IMC BREAKFAST

1
IMC BREAKFAST
MA (RHC Case Studies) March 21, 2007 J. David
Morris General Partner Red Hook
Capital jdm_at_redhookcapital.com Mobile (703)
855-8433
2
AGENDA

• Why buyout
• What is your clients strategy
• Who is the team
• How do they get returns
• RHC case studies
• Consolidation IT service (LMT)
• Consolidation Telecom (MCI)
• Consolidation Healthcare (HBO)

3
WHY BUYOUT?
Buyouts are a current and long term trend

• Industry trends
• Buyouts surpass 1980s levels
• Venture Capital firms are moving into low end
  buyouts
• Wealth of capital
• Wealth of management
• Buyout expertise
• Advisor/Consultants
• Private Equity firm sponsor

4
WHAT IS YOUR STRATEGY?
Financials are key, but strategy will be the deal
closer

• Target company
• Consolidation
• Turnaround
• Financial backers
• Buyout firm (KKR, Texas Pacific Group, Gore
  Technologies)
• Equity (Private Equity/GTCR, Pension/CALPERS)
• Debt (Equity Line/Citibank, Senior/Citibank,
  Mez./Allied Capital)
• Management team

5
WHO IS YOUR TEAM?
Management Team Should Fit Your Strategy

• What type of a team do you have?
• Strategic (Consolidation)
• Tactical (Turnaround)
• How does your clients team fit?
• Central casting / Track record
• Industry visionary / Customer relationships
• A / Z

6
HOW DO YOU GET RETURNS?
Lots of Exit Options with Different Returns

• Exit strategy
• Acquisition (cash, stock, warrants)
• IPO (stock, warrants)
• Exit success
• Strategic Acquisition (Miami, FL) telecom
  consolidation company resulted in return for
  investor and management of cash and liquid stock
  (management owned 51 under claw-back)
• Consolidator Acquisition (Irvine, CA) telecom
  turnaround sold to a consolidator resulting in
  cash and restricted stock for investors and
  management.
• IPO/Reverse Merger (Fairfax, VA) management
  retained owning 49 wholly owned subsidiary with
  need for broker to provide loan based on locked
  up stock and help sell stock (SEC rules)

7
CONSOLIDATION
RHC Case Study J. David Morris Red Hook
Capital NEWCO Consolidation jdm_at_RedHookCapital.com
Mobile [phone]
8
KEY FACTS
Highly Secure Communications Solutions

• Vision
• Solutions
• Technology
• Experienced Team
• MA Expertise
• Operation Expertise

9
WHY CREATE NEWCO?
Enterprises Need Highly Secure Global
Communication Solutions
Market Needs and Drivers

• Turnkey solutions provider
• Highly secure
• Customizable solutions
• Platform integration

Solutions
Technology

• Changing technology landscape
• Mission critical applications requirements
• Multinational enterprises

Conclusion
Emerging technologies drive highly secure global
communications solution enterprise needs.
Source Boston Consulting Group, CCV Website
10
VISION ON MARGINS
Move Business from Value Added Dealer to Highly
Secure Solutions

• Highly Secure 1.5m EBITDA 60
• Secure 1.5m 30
• VAR 20m 10
• VAD 30m 5

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MANAGEMENT
Management Team in Development
Interim CEO, JDM
CFO, BS

• Visionary with MA experience
• Leadership roles ranging from MCI to Lockheed
  Martin.

• Track record CFO of multinational companies with
  diverse portfolio of companies
• Leadership roles in IPO for MCI to other IPOs for
  cutting edge technology companies.

President,/CAO TM
Board, TS

• Former Sec. Air Force
• More than 30 years government and contractor
  leadership roles.

• CFO with turnaround expert (Fairchild)
• More than 35 years investment banking leadership.

President Solutions, MF
President Technology, TBO

• TBA
• Interim RHC turnaround advisor

• TBA
• Interim RHC track record sale technology
  (strategic exit VC deal)

12
OVERVIEW
NEWCO at a Glance
Incorporated
TBA

• 2006 Revenue(1)

125 million (Performa)
2006 Earnings from Operations(1)
15 Million (Performa)
Employees(2)
700 as of 2007 (from 1 in 2006)
Customers
Multinational corporations to the United States
government.
Two Operating Divisions
Service (90 of revenue) Technology (10 of
revenue)
Acquisitions (10 targets) Organic (restructuring)
Growth Strategy

• TBA1 2005 revenue casted by outside investment
  bank
• RHC, TBA1, TBA2

13
OUTLOOK
Multi-Strategy Approach

• MA 2q2005 closing 75 million communications
  solution provider.
• MA Pipeline
• Solutions cash flow positive (42 targets)
• Technology market drivers (14 targets)
• MA program
• Organic synergistic growth CCV Bus. Dev.
• Increased margins Acquiring emerging technology
  companies that can increase margins and provide
  competitive differentiators.

14
FINANCIALS
Technology Drives Solutions Margins
CCV Financial Performance(2004-2008)
Organic Revenue Technology 100 CAGR Solutions
20 CAGR
Technology
Margin
Solutions
15
KEY FACTS
Highly Secure Communications Solutions

• Vision
• Solutions (Revenue)
• Technology (Margins)
• Experienced Team (Track Record)
• MA Expertise
• Operation Expertise