S2S Overview for Owners & Trusted Advisors

SALE-TO-SERVICE
OVERVIEW
For Owners & Trusted Adv isors

CAPITAL FOR CLOSELY-HELD & RELATED-PARTY TRANSACTION
LEEWARD & CAPITAL INNOVATION
The U.S. continues to transition
from an economy based on
tangible assets to a service
economy based on intangible
assets.
Equity and non-bank lenders
have filled the capital gap left
by traditional banks, which
have struggled to underwrite
asset-light businesses.
Specialty finance businesses
and other lenders have only
modestly innovated to lend to a
service and knowledge-based
economy that is evolving much
faster.
Leeward’s Sale-to-Service® was
created to monetize one of the
economy’s largest and most valuable
intangible asset classes: mission-
critical systems and data.
Innovative intangible asset
financing alternatives designed
for the service economy will
facilitate growth, innovation,
and capital markets activity.
Innovation in the capital markets has not kept pace with the United States’ transition from an asset-
intensive manufacturing economy to an asset-light service economy. Leeward’s innovative investment
structure is an exception. Leeward identifies and monetizes one of the economy’s most valuable assets.

SALE-TO-SERVICE VALUE PROPOSITION
Leeward’s Sale-to-Service (“S2S”) is a low-cost non-dilutive off-balance alternative to unitranche and mezzanine
debt and minority equity and ideally suited for closely-held or related-party transactions.
Mezzanine Leverage at the Cost Senior Debt: An S2S, which is
similar to an operating lease, uses a three to six-year services
agreement where all payments are operating expense.
Behaves Like Preferred Equity: An S2S is off-balance sheet, has
no traditional financial covenants, and behaves more like preferred
equity rather than a traditional debt in distressed circumstances.
Closely-Held & Related-Party Transactions: An S2S supports
transactions where value is moving out of a business or from one
party to another, including liquidity events and buyouts.
C O S T & L E V E R AG ES A L E - T O - S E RV I C E
Low
Low
High
HighCost to Customer
“S2S behaves more like
preferred equity.”
CapitalStructure
S2S Cost to
Customer
S2S Behavior
in Distress
Asset-Based
Loan
Cash Flow
Loan
Unitranche Mezzanine
Equity

TYPES OF INTANGIBLE ASSETS
Trademarks
CopyrightsDesign Rights
Patents Trade
Secrets
Organizational
Knowledge
Proprietary
Software & Data
Brand &
Reputation
Critical
Suppliers &
Customers
Research &
Development
Strategy &
Market
Intelligence
Know-How
Leeward is focused on proprietary software and data, also described as mission-critical systems and data. Most
asset-light to asset-moderate businesses have server-based assets that meet this definition.
I N T E L L E C T UA L P RO P E R T Y I N T E L L E C T UA L C A P I TA L

MISSION-CRITICAL SYSTEMS & DATA
Mission-critical systems and data take four primary forms. Most businesses have one or more of these server-based
intangible assets and they all address or solve for complexity. The more complex the business, the better the fit for an S2S.
Personal and healthcare data
cannot be owned and are
protected in an S2S. Other
data like SKU, invoice, and
customer ID are essential for a
company’s operations making
most data a fit for an S2S.
Data &
Information
These systems are unique to
the business and can sit in a
data center or in the cloud.
Many businesses with
proprietary systems may not
be described as tech-enabled
but they are a fit for an S2S.
Proprietary
Systems
Licensed ERP software can
be hosted in a data center, or
in the “cloud” including
Amazon Web Services and
Microsoft Azure. Examples of
ERP providers include SAP,
Oracle, and Epicore.
Premises-
Based ERP
SaaS businesses are not a fit
for an S2S, but a customized
SaaS solution used by an
operating business may be
a fit. Examples include
customized Salesforce and
NetSuite systems.
Software as a
Service

Unidentifiable
Intangible Assets
(Enterprise Value)
Mission-Critical
Systems & Data
(Sale-to-Service)
C O M P O N E N T S O F VA L U E M I S S I O N C R I T I C A L S Y S T E M S & DATA
Formal Definition: Server-based intangible assets, also described as software and
data, that are indispensable to the company’s business model and which cannot
be easily replaced.
Practical Description: If the company had no disaster recovery and the servers
hosting the assets were destroyed, the company could not implement an entirely
new system quickly enough to continue to serve its customers.
Systems: These server-based assets can be heavily customized well-known ERP
systems like SAP and Oracle or internally developed systems which have been built
and enhanced over years and are proprietary to the business.
Data: Leeward can value and monetize non-personal data separate from the
company’s systems, making systems-light but data-rich businesses a fit for an S2S.
Personal and healthcare data cannot be owned and are protected in an S2S.
Goodwill
(Unidentifiable
Intangible
Value)
Tangible
Assets
Identifiable
Intangible Assets
(Balance Sheet)
MISSION-CRITICAL SYSTEMS & DATA
Leeward’s Sale-to-Service monetizes mission-critical systems and data assets that are represented in a
company’s enterprise value but often have little or no value on a company’s balance sheet.

SALE-TO-SERVICE
Sale
Leeward
$
Customer
Services
Fees
S A L E - T O - S E RV I C E AT T R I BU T E SS A L E - T O - S E RV I C E
Valuation: An S2S uses a “With & Without” valuation approach to determine the value
of a company’s mission-critical systems and data asset.
Valuation & Leverage: While these assets comprise a large part of a company’s enterprise
value, generally 30% to 70%, an S2S is still governed by traditional leverage ratios.
Services Agreement: Rather than a lease or license agreement, an S2S utilizes a three
to six-year service contract where all payments are operating expense.
Termination & Repurchase Option: The customer can pay a fee to exit the S2S early and
may then repurchase the assets or extend the S2S for up to five years for a low fee.
Leeward has effectively created a new standalone asset-class through the monetization of mission-critical
server-based intangible assets recognizing value overlooked by the broader capital markets.

~15%
~85%
S2S & ENTERPRISE VALUE
Intangible Assets & Goodwill
These assets can be a combination of
identifiable and unidentifiable intangible
assets as well as goodwill.
Tangible Assets
Tangible assets make up a small part of
an asset-light to asset-moderate
company’s enterprise value.
Sale-to-Service
The fair market value of a company’s
mission-critical system and data is generally
between 30% to 70% of a company’s total
enterprise value.
Intangible Assets
An S2S transaction leaves the business with
lower intangible asset value but provides
access to a low-cost non-dilutive source of
capital for other strategic or financial
purposes.
Tangible Assets
S2S transactions do not encumber or impact
the company’s tangible assets.
~15%
~50%
~35%
E N T E R P R I S E VA L U E S 2 S & E N T E R P R I S E VA L U E
The value of these assets are represented in enterprise value or as goodwill on the balance sheet. An S2S allows
owners access to this value without a sale of the business through a tax-efficient off-balance sheet structure.

~25%
~50%
~25%
~60%
~40%
S2S & CAPITAL STRUCTURE
L E V E R AG E D C A P I TA L S T RU C T U R E S 2 S C A P I TA L S T RU C T U R E
Equity
Traditional leveraged capital structures
generally require ~40% equity and for
many asset-light businesses, the
requirements can be higher.
Debt
Debt structures for most asset-light
businesses include cash flow and
unitranche loans with modest
amortization.
Sale-to-Service
An S2S transaction is off-balance sheet and
all payments are service expense to the
company.
Equity
Leeward can support transactions with less
equity because of an S2S’ credit and return
profile.
Debt
Leeward can and usually will provide senior
debt alongside its S2S investments, offering
companies a complete capital solution.
An S2S delivers equal or greater amounts of leverage at a lower after-tax cost. When a senior cash flow or second
lien loan is required to meet an owner’s total capital needs, Leeward will provide that as well.

USE OF PROCEEDS & CAPITAL GAIN
Liquidity
Events
Shareholder
& MBOs
Family
Transitions
Strategic
M&A
Owners seeking to
diversify their wealth but
who do not want an
investor sitting at their
board table and do not
want to increase risk by
levering up the business
with high-cost debt.
Shareholder and
management buyouts
and other closely-held
transactions where the
stakeholders do not
want an outside equity
investor in the
transaction.
Families seeking an
ownership transition to
the next generation
and want the family to
retain control.
However, the founders
also want a fair value
for their shares.
Strategic buyers seeking
mezzanine-type
leverage but want to
avoid higher cost debt.
An S2S is particularly
effective for a smaller
company’s efforts to
acquire a larger
competitor.
Provided the seller takes
back 30% or more of
enterprise value, Leeward
may provide all acquisition
capital, allowing an
independent sponsor direct
equity at close without
investment hurdles.
Independent
Sponsors
S2S assets have a little to no value on the balance sheet and are acquired for a higher value resulting in capital
gain. As a result, an S2S is a fit for transactions when one or more stakeholders will have capital gain in any case.

FINANCIAL CRITERIA
Because tax-sensitive
customers benefit from the tax
shield created by S2S service
fees, companies located in
States with high State tax
rates, like California and New
York, realize greater value.
States with
High Tax Rates
An asset-light business with
an EBITDA margin of 10% or
more is often an indication
that the business has
complexity that requires the
use of mission-critical systems
and/or data assets.
EBITDA
Margins: 10% or
Greater
Because Leeward is an
alternative to unitranche and
mezzanine debt and target
deal size is $10 million or
greater, S2S candidates
generally need EBITDA of $5
million or greater.
EBITDA:
$5M or Greater
While target investments
are $10 million to $150
million, Leeward will
consider smaller
transactions when there
is an opportunity for
follow-on investments.
Deal Size:
$10M to $150M
Leeward is focused on profitable middle-market businesses with enterprise values between $15 million and $250
million ideally located in States with high tax rates.

TARGET INDUSTRIES
Business
Services
Financial
Services
Education
Services
Healthcare
Services
Consumer
Services
Transportation
& Logistics
Media &
Telecom
Asset-Light
Manufacturing
& Industrial
E-commerce &
Digital
Marketing
Service economy industries have a high concentration of businesses with mission-critical systems and data
assets, but S2S candidates can be found across all industries, including asset-light manufacturing.

EXCLUDED CATEGORIES
An S2S is inefficient for
C-Corps due to double
taxation. Acquisition
targets can be a C-Corp
if the transaction is an
asset purchase and the
acquirer is a pass-
through entity.
Entities Taxed
as C-Corps
Businesses with license
income are not a fit for
an S2S, but if revenue is
based on anything other
than license income, like
transactions or
commissions, it may be
a fit for an S2S.
SaaS
Businesses
An S2S is not a fit for
distressed businesses,
but Leeward may
consider businesses with
high-retention recurring
revenue in excess of $10
million regardless of
profitability.
Distressed
Businesses
While pure growth capital
and debt recapitalizations
are not a fit, Leeward can
provide growth capital or
a debt recapitalization
alongside an S2S when
they are ~60% or less of
total proceeds.
Pure Growth
or Debt
Generally, asset-heavy
businesses are not a fit
when a strategic buyer
would be interested in
acquiring the company’s
physical assets in
bankruptcy, separate of
the company’s S2S assets.
Asset-Heavy
Businesses
While the following exclusions are easily identified, there are exceptions to each of these categories.

CRITICAL PATH FOR S2S TRANSACTIONS
OW N E R S H I PC AT E G O RY U S E O F P RO C E E D S F I N A N C I A L S
Overview
▪ An S2S acquires server-based intangible
assets that have little to no value on the
balance sheet.
▪ The assets are acquired for a higher value
which results in a capital gain for the seller.
▪ Because of the gain on sale, an S2S is a fit
for transactions where the use of proceeds
would have had capital gain in any case.
▪ Liquidity Event
▪ Shareholder Buyout
▪ Management Buyout
▪ Family Ownership Transition
▪ Strategic M&A
▪ Independent Sponsor Acquisition
Specifics
Exceptions
S Y S T E M S / DATA
Critical Path Questions
▪ Leeward can provide growth capital and/or
a debt recapitalization alongside an S2S
when ~60% or less of total proceeds stay on
the balance sheet.
▪ An S2S may be a fit for pure growth or debt
recapitalizations when there is an NOL to
offset capital gain and/or when alternative
sources of capital are higher-cost or dilutive.
▪ An S2S is a low-cost non-dilutive
alternative to unitranche,
mezzanine, and minority equity.
▪ S2S candidates are profitable
performing U.S. businesses.
▪ Ownership is usually closely-
held and transactions are often
related-party deals.
▪ Trailing twelve-month EBITDA
of $5 million or greater
▪ Investments of $10 million or
greater
▪ U.S. based businesses
▪ Owners must value the tax
shield of the S2S service
agreement payments.
▪ An S2S favors pass-through
tax entities.
▪ An S2S’ asset purchase is
inefficient for C-Corps due
to double taxation.
▪ Limited Liability Corp
▪ Partnership
▪ S-Corp
▪ Other pass-through entities
▪ Mission-critical systems & data are
server-based assets that are difficult,
if not nearly impossible, to replace.
▪ If these assets were lost, the company
would fail to serve its customers.
▪ These assets are common in asset-
light to asset-moderate businesses as
well as some asset-heavy businesses.
▪ Customized ERP
▪ Proprietary Technology
▪ CRM & Marketing Systems
▪ Supply Chain Systems
▪ Indispensable Data
▪ Other Mission-Critical Systems
▪ Leeward may consider
businesses with EBITDA as low
as $2.5 million under select
circumstances.
▪ Businesses with recurring
revenue in excess of $10 million
may be a fit regardless of
profitability.
▪ Acquisition targets can be a
C-Corp if the transaction is
an asset purchase and the
acquirer is a pass-through
entity.
▪ A C-Corp may also be a fit
when alternative capital
sources are costly or dilutive.
Are ~40% or more of the
proceeds used for one of the
following transactions?
Does the transaction
meet the below
financial criteria?
Is the business
one of these
entity types?
Does the business have
mission-critical systems or
data?
▪ A business with license income like a
software business is not a fit for an
S2S.
▪ A business that looks like a software
business but has revenue based on
anything other than license income,
like transactions, commissions, or
leads, is a fit for an S2S.

CRITICAL PATH FOR INDEPENDENT SPONSORS
OW N E R S H I PC AT E G O RY T R A N S AC T I O N O T H E R T E R M S
Overview
▪ An S2S acquires server-based intangible
assets with little value on the balance sheet
resulting in a capital gain to the seller.
▪ The S2S gain is offset by the sponsor’s
acquisition of the business.
▪ Leeward can be the sole capital provider
and may not require an equity investment
subject to specific deal terms.
▪ Cash consideration is generally within
traditional unitranche or mezzanine
leverage ratios.
▪ The seller takes back 25% or more of true
enterprise value through a seller note or
rolled equity, excluding earn-outs.
Specifics
Exceptions
S Y S T E M S / DATA
Critical Path Questions
▪ Leeward can provide growth capital and/or
a debt recapitalization alongside its
acquisition capital provided ~60% or less of
total proceeds are intended to stay on the
balance sheet.
▪ Leeward can provide low-cost non-dilutive
acquisition financing to equity sponsored
transactions as well.
▪ An S2S allows sponsors direct
equity at close and a larger
share of deal economics.
▪ Sponsors may receive board
fees and salary.
▪ Leeward has no direct equity
and no board seats, allowing
sponsors greater autonomy.
▪ Mission-critical systems & data are
server-based assets that are difficult,
if not nearly impossible, to replace.
▪ If these assets were lost, the company
would fail to serve its customers.
▪ These assets are common in asset-
light to asset-moderate businesses as
well as some asset-heavy businesses.
▪ Customized ERP
▪ Proprietary Technology
▪ CRM & Marketing Systems
▪ Supply Chain Systems
▪ Indispensable Data
▪ Other Mission-Critical Systems
▪ Owners must value the tax
shield of the S2S service
agreement payments.
▪ An S2S favors pass-through
tax entities.
▪ An S2S’ asset purchase is
inefficient for C-Corps due
to double taxation.
▪ Limited Liability Corp
▪ Partnership
▪ S-Corp
▪ Other pass-through entities
Does the independent
sponsor’s LOI have terms
similar to the following?
Does the transaction
meet the below
financial criteria?
Is the business
one of these
entity types?
Does the business have
mission-critical systems or
data?
▪ Businesses with license income like
software businesses are not a fit for
an S2S.
▪ A business that looks like a software
business but has revenue based on
anything other than license income
like, transactions, commissions, or
leads, is a fit for an S2S.
▪ Trailing twelve-month EBITDA
of $5 million or greater
▪ Investments of $10 million or
greater
▪ U.S. based businesses
▪ Leeward may consider
businesses with EBITDA as low
as $2.5 million under select
circumstances.
▪ Businesses with recurring
revenue in excess of $10 million
may be a fit regardless of
profitability.
▪ Acquisition targets can be a
C-Corp if the transaction is
an asset purchase and the
acquirer is a pass-through
entity.
▪ A C-Corp may also be a fit
when alternative capital
sources are costly or dilutive.

SALE-TO-SERVICE TRANSACTION MAP
C AT E G O RY C A N D I DAT E C R I T E R I A
Critical Path Items
Pass-through Tax Entity
(S-Corps, LLCs, Partnerships)
Mission-Critical Systems and/or Data
(Not Always Apparent)
Profitable & Performing
($5M+ EBITDA, 10%+ Margins,
$10M+ investment)
H I G HF I T L OW M O D E R AT E
Use of Proceeds
▪ Control sale transactions to third parties
▪ Sole use of proceeds is debt
recapitalization
▪ Growth (unless next best alternative is
heavily dilutive)
▪ Liquidity Events
▪ Shareholder & Management Buyouts
▪ Family Ownership Transitions
▪ Strategic M&A
▪ Independent Sponsor Acquisitions
▪ Financial sponsor follow-on acquisitions
▪ Financial sponsor dividend recapitalizations
(hold period three years or greater)
Balance Sheet ▪ Asset-heavy (with exceptions) ▪ Asset-moderate to Asset-light▪ Asset-heavy to asset-moderate
Alternative Cost of Capital
▪ Less than 6%
▪ Transaction objectives can be
accomplished using only senior debt
▪ Greater than 10%
▪ No or modest warrants and equity
▪ 6% to 10%
▪ No or modest warrants
Domiciled State Tax Rate
▪ Texas (None)
▪ Florida (None)
▪ *All States Are Viable for an S2S*
▪ California (13%)
▪ New Jersey (8.97%)
▪ New York (8.82%)
▪ Other States with high tax rates
▪ Georgia (6%)
▪ Virginia (5.75%)
▪ Colorado (4.63%)
▪ Other States with moderate tax rates
This transaction map outlines Leeward’s investment criteria and highlights company and transaction
attributes that offer the best fit for an S2S.

C AT E G O RY
CAPITAL COMPARISON
U N I T R A N C H E / M E Z ZS A L E - T O - S E RV I C E E QU I T Y
* States with modest to high tax rates, after-tax cost decreases with early termination
Transaction Fees ~2%~4% ~4%-6%
Tax Deductibility Interest OnlyAll S2S Fees None
Effective Cost of Capital 8% - 15%2% - 8% (*)
20% - 30%
Availability of Funds 2.5x - 5x EBITDA2.5x - 5.5x EBITDA 4x - ~12x EBITDA
Cash Flow Demands Modest Depending on AmortizationHigh Pre-tax, Comparable to 0.5% to
1% Per-Month Amortization After-tax
None
Board Rights VariousBoard Observer Board Representation
Seniority Senior to Most Unsecured Creditors &
Equity
Critical Vendor - Senior to Other
Debt & Most Unsecured Creditors
Junior to All Creditors
Covenants Modest to StrictMaterial Adverse Change Provisions
No Covenants
None
Primary Use of Capital Recapitalization, Growth & M&ALiquidity, Closely-Held & Related-
Party Transactions, M&A
Liquidity, Growth & M&A
Exit Sale or RefinanceMaturity or Termination Sale
The following table offers a comparison of Leeward’s combined S2S and term loan structure to unitranche
debt and equity from the borrower or customer’s perspective.

SALE-TO-SERVICE & OTHER LENDERS
Asset Based Loans: S2S customers with receivables, inventory, or other hard assets may
have an asset-based facility that can coexist with an S2S without burdensome
intercreditor terms.
Third-Party Cash Flow Loans: An S2S will move ahead of most creditors in a
reorganization. As a result, third-party cash flow lenders will not coexist with an S2S
without intercreditor terms for which Leeward may or may not agree.
Term Loan & S2S: In the event a transaction requires a senior cash flow or second lien
term loan, Leeward will usually provide these as well. Leeward’s loans are independent of
the S2S and are not cross-collateralized.
Asset-Based Loan
Term Loan
Term Loan & S2S
An S2S works alongside a third-party asset-based loan but generally not alongside other types of debt. When a
senior or second lien term loan is needed, Leeward may provide that as well, offering a complete capital solution.
S A L E - T O - S E RV I C E & T H I R D - PA R T Y D E B T

LEEWARD UNDERWRITING
Trailing Twelve Month EBITDA & Effective Leverage: Leeward provides capital,
including the S2S and term loan, within leverage and credit thresholds consistent
unitranche and mezzanine debt.
Current Balance Sheet: A company’s existing debt may impact the amount of Leeward’s
S2S investment as existing debt should be recapitalized with new term debt rather than
S2S proceeds.
Cash Flow Projections: While the amount of the S2S investment is subject to the S2S
appraisal, S2S fees must fit within the company’s projected cash flows net of working
capital and capital expense requirements.
EBITDA & Leverage
Balance Sheet
Forecast
Leeward uses a cash flow lending framework to evaluate the credit profile of prospective investments.
F I N A N C I A L C O N S I D E R AT I O N S

CREDIT & S2S DILIGENCE
Credit Evaluation: With the assistance of third-party service providers, Leeward
undertakes traditional underwriting and credit diligence of the business and investment
opportunity.
S2S Diligence: With the assistance of a third-party firm experienced in technology
diligence and software implementation, Leeward evaluates the mission-critical nature of
the company’s systems and data assets.
Investment Specific Diligence: Third-party management consultants, collateral audits,
quality of earnings reports, industry and regulatory diligence, valuations, and other
reports are engaged as needed.
Credit
Systems & Data
Additional Diligence
In addition to traditional internal and third-party diligence, Leeward also evaluates the mission-critical nature of
the company’s systems and data assets.
I N T E R N A L & T H I R D - PA R T Y D I L I G E N C E

H OW A N S 2 S WO R K S
EXPLAINER & MISSION VIDEOS
Leeward’s “How an S2S Works” video
offers a 90-second overview of the Sale-
to-Service investment structure. This
video is primarily designed for trusted
advisors and other capital markets
professionals.
W H E N A N S 2 S WO R K S M E S S AG E T O OW N E R S
Leeward’s “When an S2S Works” video
provides use of proceeds examples in
five 90-second segments. The 90-second
segments are used for specific
audiences like management teams,
families, and independent sponsors.
Matt’s “Message to Owners” video
speaks specifically to business owners.
Matt discusses the loss of his family’s
business and his mission in Leeward to
help other families avoid what his
family endured.
Leeward’s “How & When a Sale-to-Service Works” videos offer case studies. In his “Message to Owners” Matthew
Hagen discusses the loss of his family’s business and explains his mission in Leeward.

FREQUENTLY ASKED QUESTIONS
K E Y QU E S T I O N S L E E WA R D R E S P O N S E
1. Implications – What is the impact to free
cash flow? How does the customer have a
low cost of capital but Leeward have a
market rate of return?
▪ The S2S consumes more cash on a pre-tax basis compared to traditional financing solutions but
consumes less cash on an after-tax basis.
▪ The customer’s low after-tax cost of capital is the result of all payments being operating expense
similar to an operating lease.
▪ Owners with low taxable income like a financial investor, which mark up the basis of their
investment in an acquisition and have high goodwill amortization, may not benefit from
Leeward’s structure.
▪ Leeward’s returns to its investors are measured on a pre-tax basis and are at or above a market
rate of return.
2. Tax Efficacy / Customer – What is the tax
impact to the S2S customer?
▪ S2S customers will pay capital gain on the initial sale of the assets but all S2S fees will be
operating expense, making Leeward’s S2S analogous to an ESOP.
▪ The capital gain for a liquidity event will mirror an equity sale but without dilution, which owners
of closely-held businesses seeking a liquidity event should value.
▪ In a shareholder, management, or other buyout transaction, Leeward acquires the assets of the
business and the proceeds are distributed to the selling shareholder. The shareholder also
assumes the capital gain of the S2S given they will be paying capital gain in any case.

3. Early Termination of the S2S – How is
early termination triggered and what is
the impact to the customer and Leeward?
▪ The customer has the right to terminate the S2S after an agreed upon period, generally two
years.
▪ The termination fee is predetermined and is an operating expense like the monthly S2S fees.
▪ If the S2S is terminated early, the after-tax cost of capital to the customer decreases which
incents early termination.
▪ Termination is at the customer’s option unless a material adverse change provision in the
S2S agreement is triggered which brings the termination fee immediately due.
4. Asset Repurchase – How does the
company get its systems and data assets
back at the end of the S2S?
▪ Upon termination or maturity of the S2S, the customer has the right to repurchase the assets.
▪ The repurchase price is based on fair market value using a predetermined valuation methodology.
▪ The company can also extend the S2S for up to 5 years for a predetermined monthly fee.
▪ Most S2S customers will reacquire the assets or extended the agreement.
6. Bankruptcy / Residual Value –
Where is the S2S positioned structurally
from a bankruptcy perspective? What are
the sensitivities around residual values of
the S2S assets?
▪ In the event of a reorganization, the S2S agreement is classified as an executory contract and
cannot be modified. Provided the company cannot easily replace its systems and/or data, the S2S
rises to the level of critical vendor status, preserving the value of the S2S contract.
▪ In select transactions, there may be secured financial assets, but in most transactions, the assets
will have no or modest residual value in liquidation.
▪ Leeward’s returns do not rely on a sale or residual value of the assets at the end of the S2S.

7. Physical Location of Systems & Data –
What happens to the assets once they are
purchased by Leeward? Is there execution
risk?
▪ Provided the company’s systems and data assets are located in a third-party data center, they do
not need to be moved.
▪ Existing datacenter contracts are assigned to Leeward concurrent with the purchase of the assets.
▪ In the event the assets are in the company’s physical office, they will be relocated prior to close.
▪ Leeward is responsible for complying with the customer’s security requirements, but Leeward is
not held liable for a breach if in compliance with the company’s requirements.
8. Protected Data – How is protected data
treated?
▪ Personal identification information and healthcare data cannot be acquired or directly accessed
by Leeward but protected data must remain exclusively within the Leeward controlled systems.
9. System Upgrades – What does Leeward
do with the assets. Can the assets be
modified or upgraded?
▪ Leeward is not a value-added service provider and only modifies the assets at the company’s
request.
▪ With Leeward’s consent, the customer can modify, upgrade, or outright replace the systems at
their expense.
▪ These terms are similar to a triple-net-lease in real estate where the building belongs to the
landlord, but the tenant can modify the property at their expense with the owner’s consent.

LEEWARD CAPITAL MANAGEMENT
Matt’s fifteen-year tenure as the CEO of a large data and
technology-enabled logistics business led him to recognize
the untapped value of a company’s systems, processes, and
data. Matt implemented the first Sales-to-Service® transaction
for his family-owned manufacturing and logistics business,
American Forest Products, and started Leeward to deliver a
similar capital solution for other closely-held businesses.
Matthew began his career with Arthur Andersen, LLP in
Mergers & Acquisitions and is now a regular speaker on
intangible asset strategy & finance. Matthew received a BA in
Political Science and BS in International Business from the
University of Southern California and an MBA from Harvard
Business School and has been a member of the Young
Presidents Organization for over 18 years.
mhagen@leewardcapitalmgt.com I (469) 718-7333
Leeward Capital Management is a specialty finance business
located in Dallas, Texas. Leeward’s patent pending Sale-to-
Service® (“S2S®”) investment structure offers owners of closely
held businesses a low-cost non-dilutive alternative to
unitranche and mezzanine debt and minority equity. An S2S®
monetizes the value found in a company’s mission-critical
systems, processes, or data through a structure similar to a
sale-leaseback. Leeward provides capital between $10M and
$150M for closely-held and related-party transaction including
liquidity events, management & shareholder buyouts, family
ownership transitions, independent sponsor acquisitions, and
M&A. Leeward’s S2S® is well suited for asset-light to asset-
moderate service businesses, but companies with mission-
critical systems and data can be found in all sectors.
www.leewardcapitalmgt.com | (469) 284-5166
ABOUT LEEWARD CAPITAL MANAGEMENT, LLC ABOUT MATTHEW HAGEN

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