Follow-up Q&A to Equiteq's 'preserve and grow equity value' webinar

1. Growing equity, realizing value
Follow-up Q&A
How to ensure you
preserve and grow
equity value during
the downturn
April, 2020

2. Confidential equiteq.com© Equiteq 2020
Thank you to everyone who joined us for our webinar on 16th April
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• You can watch a re-run of the webinar
here:
• https://youtu.be/nj9i2CSRGkk
• If you would like a copy of the webinar
slides and the 100 Tips book, please
email us at info@equiteq.com
• We couldn’t cover all the Q&A on the day
– the next few slides cover the questions
we didn’t get time to address

3. Confidential equiteq.com© Equiteq 2020
Questions about the economy
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• What gives you confidence that there will be a V shaped recovery?
Paul Collins: There is a lot of uncertainty, of course. From an M&A perspective, we can already see a proportion of
acquirers are looking forward to the post-crisis phase, especially financial investors. This is quite different to 08/09 when
everything stopped - which is encouraging in itself.
• Do you thing the pandemic will make other regions like ASIA more attractive in years to come?
Paul: I'd like to think so but it could go in the opposite direction if the pandemic creates even more nationalism in the
west than we have seen in the past few years.

4. Confidential equiteq.com© Equiteq 2020
Questions about M&A
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• What is the number 1 question your buyers are asking you?
Paul: They are really trying to understand what the real-world impact is on our clients' businesses.
• During the downturn, do you anticipate US or European firms making acquisitions in US to bolster profits?
Paul: Yes – both.
• Do you see some sort of Covid-19 "adjustment" sellers can claim? To EBIT and Revenue???
Paul: Absolutely, we will be making this argument on every firm we sell going forward.
• Are there any situations where you think it would be preferable to go to market now vs. when the buyer
market is back to 'normal’?
Paul: Yes and we are seeing some of those already. If you have a service that was in great demand prior to the pandemic
and you have been growing fast as a result then buyers would still want to engage now. Many will take the view that
there will be fewer buyers around and so their interest is likely to be more successful and price may be less of an issue
than positioning themselves for the upturn when it comes. Whilst headline price may not be reduced in these
circumstances, we might expect buyers to mitigate downside risk through the deal structure i.e. less cash upfront and
more on an earnout.
• With debt so cheap and with such great terms right now, why not load up and create a war-chest for
growth?
Paul: We have some mid-market clients who are planning just that. If you can without personal risk then consider it, so
long as you have the confidence to be able to pay it back out of growth.

5. Confidential equiteq.com© Equiteq 2020
Questions about M&A - continued
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• Do you suggest keeping M&A strategy as part of your growth strategy in 2020 & 2021?
Paul: Definitely! Acquisition opportunities will be very tempting over the next 6 months and beyond. Some target firms
might not be actively in the market but with the right support, you should be able to find good value firms to acquire.
• We paused an existing acquisition process – were we premature?
Paul: It obviously makes sense to review the deal given uncertainty, but don’t take too long. If there is strategic rationale
for the deal and a willing buyer and seller, then you should be able to manage the risk through the deal structure.
• Taking a transatlantic view, how do international buyers / PE firms view the US economy and US
consultancies. Is the pandemic making US based companies more, less - or same - attractive to
international buyers? Is there a noticeable variation, globally, in response to this crisis in terms of buyers
interest in consulting firms?
Paul: A bit too early to decide on this one. Different countries have taken different approaches to managing the
pandemic, but it remains to be seen what impact this will have on regional economic recovery. In 08/09, we definitely
saw a ‘flight to quality’ in terms of deals that proceeded, and I’d expect that to be a big factor again. International buyers
recognise there are numerous high quality assets in the US, which should underpin the market.

6. Confidential equiteq.com© Equiteq 2020
Questions about cutting costs
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• When making cuts in a downturn, what's the best strategy to pursue to preserve equity value?
Paul: The first priority is to ensure you survive the downturn to have the chance to sell equity at a future stage.
Secondly, cut those resources that do not impact directly revenue growth in the short to medium term future or those
that can be reasonably replaced quickly in an upturn. Protect resources that directly drive revenue growth including
(some) marketing, sales, client management and senior client delivery. Challenge everything else.
• You say protect cash flow, but many of our clients are asking for longer terms (e.g. 90 days, not 30).
Should we say yes?
Paul: Depends. If it is a long-term strategic client and you can borrow to bridge the gap then yes. If not, I would push
back. Most clients will be able to manage the downturn better than you and it usually isn’t reasonable for them to use you
to solve their cash problems in this way.
• What’s the recommended variable to fixed compensation ratio in such circumstances?
Paul: This is obviously really company-specific, but here’s some general guidelines. The more senior you are, the more it
should be variable, perhaps 100%. As you go down the organisation, you might move towards 50/50 but the exact ratio
depends on whether the variable is really a bonus or just a means of mitigating fixed costs historically. If it has been
more of a bonus then you might go to more than 50% variable
• Any tips on maintaining morale in a small team when cutting people?
Paul: Cut hard and do it once! Work hard then at making sure the remaining staff become and see that they are part of
building the future of the firm. You cant over-communicate in this environment

7. Confidential equiteq.com© Equiteq 2020
Questions about dealing with the new environment
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• Can you really kick off a new client in the current environment?
Paul: I accept it is tough. Building rapport and trust over a zoom link is much less effective than face-to-face. So first
choice would be to focus on existing and past clients where that rapport already exists. Concentrate new client
development on pipeline and goodwill building for future revenues. That said, there’s some real innovation taking place
on virtual selling. For example, we advised on the merger between Sales Performance International and Richardson last
year, and they have already created a dedicated virtual selling programme.
• Any examples of re-invention to really support businesses in parallel with clients focusing on social
distancing?
Paul: One of our clients has had a long-term programme to migrate their application implementation services towards
more RPA (Robotic Process Automation) – they’re really stepping this up during the crisis and linking it to an improved
digital sales front-end. It means clients can configure more of the system they want - and get a ‘live’ system running
much quicker. Post-crisis, this should also give them a compelling proposition to offer existing clients who want to rapidly
shift from on-premise to cloud solutions.
• Looking forward, are there any particular aspects of the post-covid economy that companies should focus
on to strengthen their UVP (for example, focusing more on use of virtual technology given that return to
normal social interaction may be delayed for a while)?
Paul: Travel expenses have always been a big part of the consulting cost base, mostly charged on to clients but not
always. Whilst new client winning is likely to still require face-to-face contact, I think the use of video-conferencing and
online collaboration tools could reduce costs for existing client work and make firms more agile and competitive for those
that embrace the technology

8. Confidential equiteq.com© Equiteq 2020
Questions about the 8-lever model
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• Are there multipliers to your 8 levers of equity value as per your previous multiplier equation?
Paul: Assuming you mean the weightings on each of the 8 levers then, yes, they have been pretty constant - Market
Proposition, Sales & Profit Growth and Management Quality get the highest weighting of 10/10.
• Would you apply the "Wheel" in a contemplated merger, and if so how?
Paul: It’s a great way to calculate valuation, identify strengths and weaknesses of the target firm and also perform a
culture match to see if the merger is likely to work! Depending on whether it is a real merger or an acquisition, you could
make it a joint assessment or just on the acquired firm. We do this often.

9. Confidential equiteq.com© Equiteq 2020
The ‘8 Levers of Equity Value’ is a proven model to reduce risk and
drive growth in profits & value
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Market
Proposition
Intellectual
Property
Quality of
Fee Income
Sales &
Marketing
Process
Consultant
Loyalty
Client
Relationships
Sales &
Profit Growth
Management
Quality
Equity
Growth
Wheel

10. Confidential equiteq.com© Equiteq 2020
It’s time to take action to prevent decline...
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• Our Equiteq Growth Accelerator (EGA) is designed for remote delivery, and takes:
• 2 hours of preparation prior to the first workshop (you send us data)
• Half a day’s analysis with your management team using the EGA to identify key risks,
barriers and opportunities
• A follow-up conference call to review our recommended action plan with your team and build
a set of priorities to maintain and then grow sales and profits
• The EGA builds team coherence and a momentum to be able to drive through the recession
• Facilitated by Consulting Directors with 20 years experience and 2 previous recessions to
draw upon
• Supported by unique KPI software that will measure and motivate progress – available
ongoing
• Speed of action will be essential to come out on top of this downturn !

11. Confidential equiteq.com© Equiteq 2020
If you are running out of cash call us also and we may be able to
help….
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• We can assess your situation quickly and put a plan in place with you that will either
return you to liquidity or propose alternative routes to avoid going into receivership
• Equiteq has access to many forms of investment through private high net worth
individuals, private equity and bank finance
• We also maintain a database of thousands of consulting firms, many of whom would like
to acquire firms who, for whatever reason, are having financial difficulties
• Don’t leave it too late to act!

12. Confidential equiteq.com© Equiteq 2020
Full or partial sale to a strategic buyer or financial
investor
Multi-year or short-term engagement prior to a desired
outcome
The global Knowledge Economy M&A and strategic advisory firm
Equiteq leverages its long-term engagement model and deep Knowledge Economy expertise to advise clients in the maximisation
of their equity value, with our truly global presence allowing us to provide either a local or cross-border team
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Why Equiteq is best-placed to deliver value to our clientsLong-term engagement model
Growing equity, realising value
Boston
New York
Paris
London
Singapore
Sydney
Prepare
Sell
50 employees
6 offices
4 continents
Global buyer relationships
Regular contact with an extensive database of global buyers and
investors
Extensive industry experience
Assessed >1,000 clients in the Knowledge Economy and
advised >500 clients on equity growth strategy
Market knowledge
>15 years working exclusively with companies in the
global Knowledge Economy
Sector-specific M&A expertise
>100 completed transactions and many live mandates globally
in the market, meaning regular dialogue with buyers

13. Confidential equiteq.com© Equiteq 2020
Further help
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For a confidential discussion please make contact with the following Equiteq professionals
Paul Dondos
Managing Director –
Origination Services
Tel: +44 (0)203 651 0622
Mobile: +44 (0)7384254200
Email: paul.dondos@equiteq.com
Paul Collins
Chairman
Tel: +44 (0)203 651 0608
Mobile: +44 (0)7768 728228
Email: paul.collins@equiteq.com
Nick Jones
Global Head of M&A
Tel: +44 (0)203 651 0622
Mobile: +44 (0)7973 318402
Email: nick.jones@equiteq.com
Jeff Becker
Head of M&A – North America
Tel: +1 646 350 2827
Mobile: +1 973 953 1775
Email: jeff.becker@equiteq.com

14. Confidential equiteq.com© Equiteq 2020