Growth Capital Strategies for 2014

1. Ephor Group | www.ephorgroup.com | 24 E Greenway Plaza Suite 440 | Houston, TX 77046
Growth Capital Strategies Valuation
For private company, BPO service businesses, transaction multiples1
range from 4 to
12X times EBITDA (pretax profit) and 1 to 5X times revenue multiple for deals greater
than $25 million with a validated plan to grow 5 to 10X.
Transaction multiples vary based on a multitude of factors:
Strategic or transactional business at or above enterprise scale (>$25 million) or
subscale
Revenue run rate (amount size and growth rate) and ramp potential (total market
opportunity $, % of market share compared to the exit potential analysis of
strategic vs. financial buyers)
Customer Revenue Waterfall ($portfolio) and Recurring Revenues (6 month to 1
year to 3+ year contract renewals)
Gross Profit Margins and COGS Margins compared to competitors
SG&A Margins compared to similar industries
Assets (both financial and other including: IP, patents, brands, team, competitive
advantage
Liabilities
Sectors which are highly fragmented, and rich in opportunities for consolidation are
therefore attractive to growth capital investment. Although historically growth capital
was only available to large scale >$5M EBITDA enterprises or early stage healthcare,
energy, and technology startups via venture capital. Sources of capital for growing
professional service companies was limited to angel investors, startup lending, and
personal guarantees.
Today, family office investments and structured equity instruments have become
available to entrepreneurs. These entrepreneur friendly useful capital sources are
bridging the gap for companies looking to jump the chasm from a small and medium
sized business to a market leading enterprise.
And jumping the chasm creates the opportunity for wealth creation for founders
that is not readily available via other financing instruments.
Growth Capital for Entrepreneurs
1
For private company SaaS and other technology providers, transaction multiples can range from 5 to 15X revenue
multiple.
Entrepreneur Growth Capital is a flexible investment loan that preserves equity.

2. Growth Capital Strategies for 2014
Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 404 | Houston, TX 77046
The Importance of Scale on Enterprise Value
For startups driven by innovative
founders venture capital can be the
perfect marriage of funding coupled
with ongoing management support
necessary to transform the company
into a market leader. But for most
entrepreneurs venture capital (VC) is
simply not available as the company
focus is too narrow2
.
There exists large pools of un-invested
capital in the United States (>$4B) and
abroad which are seeking the safe
investment returns of growth capital.
Companies that qualify for growth capital
instruments have a low risk of failure and
above market growth.
For entrepreneurs, the value of their
business significantly jumps from a
subscale valuation to scaled enterprise
valuation as they cross the chasm from a
single location, product, or customer
segment to national or global enterprise.
For BPO service tech-enabled businesses valuation multiples increase with size and scale.
Subscale Business
<$20M
Scaled Enterprise
>$25M
2X to 6X Adj. EBITDA
0.5X to 1.0X Revenues
4 to 12X Adj .EBITDA
1 to 5X Revenues for Services
2
See Exhibit A1 and Exhibit A2

3. Growth Capital Strategies for 2014
Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 404 | Houston, TX 77046
Creating Wealth Through Growth
Did you know that from 1995 to 2009,
privately funded capital backed
companies grew sales by 133%, while
the average United States company grew
sales by 28%3
?
Growth capital is required to scale business operations. Growth capital is required to pay
for the transition from a small subscale company to a large scaled enterprise.
Overcoming the Chasm and Growing from Subscale to Scale
Of the 1 million private
companies in the
United States with 20
to 99 employees fewer
than 1 in 4 achieve
20%+ year over year
growth.
3
Capital backed companies grew jobs by 82%, while all other companies in the U.S. economy grew jobs by 12%.
These emerging companies are incredibly important to the economy as they represent well over 4X the average American company’s
sales growth and nearly seven (7) times their new job growth.
"Growth capital, whether for market expansion, to
consolidate, or to create a market leader is an
opportunity to create wealth for founders."