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Ephor Marketing Services Brief
The market opportunity is ripe for marketing services firms that create a scalable
recurring solutions platform predicated on bundling and focused on a few verticals to
ensure economic efficiency and measured growth. See the Valuation Exhibit for detail of the
wealth creation opportunity.

Accordingly, Ephor Group desires to create a > $10M marketing services firm in the south central region
of the Americas.




Marketing Market Opportunity Executive Summary
The marketing sector is highly fragmented, rich in opportunities for consolidation and therefore attracting
private equity investment. There is a large pool of un-invested capital seeking returns; and increasingly
active corporate and strategic buyers. Transaction multiples are currently pegged around 4-8X times
EBITDA (pretax profit) and 2-5X times EBITDA for deals greater than $20 million for technology based
firms and 1X to 3X net revenues for small, growth oriented labor intensive firms (based on Ephor Group
deal sources, CapitalIQ and Thomson Financial data).



Buyer Demand Trends & Drivers
        1. Integrated Holistic Platform.

        2. Digital Agency.

        3. Mobile & Mobility.
              Communications is one of the main drivers of new systems/tools implementations.
              The Kelsey Group predicted a 130.5% growth rate for local mobile search and an 81.2%
                 growth for overall mobile ad revenues by 2013. Mobile Website Requirements:
                  Site renders effectively
                  Well-optimized1 for mobile ranking factors
                  Optimzied for multiple devices




1
    Google Mobile Optimizer, MoFuse, and MOBIFY are great tools to help you easily create a mobile version of your Web site.




Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046
Valuation Impact
The marketing sector is highly fragmented, and rich in opportunities for consolidation and therefore attractive to
institutional investment with the right portfolio of recurring revenues and a unique business model.

There is a large pool of un-invested capital seeking returns; along with increasing number of active corporate and
strategic buyers. Transaction multiples for technology enabled businesses are 4 - 8X times EBITDA for scale
transactions, and therefore, for subscale transactions (<$20M) 1 to 3X Net Revenues (based on Ephor Group
transaction comparables, CapitalIQ and Thomson Financial data).

Valuation Roadmap Management Action Steps:
   1. Validate the Platform & Portfolio Approach (Buyers, Offerings, Revenue Strategy) through partnering, alliances
       and acquisitions; and
   2. Create “best-in-class” operating performance against KPI benchmarks.


Key Success Factors Required to Create Wealth
     Resources Required                                                    Status
Talented People                          “A Talented Team” assembled and supported by industry leaders,
                                         domain experts, and strategic partners.
Unique Business Model                    Model needs to be efficient, scalable and have clear differentiators in the
                                         marketplace and “be known”.
Capital to Execute                       Useful Capitalization of the company to implement its growth strategy,
                                         by noted and competent investment and governess professionals.
Routines                                 Business plan supported by operations performing at BIC2 rates
                                         and the business model is refined and made economically efficient
                                         including all processes, measurements, and revenue methodologies.

Factors Impacting Valuation (and thus Wealth Creation)
      1. Quantity and quality of recurring revenues and the profitability of the platform;
      2. Scalable operating infrastructure to ensure performance is maximized, cost-efficient and
         delivers on the full promise of the outsourcing value-proposition; plus
      3. Company had best-in-class customer acquisition economics, has significant alternative
         distribution, and is realizing the benefits of having achieved “Branded Franchise Effects.”

Valuation Multiples
Category                                                                      Price Revenue Multiple*

Business Process Outsourcing                                                  1.5 to 3.9X

Marketing Systems Implementers                                                1 to 2.9X

Outsourced Sales Provider                                                     1 to 6X

Outsourced Marketing Provider                                                 1 to 5X

Marketing Services                                                            1 to 4X

Marketing Technology                                                          1 to 8X

* revenue multiple depending upon how the business is classified (does not include pass through advertising)


2
    BIC = “Best In Class”
                                                                                                                     2



    Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056
Marketing Services Growth Barriers to Date:
The key success factors/drivers for attracting institutional investment include:
   1.   Validate and Create Raving Fans for each Vertical Market: Vertical Specific Solution Capability Practices
   2.   Implement Branded Recurring Revenue Model Suite of Products: Customer Lifecycle Portfolio Recurring
        Revenue Model
   3.   Validate Scalable Services Platform: Validate Key Operating Indicators such as
        > $250k revenue-per-employee and > $20k EBITDA
   4.   Offers Better Solution at Lower Cost than Alternatives
   5.   Create Strategic Optionality: Serve multiple industries, with multiple services, supported by multiple
        systems/tools
   6.   Validate Customer Acquisition Model: 1/3 new sales from referrals, 1/3 from alternative distribution. 1/3 from
        executives.
   7.   Validate Client Satisfaction: Retention > 3 years.
   8.   Eliminate owner or key employee dependence and single threadedness.
   9.   Ramp and scale of roles for all positions.



How Do I Position My Business to Maximize Value?




                                                                                                                     3



 Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056
P&L Today:




P&L Opportunity:




The P&L Needs Additional Products; “Don’t take a slice of the pie. Grow the entire
pie through a Branded Platform.”




                                                                                                     4



 Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056
Exhibit: Top Operating Processes to Be
Institutionalized before Capital Deployment
What is the most economically efficient deployment of funds against the various
wealth opportunities and scenarios?

        I.   Handicap (rank) the Buyers, Distribution & Channel Partners by revenue potential and ROI.
             i.e. What is the near-term (Early Adopter) market size (count # and annual revenue $)
             based on most probable distribution scenarios?

       II.   Validate the customer lifecycle, portfolio offerings, and reengineering of the organizational
             design.
                                        Illustrative Growth Model:




      III.   Acquire missing components detailed in the org. chart.




                                                                                                             5



 Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056
Exhibit: Top Questions to Be
Answered by Management

  I.   What elements of the platform are
       missing to solve the value equation?



 II.   What is the near-term (Early
       Adopter) market size (count # and
       annual revenue $) based on three (3)
       most probable distribution scenarios?



III.   What is the pricing/margin range
       and how should the offerings be
       packaged?



IV.    Scalability: What are the scale drivers and key milestones to create
       wealth?



 V.    How are all investment and execution risks minimized?




                                                                                                      6



  Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056

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Ephor mso brief2010

  • 1. Ephor Marketing Services Brief The market opportunity is ripe for marketing services firms that create a scalable recurring solutions platform predicated on bundling and focused on a few verticals to ensure economic efficiency and measured growth. See the Valuation Exhibit for detail of the wealth creation opportunity. Accordingly, Ephor Group desires to create a > $10M marketing services firm in the south central region of the Americas. Marketing Market Opportunity Executive Summary The marketing sector is highly fragmented, rich in opportunities for consolidation and therefore attracting private equity investment. There is a large pool of un-invested capital seeking returns; and increasingly active corporate and strategic buyers. Transaction multiples are currently pegged around 4-8X times EBITDA (pretax profit) and 2-5X times EBITDA for deals greater than $20 million for technology based firms and 1X to 3X net revenues for small, growth oriented labor intensive firms (based on Ephor Group deal sources, CapitalIQ and Thomson Financial data). Buyer Demand Trends & Drivers 1. Integrated Holistic Platform. 2. Digital Agency. 3. Mobile & Mobility.  Communications is one of the main drivers of new systems/tools implementations.  The Kelsey Group predicted a 130.5% growth rate for local mobile search and an 81.2% growth for overall mobile ad revenues by 2013. Mobile Website Requirements:  Site renders effectively  Well-optimized1 for mobile ranking factors  Optimzied for multiple devices 1 Google Mobile Optimizer, MoFuse, and MOBIFY are great tools to help you easily create a mobile version of your Web site. Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046
  • 2. Valuation Impact The marketing sector is highly fragmented, and rich in opportunities for consolidation and therefore attractive to institutional investment with the right portfolio of recurring revenues and a unique business model. There is a large pool of un-invested capital seeking returns; along with increasing number of active corporate and strategic buyers. Transaction multiples for technology enabled businesses are 4 - 8X times EBITDA for scale transactions, and therefore, for subscale transactions (<$20M) 1 to 3X Net Revenues (based on Ephor Group transaction comparables, CapitalIQ and Thomson Financial data). Valuation Roadmap Management Action Steps: 1. Validate the Platform & Portfolio Approach (Buyers, Offerings, Revenue Strategy) through partnering, alliances and acquisitions; and 2. Create “best-in-class” operating performance against KPI benchmarks. Key Success Factors Required to Create Wealth Resources Required Status Talented People “A Talented Team” assembled and supported by industry leaders, domain experts, and strategic partners. Unique Business Model Model needs to be efficient, scalable and have clear differentiators in the marketplace and “be known”. Capital to Execute Useful Capitalization of the company to implement its growth strategy, by noted and competent investment and governess professionals. Routines Business plan supported by operations performing at BIC2 rates and the business model is refined and made economically efficient including all processes, measurements, and revenue methodologies. Factors Impacting Valuation (and thus Wealth Creation) 1. Quantity and quality of recurring revenues and the profitability of the platform; 2. Scalable operating infrastructure to ensure performance is maximized, cost-efficient and delivers on the full promise of the outsourcing value-proposition; plus 3. Company had best-in-class customer acquisition economics, has significant alternative distribution, and is realizing the benefits of having achieved “Branded Franchise Effects.” Valuation Multiples Category Price Revenue Multiple* Business Process Outsourcing 1.5 to 3.9X Marketing Systems Implementers 1 to 2.9X Outsourced Sales Provider 1 to 6X Outsourced Marketing Provider 1 to 5X Marketing Services 1 to 4X Marketing Technology 1 to 8X * revenue multiple depending upon how the business is classified (does not include pass through advertising) 2 BIC = “Best In Class” 2 Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056
  • 3. Marketing Services Growth Barriers to Date: The key success factors/drivers for attracting institutional investment include: 1. Validate and Create Raving Fans for each Vertical Market: Vertical Specific Solution Capability Practices 2. Implement Branded Recurring Revenue Model Suite of Products: Customer Lifecycle Portfolio Recurring Revenue Model 3. Validate Scalable Services Platform: Validate Key Operating Indicators such as > $250k revenue-per-employee and > $20k EBITDA 4. Offers Better Solution at Lower Cost than Alternatives 5. Create Strategic Optionality: Serve multiple industries, with multiple services, supported by multiple systems/tools 6. Validate Customer Acquisition Model: 1/3 new sales from referrals, 1/3 from alternative distribution. 1/3 from executives. 7. Validate Client Satisfaction: Retention > 3 years. 8. Eliminate owner or key employee dependence and single threadedness. 9. Ramp and scale of roles for all positions. How Do I Position My Business to Maximize Value? 3 Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056
  • 4. P&L Today: P&L Opportunity: The P&L Needs Additional Products; “Don’t take a slice of the pie. Grow the entire pie through a Branded Platform.” 4 Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056
  • 5. Exhibit: Top Operating Processes to Be Institutionalized before Capital Deployment What is the most economically efficient deployment of funds against the various wealth opportunities and scenarios? I. Handicap (rank) the Buyers, Distribution & Channel Partners by revenue potential and ROI. i.e. What is the near-term (Early Adopter) market size (count # and annual revenue $) based on most probable distribution scenarios? II. Validate the customer lifecycle, portfolio offerings, and reengineering of the organizational design. Illustrative Growth Model: III. Acquire missing components detailed in the org. chart. 5 Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056
  • 6. Exhibit: Top Questions to Be Answered by Management I. What elements of the platform are missing to solve the value equation? II. What is the near-term (Early Adopter) market size (count # and annual revenue $) based on three (3) most probable distribution scenarios? III. What is the pricing/margin range and how should the offerings be packaged? IV. Scalability: What are the scale drivers and key milestones to create wealth? V. How are all investment and execution risks minimized? 6 Ephor Group | 1-800-379-9330 | www.ephorgroup.com | 5353 W. Alabama Suite 300 | Houston, TX 77056