x 1.4x
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Investor IRR
43.2%28.8%7.0%
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Manager Common Equity Ownership %
30.0%25.0%20.0%
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Manager Payout
 $ 15,528 $ 5,555 $ -
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SUMMARY CASH FLOW MODEL & RETURNS - INVESTOR CAPITAL STRUCTURE 2
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(US$ in 000s, except where noted)
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Optimistic Case
Base Case
Pessimistic Case
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Operating Assumptions:
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Annual Revenue Growth
20.0%12.5%0.0%
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Annual EBITDA Margin Expansion
0.50%0.25%0.00%
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Exit Valuation Multiple
7.0x 5.5x 4.0x
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Year 5 Sales
 $ 37,325 $ 27,030 $ 15,000
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Year 5 EBITDA
 $ 8,398 $ 5,744 $ 3,000
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Exit TEV $ 58,787 $ 31,592 $ 12,000
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Less: Net Debt
 3,558 6,017 7,247
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Total Equity
 $ 55,229 $ 25,575 $ 4,753
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Redeemable Preferred Equity
$ - $ - $ 1,647
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Nonredeemable Preferred Equity
3,975 3,975 3,105
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Value of Common Equity
 $ 51,254 $ 21,600 $ 0
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Returns:
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Investor Redeemable Preferred Equity (a) (b)
 $ 6,661 $ 6,933 $ 7,260
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Investor Nonredeemable Preferred Equity
$ 3,975 $ 3,975 $ 3,105
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Investor Common Equity
35,878 15,660 0
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Total Return to Investors
 $ 46,514 $ 26,568 $ 10,366
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Original Investment
 $ 7,950 $ 7,950 $ 7,950
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Return on Invested Capital
5.9x 3.3x 1.3x
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Investor IRR
45.9%30.2%6.5%
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Manager Common Equity Ownership %
30.0%27.5%20.0%
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Manager Payout
 $ 15,376 $ 5,940 $ -
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(a) Includes Investor Capital dividends during duration of investment.
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(b) Cash from operations pays down Redeemable Preferred Equity over 5 year hold period.
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