ABC Company, Inc.

Recapitalization Analysis
(figures in U.S. dollars, thousands)

Key Inputs & Assumptions

Company Name: ABC Company, Inc. Exit EBITDA Multiple: 6.0x
Company Fiscal Year Ended: 12/31/14 Exit EBITDA Sensitivity: 1.0x
Date of Transaction Analysis: 9/25/14 Total Sources/2014E EBITDA: 6.0x
Date of Transaction Offer: 12/31/14 Interest Rate (1=Avg., 2=Beg., 3
Pro Forma Year: 2014 Paydown Debt? ("Yes", "No") No

Sources of Funds Amount Ownership Opt/Warr Diluted %Sources

New Equity Sponsor 5,000 80.0% --- 70.8% 40.1%
Rollover 1,250 20.0% 10.0% 26.5% 10.0%
New Mezzanine w/ Warrants -- --- 3.0% 2.7% ---
100.0% 13.0% 100.0%

Debt / EBITDA
Rate 2014E 2015P
New Mezzanine w/ Warrants 1,035 10.0% 0.50x 0.43x 8.3%
New Senior Notes 2,070 9.0% 1.00x 0.87x 16.6%
New Revolving Credit Facility 3,105 8.0% 1.50x 1.30x 24.9%
Total Sources $12,460 3.00x 2.61x 100.0%

Uses of Funds Amount Rate %Uses

Proceeds to Seller 11,264 90.4%
Rollover 1,250 10.0%
Balance Sheet Cash (1,554) 2.0% (12.5%)
Short-Term Notes Payable -- ---
Line of Credit 1,000 8.0%
Longterm Debt 500 4.0%
Advisory Fees -- ---
Financing Fees -- ---
Total Uses $12,460 100.0%
ABC Company, Inc. Income Statement
(figures in U.S. dollars, thousands)

FYE December 31: 2013A 2014E 2015P 2016P

Net Sales $15,000 $17,250 $19,838 $22,813

Sales Growth 15.0% 15.0% 15.0%
COGS 9,000 10,350 11,903 13,688
Gross Profit 6,000 6,900 7,935 9,125
Gross Margin (% of Sales) 40.0% 40.0% 40.0% 40.0%

SG&A Expense 4,600 5,290 6,084 6,996

% of Sales 30.7% 30.7% 30.7% 30.7%
Operating Profit (EBIT) 1,400 1,610 1,852 2,129

Depreciation & Amortization Expense 400 460 529 608

% of Sales 2.7% 2.7% 2.7% 2.7%
EBITDA 1,800 2,070 2,381 2,738
% of Sales 12.0% 12.0% 12.0% 12.0%

Net Interest Expense 150 150 498 486

Pretax Income (EBT) 1,250 1,460 1,354 1,643

Taxes 500 584 514 624

Effective Tax Rate 40.0% 40.0% 38.0% 38.0%
Net Income 750 876 839 1,019
% of sales 5.0% 5.1% 4.2% 4.5%
ABC Company, Inc. Cashflow Statement
(figures in U.S. dollars, thousands)

FYE December 31: 2014E 2015P 2016P

Net Income / (Loss) $876 $839 $1,019

Depreciation 460 529 608
Change in Accounts Receivable (225) (259) (298)
Change in Inventory (188) (216) (248)
Change in Prepaid Expenses (15) (17) (20)
Change in Accounts Payable 75 86 99
Change in Accrued Expenses 30 35 40
Total Operating Activities $1,014 $997 $1,201

Capital Expenditures (460) (529) (608)

Total Investing Activities ($460) ($529) ($608)

Dividends -- -- --
Equity Issued -- -- --
Short-Term Notes Payable -- -- --
Change in Line of Credit -- -- --
Change in Longterm Debt -- -- --
New Mezzanine w/Warrants -- -- --
New Senior Notes -- -- --
New Revolving Credit Facility -- -- --
Total Financing Activities -- -- --

Change in Cash +/(-) 554 468 592

Beginning Cash Balance 1,000 1,554 2,022
Ending Cash Balance $1,554 $2,022 $2,614
ABC Company, Inc. Balance Sheet
(figures in U.S. dollars, thousands)

FYE December 31: 2013A 2014E 2014PF 2015P 2016P

Minimum Cash $500 $500
Cash & Cash Equivalents 1,000 1,554 $1,554 $2,022 $2,614
Accounts Receivable 1,500 1,725 1,725 1,984 2,281
Inventory 1,250 1,438 1,438 1,653 1,901
Prepaid Expenses 100 115 115 132 152
Total Current Assets 3,850 4,831 4,831 5,791 6,949

Net Property, Plant & Equipment 1,000 1,000 1,000 1,000 1,000
Intangible Assets / Goodwill -- -- 7,934 7,934 7,934
Deposits -- -- -- -- --
Total Noncurrent Assets 1,000 1,000 8,934 8,934 8,934

Total Assets 4,850 5,831 13,765 14,725 15,883

Accounts Payable 500 575 575 661 760

Accrued Expenses 200 230 230 265 304
Total Current Liabilities 700 805 805 926 1,065

Other Non-Current Liabilities -- -- -- -- --

Short-Term Notes Payable -- -- -- -- --

Line of Credit 1,000 1,000 -- -- --
Longterm Debt 500 500 500 500 500
New Mezzanine w/ Warrants -- -- 1,035 1,035 1,035
New Senior Notes -- -- 2,070 2,070 2,070
New Revolving Credit Facility -- -- 3,105 3,105 3,105
Total Long-Term Debt 1,500 1,500 6,710 6,710 6,710

Total Liabilities 2,200 2,305 7,515 7,636 7,775

Total Shareholders' Equity 2,650 3,526 6,250 7,089 8,108

Total Liabilities & Shareholders' Equity 4,850 5,831 13,765 14,725 15,883
Balance 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000
ABC Company, Inc. Financial Statement Assumptions
(figures in U.S. dollars, thousands)

FYE December 31: 2013A 2014E 2015P 2016P

Capital Expenditures (% of Sales) 2.7% 2.7% 2.7% 2.7%

Capital Expenditures 400 460 529 608

Assets (Sales days)

Accounts Receivable 36.5 36.5 36.5 36.5
Inventory 50.7 50.7 50.7 50.7
Prepaid Expenses 2.4 2.4 2.4 2.4

Liabilities (COGS days)

Accounts Payable 20.3 20.3 20.3 20.3
Accrued Expenses 8.1 8.1 8.1 8.1

Working Capital
Current Ratio 5.5x 6.0x 6.3x 6.5x
Net Working Capital 2,150 2,473 2,843 3,270
Change in Net Working Capital 323 371 427
 Outputs
FYE Ended:
2017 2018 2019 2020
Summary of Equity Sponsor Returns
Trailing EBITDA Multiple
5.0x 25.6% 25.0% 24.4% 23.9%
6.0x 34.4% 31.1% 29.0% 27.5%
7.0x 42.2% 36.5% 33.0% 30.6%

Summary of Mezzanine Holder Returns

Trailing EBITDA Multiple
5.0x 19.9% 18.4% 17.6% 17.1%
6.0x 21.9% 20.0% 18.9% 18.2%
7.0x 23.8% 21.5% 20.1% 19.2%

Value of Management Stake

Trailing EBITDA Multiple
5.0x $3,717 $4,583 $5,594 $6,771
6.0x 4,553 5,544 6,699 8,042
7.0x 5,389 6,505 7,804 9,313

Summary Credit Statistics

2014PF 2015P 2016P

EBITDA/Tot. Int. Exp. 4.2x 4.8x 5.6x
EBITDA-Capex/Tot. Int. Exp. 3.2x 3.7x 4.4x

Total Debt/EBITDA 3.2x 2.8x 2.5x

Senior Debt/EBITDA 2.5x 2.2x 1.9x
Total Debt/Total Cap 0.5x 0.5x 0.5x
2017P 2018P 2019P 2020P

$26,235 $30,170 $34,696 $39,900

15.0% 15.0% 15.0% 15.0%
15,741 18,102 20,818 23,940
10,494 12,068 13,878 15,960
40.0% 40.0% 40.0% 40.0%

8,045 9,252 10,640 12,236

30.7% 30.7% 30.7% 30.7%
2,449 2,816 3,238 3,724

700 805 925 1,064

2.7% 2.7% 2.7% 2.7%
3,148 3,620 4,164 4,788
12.0% 12.0% 12.0% 12.0%

471 453 431 405

1,977 2,363 2,807 3,319

751 898 1,067 1,261

38.0% 38.0% 38.0% 38.0%
1,226 1,465 1,740 2,058
4.7% 4.9% 5.0% 5.2%
2017P 2018P 2019P 2020P

$1,226 $1,465 $1,740 $2,058

700 805 925 1,064
(342) (394) (453) (520)
(285) (328) (377) (434)
(23) (26) (30) (35)
114 131 151 173
46 52 60 69
$1,435 $1,705 $2,017 $2,376

(700) (805) (925) (1,064)

($700) ($805) ($925) ($1,064)

-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --

736 901 1,092 1,312

2,614 3,350 4,251 5,342
$3,350 $4,251 $5,342 $6,654
2017P 2018P 2019P 2020P
$500 $500 $500 $500
$3,350 $4,251 $5,342 $6,654
2,624 3,017 3,470 3,990
2,186 2,514 2,891 3,325
175 201 231 266
8,334 9,983 11,934 14,235

1,000 1,000 1,000 1,000

7,934 7,934 7,934 7,934
-- -- -- --
8,934 8,934 8,934 8,934

17,268 18,917 20,868 23,169

875 1,006 1,157 1,330

350 402 463 532
1,224 1,408 1,619 1,862

-- -- -- --

-- -- -- --
-- -- -- --
500 500 500 500
1,035 1,035 1,035 1,035
2,070 2,070 2,070 2,070
3,105 3,105 3,105 3,105
6,710 6,710 6,710 6,710

7,934 8,118 8,329 8,572

9,334 10,799 12,539 14,597

17,268 18,917 20,868 23,169

0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000
2017P 2018P 2019P 2020P

2.7% 2.7% 2.7% 2.7%

700 805 925 1,064

36.5 36.5 36.5 36.5

50.7 50.7 50.7 50.7
2.4 2.4 2.4 2.4

20.3 20.3 20.3 20.3

8.1 8.1 8.1 8.1

6.8x 7.1x 7.4x 7.6x

3,760 4,324 4,973 5,719
490 564 649 746