Ephor Group Introduction

Ephor Group Introduction

Founded in 2003 by In ancient Sparta, Ephor’s were advisors who were responsible for the execution of critical decrees. Ephor’sy

Garry E. Meier, Ephor Group provides strategic advisory services to

p pswore to carry out their decrees and also supervised meetings of the council and assembly.

Today, Ephor’s develop organizations wherever they are situated in their business lifecycle - with advisory scope that covers operating support to strategic positioning.

What is an Ephor?

services to institutional backed technology and service businesses to

TeXchange Board (nonprofit 5013c) for Technology Entrepreneurs and Executives (2010-present).

Economic Small Business Advisory Council to US Senate Committee (2009-present)

Speaking Engagements:

expand revenue models and create wealth.

Speaking Engagements: o TriNet, The State of HR and the Future of Human

Resources Outsourcing (HRO), 2006o Greater Houston Partnership, Client Acquisition Revenue

Models, 2007o Greater Houston Partnership, Channel Building, Channel

Development, and Channel Management: Alternative Distribution Best Practices, 2008

o Austin UT Club, The Playbook for Success, 2009

History

o Austin UT Club, The Playbook for Success, 2009o High Tech Texan, How To Create Wealth, 2011

Founded in 2003 by Garry E. Meier after several successful private and public company CEO assignments and a little “beach and golf time.”

Ephor Group Clients: A track record of results Solving the Value Equation.

Recent Client Accomplishments:

Client engagements: Brand Refresh and GoToMarket: Sentric (Workforce Management Technology) Product Launch: ProBenchmark (SaaS) Polus Group (FAO) Bullseye (SaaS)

Ad i i t ti & T ti l F ti l

Recent Client Accomplishments:

• Grew provider from $1M to $9M in 18 months and then strategic investment by Hewitt.

P j t i t d t ti l

Product Launch: ProBenchmark (SaaS), Polus Group (FAO), Bullseye (SaaS) M&A Corporate Development: Serenity (IT MSP), Moderor (HRO) Expansion: Bluware (Staffing), Novo (Call Center, Contact Center, BPO).

Board Advisory Clients:

Administrative & Transactional FunctionalOutsource Int. (OSI) (HRO/PEO) Chairman/CEO 1998-2001

o Revenue: $480m Turnaroundo Exit: Divestiture of Brands

Strategic Buyer: TeamStaff Strategic Buyer: Spherion

Tandem/(OSI) (Recruiting & Staffing) Chairman 1998-2001

o Division Revenue from $180m to $280m

o Exit: Financial Buyer: Cerberus

• Projects oriented transactional business transitioned into recurring solutions provider.

• Acquired add-on “book of business” which added additional revenues,

Strategic Buyer: Spherion

HR America (ASO) Chairman 2002-2006

o Revenue from $3m to $22mo Exit: Strategic Buyer: Gevity

Talent Tree (Recruiting & Staffing) Chairman/CEO 2002-2005

o Revenue from $90m to $145mo Exit: Financial Buyer: Chrystal

SmartTime Software (T&L Mgmt) HR Advance (Benefit Admin)

clients, and team members.

• Received $2.56M in funding capital raise.

• Rolled up $30M of payroll service Chairman/Interim CEO 2004-2007

o Revenue from $6m to $15mo Exit: Strategic Buyer: Kronos

BOD Advisor 2008-2010o Revenue from $9m – $19mo Exit: Strategic Buyer: Hewitt/AON

Perquest (Payroll/WFM) BOD Advisor 2007-2011

o Revenue from $4m to $19mE it St t i B ADP

Achilles (HRO) Chairman 2007-Current

o Revenue from $4m to $11mE it C t H ldi

p p yproviders to create a national provider of “Workforce Management Solutions.”

• Doubled staffing provider revenues from $40M to $80M.

o Exit: Strategic Buyer: ADP o Exit: Current Holdings

HRO Expertise

Processing & Administration Functional Support

Recruiting & StaffingPayroll & Tax

g pp

Outsource International Perquest

Work Management:“Supporting the Time & Labor

OSI/Tandem Staffing Talent Tree

B fit Eli ibilit d Supporting the Needs of the

Worker”

Time & Labor, Productivity Mgmt.

SmartTime Software WorkPlace Solutions

Benefit Eligibility and Administration

HRAdvance

HRA i

Administrative Service Organization (ASO)

Departmental HR Outsourcing

A hill

PEO

HRAmerica Achilles Synadyne

BPO Expertise

Processing & Administration Functional Expertise

Contact CenterSaaS

g p

ERP, Workforce Management

Administration

Eligibility, Call Center

PlatformPoint Solutions

RPO, SPM, EPM

Departmental Outsourcing

Financial, HR, Recruiting, Marketing

Administrative Services

g

Advisory ServicesFinancial Administration

Payroll, AP, AR, Expense GoToMarket, M&A Corporate Development,Board Governance

Outsourced Billing and Financial Reporting

Economic Alternative

Calls to Action

1 E i St t A Eff ti St t Efficient Model

Star Performer

Alternative Distribution1. Examine your Strategy. An Effective Strategy

is Required including Brand Asset Management, Go-To-Market, Product Management, and Channel Management.

Star Performer Capabilities

2. Have a Market Validated Growth Strategy. Focus on expansion via a portfolio of products and revenue sources.

3. Do Not Accept Mediocrity. Mediocrity Promotes Failure!

© 2011 Ephor Group LLC | 1 (800) 379-9330 | www.ephorgroup.com

“In 2012 and beyond, wealth will be created forthose unique revenue models that are the most those unique revenue models, that are the most economically efficient, promote and excel at owing their communities, and focus on key strategic initiatives (i.e. customer satisfaction).”

-Garry E. Meier, Ephor Group Founder

> Download additional resources at: http://www.ephorgroup.com/resources.asp

Revenue Advisory Services

Whether you need interim help, a Chief Revenue Advisor

Since 2006, we conduct quarterly research surveys on utilization and best practices for technology and outsourcing buyers.

We also, interview 400 businesses every year to determine the market landscape forecast and or Chief Strategy Officer, there are proven, pragmatic

methods for expanding revenues.

Mid Market Research Findings 2011:

determine the market landscape, forecast, and opportunities.

Defining the SME Middle-Market Buyer:The mid-market is significant as the table illustrates the potential universe of SME & mid-market employers with 50 to 10,000 full-time W-Mid-Market Research Findings 2011:

I. The drivers have shifted from license software to SaaS solutions, from cost savings to capability enabling solutions, and from functional specific to business-centric.

II. Utilization improving based on adaption of technology to meet

p y ,2 employees:

What will satisfy the needs of the SME market is

TARGET (thousands)

Americas India & Middle East

Asia Europe

Mid-market 100,000 10,000 25,000 100,000

p g p gytoday’s work requirements (flattening span of control, global multi-location complexities, younger workforce, mobile and contingent workforce).

III. Recurring oriented business models are the market leaders. Portfolio and distribution key contributors

What will satisfy the needs of the SME market is simplifying the technology and functional processes with a business-centric mindset.

The majority of businesses consider themselves mid-market enterprises. They have multiple vendors complicated by changing business Portfolio and distribution key contributors

to more efficient model leaders.

vendors complicated by changing business demands and evolving landscape, and lack efficient and effective processes and expertise to adequately fit their needs.

The ideal customer buys to simplify their business, while valuing the solutions based

h l d ith i d t ti l ifi approach coupled with industry vertical specific domain expertise.

By making the buying process easy, the long-term profitability potential is great.

Ephor Group is a strategic advisory firm which helps our clients (technology and outsourcing providers) create wealth by achieving their growth objectives.

Ephor was created as an Benefits of our methodology approach Ephor was created as an alternative to traditional consulting. We put our own “skin in the game” and truly work in the company’s interest as part of our Perform Model

gy pp(as opposed to traditional consulting, coaching or iBanking) includesour Methodologies and our Perform Model.

Ephor Perform Business Process™ methodologies: FlightPlan™ for GoToMarket ensures effective/efficient revenue strategy. as part of our Perform Model

and we insource our Methodologies to our clients.

Ephor Group was founded as the “family office” for Garry E.

FlightPlan for GoToMarket ensures effective/efficient revenue strategy.

GrowthSTEP™ guides companies to their next plateau inclludingAlliances, Distribution and/or M&A Corporate Development.

Boardwalk Management Science™ provides Controls and Intelligence the family office for Garry E. Meier and other high net worth individuals to provide advisory services to our investments and portfolio of clients.

and ensures optimum asset creation, monetization and value realization.

Read more about our methodologies online.

Ephor Group’s approach is pragmatic, proven, and performance-oriented. Ephor works with technology and

Intelligence•Market Research•Landscape: Competitive and Buyers

Controls•Governance Boardwalk

•Management

Assets•Brand•Sources of Revenue•Insourcing approach

outsourcing providers. We have led, advised, and invested in some of the most successful business service companies in the Americas.

Buyers•Wealth Creation Drivers

•Industry Comparables•Competitive Intelligence

•Pricing Intelligence

gScience Reporting

•PayforPerformance

•Insourcing approach creates processes

l h l l h G kFlightPlan FlightDirector GoToMarket: Benefits of “TARGETING” to Expand Revenues

The Business Case: “TARGETING” Case Study Highlight:

Today’s market and economicenvironment requires a provenmethodology that increasesthe probability of consistent success. Strategic Effectiveness + Programmatic

Execution creates exponential wealth. i.e. success comes from your brand being #1 or #2 in each targeted community, plus assets are effectively deployed, and ongoing operational execution seeks consistent improvement.

By implementing effective Go-To-Market programs clients have found:† Improved personnel productivity† Decreased sales cycle times† Improved conversion rates† Increased year one revenues† Higher total net lifetime value

By targeting multiple partners that can generate significant revenues our client

FlightPlan FlightDirector GoToMarket: Benefits of “TARGETING” to Expand Revenues

companies expand into additional regions, communities, and offerings.

FlightPlan FlightDirector GoToMarket Case Studies

Brand Assets improves awareness and interest which improves resource efficiency, conversion rates, and net lifetime client revenues.

Ephor Group’s GrowthSTEP™Methodology Introduction

Proprietary & Confidential.@ Copyright Ephor Group, LLC 2011.

GrowthStep℠ SaaS Case StudySituation Audit: Perquest’s mission was to provide the first and exclusive software-as-a-service (SaaS) HRO services to small and large businesses via a single technology platform.

Ephor Process, Approach, and Sequence of Events:I. Opportunity & Outcomes >> The attractive investment returns in the payroll business are

generated by acquiring annuity streams of recurring revenue at a low cost, and reselling the revenue at exit at higher multiplesrevenue at exit at higher multiples.

II. Creating a Seller >> Ephor identified an opportunity in the market: the legacy payroll providers have been unsuccessful in providing clients with a combination of state-of-the-art technology, coupled with business centric services, premier end-user friendliness and superior customer service and support. se ce a d suppo t

III. The “Yellow Brick Road” >> Ephor conducted the research, presentation, and negotiations and signed up numerous qualified acquisition targets. And then facilitated the integration efforts and ensured integration milestones were on-track and effectively managed.

Results: I. Within 30 days a short-list of targets was researched and handicapped, and the corresponding

Playbooks, Financial Acquisition Model, and Integration Plan was created. II. Six (6) acquisition targets were identified and signed Letter-of-Intent within 180 days. III. Perquest was acquired by ADP in 2010.

GrowthStep℠: Ephor Group’s Corporate Development Process.

GrowthStep℠ was developed in the mid-90’s to provide “asset light”p p p gtechnology and service businesses a specific expertise and methodologyexclusively focused on growth through alliance, acquisition, andportfolio and distribution expansion.

Ephor’s GrowthStep℠ methodology combines a precise and highlyfocused approach, delivered with deep domain experience by resultsproven “C” level executives, resulting in the achievement of the growthand corporate development objectives of our client companyand corporate development objectives of our client company.

GrowthStep’s approach ensures acquisitions are accretive to valuationsand realize the necessary timelines and results.

GrowthSTEP™: M&A Corporate Development Case Study

Unlike traditional M&A, our approach targets multiple acquisitions of teams, capabilities, and partners so our client company creates dominance in a region, niche, or community.

GrowthStep Valuation MethodologyIndustry Comparables: Cost of $1.00 of Revenues

Acquisition Modeling

GrowthStep Process

Perquest Yellow Brick Road it’s as Simple as 1 2 3:Perquest Yellow Brick Road, it s as Simple as 1, 2, 3:

1. Step One: Step Project MAPPING

2. Step Two: Creating a Seller Process

3. Step Three: Due Diligence and Integration:

COMPANY CLUSTER Revenues AVERAGE WSE

NBR OF CUSTOMERS

ANNUAL W-2S

NO CAL TOTAL $ 10,450,000 55 655 61000SO CAL TOTAL $ 10,300,000 52 662 233333

Mapping the Highest Probability Targets: Acquisition Integration Timeline:

FLORIDA TOTAL $ 1,100,000 51 295 naMIDWEST TOTAL $ 32,040,000 89 1686 93200MINNESOTA TOTAL $ 5,000,000 73 467 51667N DAKOTA TOTAL $ 1,000,000 30 640 984000NJ NY TOTAL $ 12,100,000 187 540 55833PENN TOTAL $ 28,200,000 73 1104 1209500TX OK TOTAL $ 31 600 000 47 1317 201250

20

TX OK TOTAL $ 31,600,000 47 1317 201250DESERT TOTAL $ 9,280,000 53 588 65500VAC TOTAL $ 9,400,000 38 1135 128750

GrowthSTEP Corporate Development MethodologyGarry Meier and his associates developed the methodology to steer

> Develop Targeted Acquisition Pipeline (Size and Scope Each Potential)

a. Handicap All Potential M&A Potentials & Compare Potentials to Strategy

methodology to steer platform companies in their corporate development efforts.

The methodology traces its roots back to IBM

Segment C

Segment B

Segment A

> Implement Acquisition Outreach Program

a. Create Sellers b C fi t D Dili

its roots back to IBM, Edward Jones & Co, Technology Service Solutions. It is a lock-step program for ensuring corporate development activities are highly

Segment C

Segment B

Segment A

b. Confirmatory Due Diligencec. “Yellow Brick Road” Intro Presentation d. “Happy Ending” & Constituency Alignment

Discussion

“Y ll B i k R d Pl b k”

activities are highly profiled, qualified, acquired, and integrated.

B > “Yellow Brick Road Playbook”a. Precise Valuation Modelb. Integration Plansc. Due Diligence d. Closing Documents

Segment

C

AB

> TransactionsQualifiedInvestment

Q: What should be your top priorities & considerations?

This economy demands an effective strategy, illustrated improvement in your business model in your business model, coupled with process excellence in order to create wealth.

“Process Excellence” includes efficient and scalable processes which requires outsourcing, increased management science, and enhanced workforce management and training.

We Understand Perform Businesses

Managing a service as a product may lead to l b t t fit With h t

Labor Intensive Business Characteristics

sales but not profits. With each engagement we perform an assessment and analysis, create a project plan, and then support the execution efforts through our operating support and advisory guidance.

Factors unique to most labor intensive businesses that create challenges in optimizing profitability:

Cottage nature requires high touch management

Cyclical industry fundamentals are driven by end-user fit bilit d d d f d d d i

Our evaluation of the needs of the company, in conjunction with its owners and managers, determines the resources we bring to bear on each phase. We work with the company to execute its performance improvement within

profitability and demand for end user goods and services as well as industry specific factors

Employee profile and employee motivation – tendency to attract and reward mediocrity

Excessive customer acquisition costsexecute its performance improvement within this disciplined, metric-oriented framework using timelines that create mutual accountability.

Business Needs:

Excessive customer acquisition costs

Profitability driven by mass and density inside geographic markets

Sales process is price sensitive because of current labor imbalanceBusiness Needs:

a) Wealth Creation Roadmap against the opportunity

b) Branded “Franchise Effects”c) Risk Mitigation

imbalance

Strong desire for immediate fixes vs. positioning the business for long-term value maximization (expectation gap)

Failure to create ‘Productization’ of services including d) Strategic Optionalitye) Capital and Financing Management

Failure to create Productization of services including recurring revenue model, portfolio effects, and customer lifecycle maturity management model

Under-performing companies are often entitlement oriented and change is not easily accepted by organization

Ephor Group’s Track Record of Success

Return on Invested Capital Avg 300%

Our track-record of model improvement as seen through KPI (key performance indicators):

Corporate Performance

Return on Invested CapitalValuation Improvement Brand Value, Brand EquitiesMarket Positioning

Avg. = 300% From <4X to >8X EBITDA > Margins & Retention #1 or #2

Operating Performance Field Level EBITDAProfit Per EmployeeRevenue Per Partner

>30%+ >$25k per EE >$500k

Functional Performance

Revenues per ExecutiveRevenues per Account ManagerCost Per LeadCost Per Sell (new client)

>500k >300k <$100 1X first year revenues