The Tri-Northern Exit
• Investment Committee Presentation
• John Alcorcon
• Divij Johri
• AJ Lumantao
• Anand Ramasamy
• Richard Saavedra
Who are We?
Capital Under Management Specialized Focused on Middle Market
Closely held and family Based in Texas
businesses solutions GTT Focused on Texas and Southwest
Leveraged buyout
What Do We Do?
We Finance We Invest in We Have We are Focused
Companies Sectors Operated for 13 in Texas
EV between Consumer Products Years
$50-250M Healthcare Fund 1: $250M
Business Services Fund 2: $400M
Manufacturing
Fund 3: $715M
Financial Services
Distribution
Our GP
Mr. Randall Fojtasek
Executive Officer of Atrium Companies, a leading
manufacturer of residential building products
Chairman of the Board of Directors of Aakash
Chemicals, Cascade Windows, FullSpeed
Automotive, Wetzel’s Pretzels, GNAP and Service
Champions
Served as Chairman of the Board of Directors of
TruRoad, BlackHawk Industrial, Southern Tide,
Lone Star, ORS and SESC and was the lead
director of the Board of Rennhack, Cheddar’s and
Tri-Northern
GTT®
We partner with
owner-families in
our
Generation Transfer
Transactions®
GTT®
Tax Efficient Provides Liquidity Continued Operating Flexible Capital
Control Structure
Structure accommodates
future growth
How GTT® Works
1 2 3 4
We (Brazos)
Transaction was would buy 49.9%
Owner Would
Managers an exchange of of the common
Reinvest a Sum to
achieved Liquidity securities, thus stock and a block
Maintain 50.1% of
and retained cash would not be of preferred
the Common Stock
significant equity taxed until the new shares with
of the New
ownership shares were attached warrants
Company
liquidated for the purchase of
common stock
How GTT® Works
Family can still control We as minority have
the firm protections
• As long as performance targets were • Significant board representation
met • Supermajority right to block major
• We would own more of the firm if these changes
targets were not met • Severe under-performance = right to
take control of the board
Market
Alarms, Motion Video Access Control Audio, Visual,
Detectors & Surveillance & & Fire Safety Data & Ancillary
Control Panels CCTV Systems Wiring
Projected Growth Projected Growth Projected Growth Projected Growth
3.7% 9.2% 3.8% 5.3%
Market
Manufacturers (400 players) Honeywell, Tyco, United Tech
$6.3B $2.7B
70% Market Share 30% Market Share
Distributors ADI,Tri-Northern,
End
(100s of Players) Anixter, Alarmax Co-Ops
$3B $2B $550-650MM Users
60% Market Share 40% Market Share
Dealer Integrator
ADT, Broadview, Protection One (Residential Alarm Players)
$14B Revenue (Product Pass-Through - meaning no labor)
$44B Total Revenue
*Extremely fragmented with 20,000 companies with more
than 50% under $1MM Revenue
Electronic Security Distributors
Credit Service – Product Warehouse
Knowledge And
Industry
Understanding
The Deal – Tri-Northern Investment
When?
March 16, 2010, 81 days post signing LOI
How?
• Investment opportunity for acquisition of Tri-Northern pitched by
banker
• Due diligence carried out for both companies
• Assessed the synergy opportunity between both companies &
Brazos
• Developed plan to execute merger
• Acquired debt financing for the deal
The Deal – Tri-Northern Investment
• M&A deal finalized for $127.1 M (6.5X combined EBITDA of
$19.6 M)
• Brazos ownership – 70% equity stake
• Capital Structure
Debt (66%) Equity (34%)
$54.6 Million - $31.7 Million – Brazos investment
Asset-Based-Loan
$33.4 Million – $10.4 Million – Management equity from tri-
Mezzanine Loan Northern
$3.3 Million – Mezzanine lender
Why Did We Win?
Muscle Speed Aggression
Fund Size: Within 20 days Interest in
$715Mn presented IOI Investing
Value Add
Smaller Security Dealer
High-end Integrator
9 Canadian Sales Office, 1
Puerto Rico & 16 US Sales Office
+ 12 Additional Sales Offices
2,000 New Customers
$13M In Additional
Revenue
Value Add
Security & Data Cable
Houston Was Difficult to
Crack for Tri-North and
Were Present in Data-
cabling (Weakness Of
Tri-North)
Martin's Security Depot
Leading CCTV
Distributor In West Coast
Value Add
Cross Selling Integration of Back Office, Strong stock rotation rights
Sales Structure Finance, IT, Professional Vendor financed inventory
Common Commission Services, and Bringing the with manufacturers
Program Entire Organization On Same IT Scale benefits
= $6.3M Savings Platform Branch Managers incentivized
= $1.5M Savings for freight expenses reduction
Price harmonization with key
National Accounts Group vendors
= $10.5M Additional Revenue Customer paid freight at low
cost
= $2.4 Mn Savings
Summary of Value Add
Revenue +11% Margin
+18% CAGR 4.5X to 3X
CAGR 2010- enhanced from
EBITDA Leverage Ratio
2012 5.2%- 5.9%
Sell or Hold
127M 220M 184M 228M
Offer received 3-Year Hold 5-Year Hold
At Inception 3x 2.8x
42% IRR
4.3x
34% IRR
74% IRR
March March March March March March
2010 2011 2012 2013 2014 2015
Indicative 178M 221M 301M
Valuations 2.1x
45% IRR
3.6x
53% IRR
5.9x
43% IRR
Sell or Hold
Sell Now
