The document summarizes ways for a company to achieve sustainable growth with investor support. It discusses establishing strategic goals, managing by metrics, structuring the company for growth, and how investors can help accelerate value through board support, strategic planning, introductions to customers and partners, and operational improvements. The focus is on active investor involvement to implement initiatives that build long-term value.

1. Sustaining Growth
Hosted by GrowFL & FL-CAN
April 10, 2013

2. Contact
Justin Reger, LLR Partners
jreger@llrpartners.com
215-717-2900
www.llrpartners.com
Twitter: @LLRPartners
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3. Agenda
1. LLR Partners Overview
2. Growth Inhibitors
3. Overcoming Growth Inhibitors
4. Sustainable Growth Model
5. Value Acceleration from Investors
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4. LLR Overview
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5. LLR Overview
• Founded in 1999 by trusted advisors to middle- Investment Criteria
market growth companies in the Mid-Atlantic region
Revenues $15MM to $250MM
seeking to:
— Share in the risk/reward of high growth companies Growth 10%+
— Provide local businesses access to known and trusted
capital providers EBITDA $0 to $50MM
— Bring a user-friendly, customer service orientation to
Investment Size $20MM to $100MM
private equity
Management Vision & alignment
• Grown into a national provider of late-stage growth
capital with deep domain expertise Market $500MM+ & growth
• Maintained core values: Model
Differentiated, scalable, &
sustainable
— Invest in growth
Situations where we can
— Align with management LLR Experience
add value
— Treat companies like clients
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6. LLR Sector Focus
Business Services Consumer & Education Financial Services Healthcare Services Software & IT Services
• Business Process Outsourcing • Multi-unit Businesses • Financial Technology & • Information Management • Enterprise Software
• Professional Services to • Internet & Catalog Retail Service Providers • Revenue Cycle Management • Application Software
Niche Markets • Multiline & Specialty Retail • Specialty Finance • Practice Management • Systems Software
• Government Services • Diversified Services • Software • Outpatient Services • Infrastructure
• Fixed Asset Management • Durables & Beverages • Security • Data Analytics & Informatics • Perpetual License and SaaS
• Marketing Services & • Household Products • Alternative Payments • Diagnostics & Monitoring Models
Technology • Childcare • Broker / Dealers & Trading • Distribution • Managed / IT Services
• Data Analytics • K-12 Education • Capital Markets Technology • Disease & Benefits • Solutions Providers
• Human Capital Management • Post-Secondary Education • Data & Analytics Management • Data Service Providers
• HR Outsourcing • Education Technology • Asset Managers • Pharmacy Benefit • Technology-Enabled Business
• Transportation & Logistics • Training • Insurance Brokerage Management Services
• Information Services • TPA & Service Providers • Alternative Site Care
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7. Growth Inhibitors
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8. The Dreaded S-Curve
Revenue
Expected Performance
Actual Performance
Time
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9. The Need for Innovation
Revenue
New Product Innovation
Time
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10. Apple Illustration
160.0
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80.0
60.0
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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
iPad iPhone iTunes iPod Laptops Desktops
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11. Growth Inhibitors
• Market
— Is there a market? Is it ready? Is it large enough?
• Product
— What is the value proposition? What is the positioning?
• Model
— Is it sustainable? Is it sufficiently profitable? Is it scalable?
• Talent
— Is the team complementary? Are they on the same page? Do you focus on culture?
• Capital
— Do you need it? If so, what forms and from whom?
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12. Overcoming Growth Inhibitors
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13. Ways to Overcome Inhibitors
Market 1. Define landscape of new growth initiatives
& 2. Assess market needs vs. product capabilities vs. gaps vs. investment requirements
Product
3. Effective positioning, value prop/ROI, messaging & collateral
4. Integrate GTM: Marketing, Sales and Services
5. Adhere to solution sell methodology & value-based pricing
6. Adhere to sales plays and account engagement processes
Model 7. Develop effective partner programs for leverage, validation & new business
8. Manage to productivity & scaling models
9. Strive for customer satisfaction and passionate references
10. Build joint demand generation & forecasting visibility
11. Enhance talent management
Talent
12. Develop a culture of excellence and same page leadership
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14. 1. Mapping New Growth Initiatives
Thought Leadership
Platform
Suites
New
Value-Based Pricing
Industry Adapters
Expand our Offerings
Max Client Opp
Practices
Branded SVS Suite Sells
Expert Centers Cross Sell/Up Sell
Premium Support
Horiz/Vert
Services
Expand
the Suite
Expand
Expand
Current
New Industries
Expand Industries SaaS
& Mid-Market
Current Offerings
EMEA
Expand APG
Geo(s)
SA
Current New
Expand our Reach
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15. 2. Assessing Markets & Product Development
Note: Numbers indicate priority for the segment capability Leader Competitive Baseline Marginal TBD
Industry
Segment
Market Stage Mature Market Developing Market Potential Market Potential Market
Category Fit High High Medium Medium
Product 1
Product 2
Product 3
Product 4
Product 5
Product 6
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16. 3. Positioning the Offering
• Positioning of Company, Platform, Suites & Services
• Define the offering’s value proposition, compelling events and ROI
• Develop effective messaging for decision maker
• Develop collateral for client facing teams
• Working with market analysts
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17. 4. Integrate Go-To-Market Functions
• The objective is to establish a repetitive methodology for selling and
implementing solutions in the shortest timeframe possible, while gaining
passionate references
— Marketing to position the company/offering, build market awareness, push
leads into the sales process and gain references
— Sales to represent the company, capture market share and develop demand at
account level
— Services to scope minimum go-live solution requirements, implement the
solution and maintain the solution
• These interdependent processes must be jointly managed to shared
objectives/processes
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18. 5. Solution Sell Methodology & VBP
• Adherence to Solution Sell Methodology
• Establish positioning and value propositions early in the sales process
— Focus on entire solution: License, Professional Services and M&S
— Use of BVA Process
— Establish pricing after providing our value propositions tied to the ROI
• Manage scope of SOW early in the sales process
— Project manage to initial SOW schedule, gain customer satisfaction and reference
• Hold service pricing at tiered skill levels based on offering domain knowledge
• Define value of premium support
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19. 6. Sales Plays & Account Engagement
• Always position suite and new offerings first
• Study and perfect each sales play
• Find entry point and minimum solutions but add rationale/terms for full
suite
• Explore and profile the full account opportunity through various
engagements: Business Owners, Divisions, Future Initiatives
• Record, document, track in CRM system
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20. 7. Partner Programs
Integrated License Sales Service Practices
In In Process
No Process Yes No Yes
1.Strategic Fit Established 1.Strategic Fit Established
2. Incremental Value Prop. 2. Incremental Value Prop.
3. Joint Solutions Defined 3. Joint Solutions Defined
4. Executive Sponsorship 4. Executive Sponsorship
5. Business Model Defined 5. Business Model Defined
6. Joint Business Objectives 6. Joint Business Objectives
7. Joint GTM Plan 7. Joint GTM Plan
8. Deployment Partner 8. Deployment Partner
9. Resell ABC Solutions 9. Resell ABC Solutions
10. Joint Sales Engagements 10. Joint Sales Engagements
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21. 8. Productivity & Scaling Models
• Productivity Guidelines • Scaling Guidelines
— Multiple offerings — Align reps to a coverage model
— ASPs — Number of accounts per rep
— New vs. existing — Building pipelines of sales talent
— Average bookings per rep per — Company University for on-
quarter boarding talent
— Bookings to license revenue — Partners for leverage
conversion
— Expense to revenue and DCM
— Shorter sales cycles
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22. 9. Customer Satisfaction & References
• Customer satisfaction aligned to incentives
• Measure, measure, measure
• Responsiveness to escalation processes
— 360 Program
• Levels of references
— Event speaker, white paper, press, verbal, etc.
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23. 10. Joint Demand Gen & Forecasting Visibility
• Joint lead generation, pipelines, PS backlog & forecasting
• Three major sources of lead generation
— 40% Marketing, 40 % Sales, 20% Partners
• Pipeline coverage supporting bookings plan
— 4.5x qualified lead coverage for R12
— 3.0x, 4.0x, 5.0x & 6.0x progressively by quarter
— Marketing targeting new leads of 400 leads/mo, Sales of xxx SQL/mo
• Marketing campaign mix/multiple contacts to grow market share
• Metrics and actions to improve funnel yields
• Forecasting accuracy within +/- 10%
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24. 11. Talent Management
• Train to Company GTM model through Company University
— Technical training on the offerings
— Business training on the positioning, value props, messaging, BVA
— Solution sell and support methodology training
— Sales plays by segment
— Role of partners by segment, client size
• Evolve to specialization by segment and industry
• Add staff as clear opportunities develop
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25. 12. Culture of Excellence
• Set the tone at the top of the Company
• Every employee working to close opportunities
• Same page leadership
• Assure cross-functional engagement processes are clear and efficient
• Assure our incentive plans are aligned to strategic goals
• Implement best practices program across functions
• Continuous learning
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26. Sustainable Growth Model
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27. Effectively Plan
Annual Operating Plan (AOP) 3-Year Strategic Plan
Full P&L, BS, CF
AOP Kick Off Key Initiatives
Strategic
AOP Annual
Interlocked Plans
Planning
Tied to 3-year
Strategic Plan
Additional Directed at
Business Meeting Strategic
Opportunities Business
Objectives
Cross-Functional Plan Firm Update 3-Year
Interlocking Plans Base Business Plan
Initial Business Fall Plan Revenue Planning Analysis
Plan Approval Assumptions Brainstorming
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28. Set Strategic Goals
1. Bookings Growth > 40%
— Critical driver to growth
— Strong client acceptance, retention, momentum
2. 15-30% Profitability
— Continuous improvement towards objective
3. Mission Critical Enterprise Solutions
— Define and lead market
— Recognized branded solutions
4. Superior Client Experiences
— Passionate references
5. Innovative Culture
— Where career development and growth are pervasive
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29. Manage by Metrics
Industry Company ABC
Ranges Target
Bookings Growth >40%
Revenue Growth >20%
GM 65-85%
Licenses 95-99%
Pro Services 30-50%
Maintenance & Support 80-90%
Development 15-20%
Sales 20-25%
OpEx Marketing 5-8%
G&A 8-10%
Total OpEx 50-65%
Operating Margin 15-30%
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30. Structure of Sustainable Growth Company
Vision
Corporate
Corporate Objectives and Supporting Business/Functional Models
G&A Capability and Differentiation: Finance, Legal, IT, HR
Management Processes for Growth Planning & Same-Page Leadership
Business Management: Product Management, Product Marketing, Corporate Strategy
Bus Mgmt
Strategy /
Market Driven Requirements
Three Year Business Plan, Branding, Portfolio Management
Cross-Functional Interlocking Product Lifecycle Management Process
Operational
Excellence
Cross-Functional Operational Excellence, BP/CI , Enterprise Solution
Product Facing Customer Facing
Program Development Testing Deployment Marketing Sales Pro Services Support
Mgmt
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31. Investor Value Creation
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32. The Value Added Investor
A. “We love to roll up our sleeves and work side-by-side with our
portfolio companies for the long haul.”
B. “We work with management teams to implement strategic and
operating initiatives to build long-term value.”
C. “We are active investors who take a proactive approach to
working with our portfolio companies.”
D. “We work as a team to support the management of our portfolio
companies in a variety of ways.”
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33. Investor Resources
Sector
Experience
Best
Lenders
Practices
Service
Providers Company Portfolio
Operating
Consultants
Partners
Advisory
Board
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34. Value Accelerators
Exit
Acquisitions
Talent Management
Value
Operational Improvements
Customers & Partners
Strategic Planning
Board of Directors
Time
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35. “We Help Build a World Class Board”
Don’t • Stacking the board with a bunch of investor types
Settle • Just a foundational board providing basic oversight and compliance
For
Get • Independent directors with direct operating experience in
Excited complementary functional areas
By • Active involvement beyond quarterly meetings
• What is the role of the Board?
Ask
• How active is the Board?
Questions
• What profile do you envision for board members?
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36. “We Provide Strategic Insight”
Don’t • A sounding board
Settle • A mandate rather than a dialogue: “Here is your three-year strategic
For plan, now go execute”
Get • Collaborative strategic planning sessions that you and your team
Excited own, with an independent facilitator
By • Playbooks and frameworks to help as a guide, but application that is
left to you and your team
• What typically happens post-closing?
Ask • Can you share a prior 100-day plan?
Questions • What are your preliminary thoughts on avenues for growth?
• What are the backgrounds of the investors/advisors?
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37. “We Can Make Introductions to Customers & Partners”
Don’t
• A network of companies that can provide meaningful business value
Settle
For
Get • Portfolio of prospective customers and/or partners
Excited • Thoughtful partner development plan
By • Deep relationships with channel partners / potential buyers
• Are other portfolio companies potential customers and/or partners?
Ask • What does the broader portfolio partner ecosystem look like?
Questions
• What is the firm’s history with driving business through its network?
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38. “We Assist with Improving Operational Efficiency”
Don’t • Monthly/quarterly reporting calls
Settle • More mandates: “You must implement these processes and
For systems”
Get • Roadmaps by each functional area from prior successes
Excited • Best practices sharing among portfolio – informal and formal
By • Specific project examples from other portfolio companies
Ask • We are challenged by X; what has been your experience?
Questions • How much interaction occurs within the portfolio?
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39. “We Can Source Talent”
Don’t • Minimal incremental value: “Meet Bob, he runs a search firm”
Settle • Unilateral hiring decisions: “Meet Joe, your new head of sales”
For
Get • Deep bench of operating talent in multiple functional areas
Excited • Relationships and experience with multiple search firms across
By multiple functions, geographies, experience levels
• Dedicated director of talent leveraged by the portfolio
• Is there someone on your staff dedicated to helping the portfolio
Ask build talent management plans?
Questions • I have holes in my management team; do you have access to talent
who can fill them?
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40. “We Can Help with Acquisitions”
Don’t • Pledge to provide or help secure incremental capital
Settle • Basic deal experience
For
• Thoughtful, collaborative approach: “Here’s an initial acquisition
Get
target list, let’s talk about what makes sense for your growth plan”
Excited
• An outsourced M&A department
By
• Previous buy-and-build experience and proven playbooks
• What are your thoughts on an acquisition strategy?
Ask • Do you have dedicated resources to support our acquisition strategy?
Questions • How much experience do you have with buy-and-builds and
integrations?
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41. “We Optimize Exit Value”
Don’t
• We have successfully exited X number of companies
Settle
For
Get • Thoughtful view on logical buyers and existing relationships into them
Excited • Flexible strategy that will expand and evolve your exit options
By • Management input on exit timing (partnership approach)
• Who have you sold prior portfolio companies to?
Ask • Do you have regular dialogues with strategic buyers?
Questions • What is your investment horizon?
• Walk me through sub-optimal outcomes
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42. Questions
Justin Reger, LLR Partners
jreger@llrpartners.com
215-717-2900
www.llrpartners.com
Twitter: @LLRPartners
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