Acquisition/disposition/valuation/lending services …...3 Heritage Global Inc. | Company Overview Heritage Global Inc. is a diversified financial services company providing acquisition,

Investor PresentationMarch 2020

Acquisition/disposition/valuation/lending services for

surplus and distressed assets

2 Heritage Global Inc. | www.hginc.com

Forward-Looking Statements

This communication includes forward-looking statements based on our current expectations and projections about

future events. For these statements, Heritage Global Inc. (the “Company”) claims the protection of the safe harbor

for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

The forward-looking statements contained in this communication are based on knowledge of the environment in

which the Company currently operates and are subject to change based on various important factors, including

variability in magnitude and timing of asset liquidation transactions, the impact of changes in the U.S. national and

global economies (including the uncertain conditions created by the coronavirus [COVID-19] pandemic), interest

rate and foreign exchange rate sensitivity, as well as other factors beyond the Company's control.

Unless required by law, we undertake no obligation to update or revise any forward-looking statements, whether as

a result of new information, future events or otherwise.

In light of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-

looking statements, which speak only as of the date of this presentation.

Although we believe that our expectations are based on reasonable assumptions, we can give no assurance that

our expectations will materialize. For more details on factors that could affect these expectations, please see our

filings with the Securities and Exchange Commission including the “Risk Factors” section in our most recent annual

report on Form 10-K.


Company Overview

Heritage Global Inc. is a diversified financial services company providing acquisition, disposition, valuation, and

lending services for surplus and distressed assets.

Specialty

Financing

Solutions

SPECIAL

SITUATIONSCharged-Off

Portfolios

Auction

ServicesASSET ADVISORY Valuations

Intellectual

Property

ADVISORY/

MONETIZATIONDistressed

Real Estate

Asset Sales

Valuation Services

Advisory

Specialty Lending


Representative Clients


Value Creation – Investment Highlights

Competitive

Advantages

Sustainable

Growth

Financial

Performance

Shareholder

Value

Global

Platform

• OTCQB: HGBL

• CSE: HGP

Tickers

• $0.75

Price

• $22 Million

Market Cap

MARKET DATA1 FINANCIAL TRENDS2

• $26.2 Million

Revenue

• $3.9 Million

Net Income

• $4.2 Million

Adjusted EBITDA3

• $0.13

Diluted EPS

1 In US dollars as of 3/19/20.2 Represents fiscal year ended December 31, 2019.3 See “Reconciliations of Non-GAAP Measures” in the Appendix of this presentation.


Capital Assets Financial Services Proprietary Trading

Domain

Expertise

* Deal sourcing

* Relationships

* Execution capabilities

* Track records

Platforms

* Diversification

* Integrated services

offering/turnkey solution

provider

* Global scale/infrastructure

* Player across underserved

markets

Durability

Countercyclical

* Auction volumes/supply

* Non Performing Asset

volumes

* Specialty lending

Pro-cyclical

* Corporate auction market

* Principal deals

Competitive Advantages


Leadership Team

• Over 30 years experience in

the auction industry.

• Managed more than 4,000

industrial auctions in 30

countries.

• Previously served as

Chairman and CEO of

DoveBid, an industrial asset

and commercial property

auction company.

• Received a degree from

Washington State University.

Ross Dove

Chief Executive Officer

• Over 30 years experience in

the auction industry.

• Managed more than 4,000

industrial auctions in 30

countries.

• Previously served as President

of DoveBid, and as a Senior

Account Executive at Merrill

Lynch directing a client base

of over 600 individuals.

• Holds a Bachelors of Science

degree in Business from North

Illinois University.

Kirk Dove

Chief Operating Officer

• Over 25 years executive

financial accounting and

business management

experience serving various

public and private equity

funded companies.

• Previously spent 11 years at

Ernst & Young working on a

large number of IPO and

M&A transactions.

• Holds a Bachelors of Science

degree in Accounting from

Arizona State University.

Scott West

Chief Financial Officer

• Over 25 years of legal

experience serving asset

advisory and auction firms.

• Previously spent 12 years with

GoIndustry-DoveBid as legal

counsel.

• Holds a juris doctorate degree

with cum laude honors from

Wayne State University Law

School and a Bachelor of

Science in Economics from the

Wharton School of the

University of Pennsylvania.

James Sklar

General Counsel


Positioned to Grow in All Cycles

Macro

Headwinds

HGBL

Tailwinds

Wider spreads on principal asset/loan

activities

Favorable lending cycle

Higher nonperforming assets/net

charge-offs

Building surplus inventories and

bankruptcies

Lower asset prices/volumes

Pressure on Net Interest Margins

Declining Net Interest Income


Sustainable Growth

Vision: Become the dominant solution and most respected and trusted firm to corporations,

trustees and lenders needing to monetize challenged assets across all classes and geographies.

Principal Deals

Product &

Services

Development

Target Market

Extensions

Business

Development

External

Growth

Opportunities Growth

Drivers


Global Platform

Puerto Rico Costa Rica

Mexico Canada

Spain

England France

Ireland Germany

Italy China

South Korea Australia

HERITAGE GLOBAL PARTNERS SALES


Financial Performance

1 Profitability• Inflection point

• Building scale across platforms

• Rising operating leverage

2 Diversification• Across/within business units

• Agency vs. principal revenue streams

• More predictable and forecastable

revenues, margins, and earnings

3 Financial Flexibility• Building EBITDA1

• Strong balance sheet

• Recently upsized credit facility

• Strategic M&A

1 See “Reconciliations of Non-GAAP Measures” in the appendix of this presentation.


Financial Performance – Operating Efficiencies

Build Scale

• Within businesses

• Across platforms

Manage

Expenses

• Corporate level

• Business unit level

Drive

Operating

Leverage

• Maintain high

incremental

margins

• Favorable business

mix shift

Increasingly

Leverage

Synergies

• Processes &

systems

• Centralized

database

Action Plan


Value Creation

Financial

Performance

* Healthy & achievable

growth projections

Improving EPS

Quality,

Visibility, &

Sustainability

* More balanced

agency vs. principal

revenue streams

* More predictable

events = smoother

revenue & earnings

* Specialty lending

platform provides

increased predictability

with “flow” transactions

* Forward flow

contracts

* Date-certain events

Strengthening

& Leveraging

the Balance

Sheet

* Upsized credit facility

* Business lines of

credit

* Capital management

Investor

Relations

* Investor targeting &

outreach

* Enhance messaging,

disclosures, reporting

Appendix


Heritage Global Partners

3 Growth Drivers• Shift toward higher-contribution principal deals

• Recent alliance with Napier Park to acquire

industrial equipment and real estate assets

• Building surplus equipment assuming accelerating

Pharma M&A to refill pipelines

• Increasingly leveraging Capital Asset Redeployment

Enterprise (CARE) software package

1 ServicesHeritage Global Partners is a full service, global

auction and asset advisory firm.

2 Differentiating FactorsDomain expertise and infrastructure via

management’s experience, expertise, relationships,

and track records. Broadly diversified across sectors.

Aerospace & Aviation Biotech & Pharma

Machine Tools Semiconductor & Electronics


Heritage National Loan Exchange (“NLEX”)

3 Growth Drivers• Innovative expansion into FinTech, student loans,

and peer-to-peer lending sectors

• Plans to add post-sale initiatives

• Banks set to bring more volume to market

reflecting a less onerous regulatory environment

1 ServicesNLEX is a loan sale advisor of charged-off and

nonperforming asset portfolios via an electronic

auction exchange platform.

2 Differentiating FactorsFor 20+ years, NLEX has sold over $150 billion face

value of performing, nonperforming and charged-off

assets for banks, the U.S. government, and other debt

holders throughout the United States and Canada. SERVICES

Portfolio

Evaluation

Buyer Due

Diligence

Data Security

Market Price

Max

Contract

Negotiation

Remit &

Post-Sale

Service

Multiple

Product

Expertise

Compliance/

Transparency

SCOPE OF SERVICES


Heritage Global Capital

1 ServicesHeritage Global Capital provides specialty financing

solutions to small- and medium-sized investors in

charged-off and nonperforming asset portfolios and

other asset-based classes.

2 Differentiating FactorsDecades of domain expertise and the ability to

leverage established relationships from the HGC

executive team who have participated in over $400

million in fundings and have extensive Industry

relationships.

FUNDING PROCESS

3 Growth Drivers• Increasingly penetrating an underserved growing

market – smaller buyers of charged-off receivables

• Providing more economic financing options

• Providing a greater variety of funding solutions

which allows our Clients to stretch their equity,

creating growth

• Banks set to bring more volume to market

reflecting a less onerous regulatory environment


Heritage Global Valuations

3 Growth Drivers• Additional bank-approved vendor lists

• Deepen penetration with existing bank relationships

• Geographic expansion

1 ServicesIndustrial and wholesale inventory/equipment

valuations to assist financial institutions in making

lending decisions

2 Differentiating FactorsDecades of valuation/liquidation experience

leveraging HGBL’s industrial auction group, as well as

investment banking, patents and trademarks,

receivables, and real estate business units

REPRESENTATIVE CLIENTS


Heritage Zetabid Realty & Auction Services

3 Growth Drivers• Client acquisition

• Broader/deeper relationships with existing clients

1 ServicesHybrid auction/brokerage solution to sell commercial

and residential real estate on an accelerated timeline

2 Differentiating FactorsBoutique approach allows for targeted marketing

under the banner of an auction to maximize buyer

attention, pricing, and close rates


3 Growth Drivers• Expand relationships with National Association of

Bankruptcy Trustees

• Increase sales of non-commercialized patents in

Global 1000

Heritage Global Patents & Trademarks

1 ServicesProactively manage/streamline corporate Intellectual

Property portfolios via sealed-bid and online auctions

2 Differentiating FactorsPioneered the development of Intellectual Property

auctions in the early 2000s, with a focus on “Date-

Certain Events”

OIM Squared

Artificial Intelligence

Receivership

Sold $1,040,000 to credit bidder

Wisewear

Internet of Things/Smart Jewelry

Chapter 11

Sold $110K

Sheer Wind

Renewable Energy

Chapter 7

Sold $20K

RECENT SALES


Peer Comparables

Valuation ComparisonsDate: 3/19/20

EV/EBITDA Price/EPS EPS % Chg

2019 2020 2021 2019 2020 2021 2019 2020 2021 20/19 21/20 2019 YTD

Auctioneers

KAR Auction Services, Inc. KAR $13.16 $1,696 $4,906 9.9x 9.7x 9.0x 12.7x 10.3x 8.8x $1.04 $1.28 $1.50 23.2% 16.8% -54.3% -39.6% 5.4%

Liquidity Services, Inc. LQDT $3.96 $135 $98 N/A N/A 14.2x N/A N/A N/A -$0.22 -$0.33 -$0.04 N/A N/A -3.4% -33.6% 0.0%

Ritchie Bros. Auctioneers RBA $27.91 $3,062 $3,424 11.4x 10.9x 9.9x 21.0x 19.1x 16.7x $1.33 $1.46 $1.67 9.9% 14.2% 31.3% -35.0% 2.9%

MEDIANS 10.6x 10.3x 9.9x 16.8x 14.7x 12.8x 16.5% 15.5% -3.4% -35.0% 2.9%

AVERAGES 10.6x 10.3x 11.0x 16.8x 14.7x 12.8x 16.5% 15.5% -8.8% -36.1% 2.8%

Heritage Global Inc. HGBL $0.70 $21 $20 4.7x 5.4x N/A N/A $0.13 N/A N/A N/A N/A 115.2% -28.4% 0.0%

Exchanges

Cboe Global Markets Inc CBOE $81.75 $9,028 $9,651 11.5x 11.1x 10.4x 17.3x 16.5x 15.2x $4.73 $4.95 $5.37 4.7% 8.4% 22.7% -31.9% 1.8%

eBay Inc. EBAY $30.21 $24,050 $29,647 8.3x 8.4x 7.9x 10.7x 10.0x 9.0x $2.83 $3.02 $3.38 6.7% 11.8% 28.6% -16.3% 2.0%

MarketAxess Holdings Inc. MKTX $312.30 $11,843 $11,667 40.3x 34.7x 31.0x 57.8x 51.0x 45.5x $5.40 $6.12 $6.87 13.4% 12.2% 79.4% -17.6% 0.8%

Nasdaq, Inc. NDAQ $86.57 $14,285 $17,702 14.1x 13.1x 12.4x 17.3x 16.0x 14.9x $5.00 $5.41 $5.83 8.2% 7.7% 31.3% -19.2% 2.1%

Tradeweb Markets, Inc. Class A TW $38.76 $2,721 $7,262 19.6x 16.9x 15.3x 38.8x 31.9x 29.0x $1.00 $1.21 $1.34 21.4% 10.2% N/A -16.4% 0.9%

MEDIANS 14.1x 13.1x 12.4x 17.3x 16.5x 15.2x 8.2% 10.2% 30.0% -17.6% 1.8%

AVERAGES 18.8x 16.8x 15.4x 28.4x 25.1x 22.7x 10.9% 10.1% 40.5% -20.3% 1.5%


Boutique Advisors

Evercore Inc Class A EVR $38.11 $1,549 $1,187 2.1x 1.9x 1.9x 4.9x 4.6x 4.4x $7.70 $8.36 $8.71 8.6% 4.1% 4.5% -49.0% 6.5%

Greenhill & Co., Inc. GHL $9.90 $186 $461 9.0x 5.9x 6.0x 22.0x 5.6x 4.9x $0.45 $1.78 $2.01 296.1% 12.9% -30.0% -42.1% 2.3%

Houlihan Lokey, Inc. Class A HLI $48.64 $2,135 $3,070 15.7x 14.6x 13.7x $3.11 $3.34 $3.55 7.6% 6.4% 32.8% -0.5% 2.7%

Lazard Ltd Class A LAZ $25.51 $2,672 $3,792 6.3x 5.8x 5.6x 7.8x 6.6x 6.0x $3.28 $3.86 $4.27 17.8% 10.6% 8.3% -36.2% 7.7%

Moelis & Co. Class A MC $25.57 $1,358 $1,338 6.6x 4.1x 3.9x 13.0x 9.7x 9.0x $1.96 $2.65 $2.83 35.1% 6.9% -7.2% -19.9% 8.6%

PJT Partners, Inc. Class A PJT $27.46 $628 $1,158 11.4x 9.0x 7.8x $2.41 $3.06 $3.53 27.0% 15.5% 16.4% -39.2% 0.8%

MEDIANS 6.4x 5.0x 4.7x 12.2x 7.8x 6.9x 22.4% 8.8% 6.4% -37.7% 4.6%

AVERAGES 6.0x 4.4x 4.3x 12.5x 8.3x 7.6x 65.4% 9.4% 4.1% -31.1% 4.8%


Source: FactSet. Forward EBITDA/EPS figures based on consensus estimates.

Company TickerStock

Price

Mkt Cap

($M)

EV

($M)

Dividend

Yield


Reconciliation of EBITDA and Adjusted EBITDA (Non-GAAP Measures)

($ thousands)

2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 2016 2017 2018 2019

Net Income $1,685 $369 $408 $612 $1,494 $1,216 $577 $14 ($249) $3,751 $3,899

Add back:

Depreciation & amortization 76 79 80 76 76 74 79 316 313 319 305

Interest & other expense, net 38 47 13 23 22 12 7 63 95 214 64

Income tax expense (benefit) 64 0 206 24 54 39 (1,030) 21 (420) 270 (913)

EBITDA 1,863 495 707 735 1,646 1,341 (367) 414 (261) 4,554 3,355

Management add back:

Stock-based compensation 85 73 70 71 76 63 73 99 246 289 283

Settlement accrual 0 0 0 0 0 0 0 0 1,142 0 0

Fair value adjustment of contingent consideration (157) 0 0 0 0 0 0 92 938 (157) 0

Impairment of goodwill 0 0 0 0 0 0 573 0 0 0 573

Adjusted EBITDA $1,791 $568 $777 $806 $1,722 $1,404 $279 $605 $2,065 $4,686 $4,211

Source: Company reports.

Reconciliations of Non-GAAP Measures

1

1 The Company uses the non-GAAP financial measure “Adjusted EBITDA” in assessing its results because the Company believes that Adjusted EBITDA is relevant and useful supplemental information for

our investors. The Company believes that the presentation of this non-GAAP financial measure, when considered together with our GAAP financial measures and the reconciliation to the most directly

comparable GAAP financial measure, provides a more complete understanding of the factors and trends affecting the Company than could be obtained absent these disclosures. The Company’s use of

Adjusted EBITDA is not meant to be, and should not be, considered in isolation or as a substitute for, or superior to, any GAAP financial measure. Because non-GAAP financial measures are not

standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

[email protected]

(858) 242-4741

Acquisition/disposition/valuation/lending services …...3 Heritage Global Inc. | Company Overview Heritage Global Inc. is a diversified financial services company providing acquisition,

Documents