Grace Matthews Chemical & Materials Overview Grace Matthews Chemicals Practice Overview Internationally Recognized Chemicals Transaction Advisors Services Strong, experienced and well-respected chemicals focused transaction advisors Business sales – strategic and private equity National presence with global reach Corporate divestitures Founded in 1999 Recapitalizations and management buy-outs Sixteen employees Going-private transactions Ten professionals dedicated to our chemicals practice Acquisitions Collectively, our chemicals professionals have: Capital raises Completed over 100 chemicals assignments Fairness opinions and valuations Over 150 years in chemicals M&A, finance, production, engineering and executive management positions Strategic alternatives analysis Typical Engagements Transaction Breakdown Clients include privately-held businesses, private equity funds, and large, multi-national corporations Buy-Side 20% End-to-end transaction advisory services Typical transaction sizes range from $20 to $500 million Sell-Side 65% Recapitalizations / Other 10% Fairness Opinions/ Strategic Alternatives 5% 2 Transactional Capabilities Sell-side Strategic vs. Financial Buyers Client profiles 80% of GM sell-side clients were acquired by strategic buyers High quality public and privately-held companies Global 2000 corporate divestitures Private Equity 20% Private equity portfolio companies Process types Limited, confidential strategic sales (1-6 strategic buyers) Transitional auctions Strategic 80% Broad auctions Recapitalizations Management buy-outs Special situations Buy-side Global Access to Strategic Buyers and Financing Sources Client profiles Track record of high level access to global strategic buyers Large multinational corporations Incumbent management with active MBO opportunity Process types Exclusive, focused searches in specific industry sectors Single target engagements Broad scope searches with multi-year engagement resulting in multiple acquisitions One-third of transactions are cross-border Long-term relationships with hundreds of leading private equity firms and private investors Extensive relationships with a variety of financing sources Banks Private Equity Alternative Sources 3 Established Relationships with Industry Leaders GM principals have completed assignments with all below Also, direct ties to hundreds of other global and regional chemical companies 4 Established Relationships with Private Equity Groups GM principals have completed assignments with all below Strong relationships with chemicals and materials focused private equity groups Regular attendees of ACG Intergrowth & Capital Connect Events 5 Dedication to Specialty Chemicals Chemical Whitepaper Published Annually Deep Industry Expertise Over 100 chemicals assignments completed in the sectors below Experience across virtually the entire spectrum of specialty chemicals Oil & Gas Process Chemicals Agricultural Chemicals Paints, Industrial Coatings & Inks Food Ingredients Fine & Organic Chemicals Personal Care, Soaps & Cleaners Chemicals & Materials Inorganics, Ceramics & Catalysts Adhesives, Sealants & Tapes Plastics, Polymers & Resins Colorants & Additives Contract Packaging Construction Materials Industry Associations Regular Speaking Engagements at Chemicals Events American Coatings Association, April 2015 “M&A’s Changing Landscape: Chemicals, Coatings, and Distribution” Danish-American Business Forum, January 2015 “Update on the U.S. M&A Market Activity” Adhesives and Sealants Council Spring Convention, April 2014 “M&A in Adhesives & Sealants: Private Equity vs Strategic Buyers” American Coatings Association, October 2013 “M&A in Specialty Chemicals & Coatings: Innovation, Consolidation, and Playing Well with Others” Adhesives and Sealants Council Leadership Conference, June 2013 “Value Creation in Specialty Chemical Mergers and Acquisitions” 6 Global Reach Global Capabilities Multinational Client Base and Relationships Nearly all of our sell-side processes include potential non-U.S. buyers Strong relationships with key global chemical and materials companies We cultivate direct ties to senior management around the world, who respect us for our industry expertise and deal flow. They also often hire us for their divestitures. Recent multinational clients include the following: GM principals visit European clients on a regular basis (typically monthly) Approximately 70% of our deals in the last three years involved significant interaction with global, non-U.S. strategic buyers Approximately one-third of our deals in the last three years were cross-border 7 Grace Matthews Chemicals Team John Beagle | Co-founder, Managing Director Doug Mitman | Co-founder, Managing Director Kevin Yttre | Managing Director Chemical Team Lead Former Trader for Fidelity Investments and Market Maker at the American Stock Exchange in New York Formerly with ICI’s Uniqema specialty chemicals business in U.S. and The Netherlands MBA from Cornell University and BA from Dartmouth College MBA from Harvard, B.S. in Chemical Engineering from University of Wisconsin-Madison 25+ years relevant experience 10+ years relevant experience Former research engineer at Digital Equipment Corporation MBA from Cornell University, B.S. in Materials Science from Cornell University 25+ years relevant experience Ben Scharff | Managing Director Thomas Osborne | Senior Advisor Trent Myers | Vice President Advises clients in chemicals, paints and coatings, construction products and services, and general manufacturing sectors Former CEO of both The Tnemec Company and ICI Paints North America / The Glidden Company Served as monthly columnist for Adhesives Age and Modern Paint and Coatings BS from University of Wisconsin-Madison and previously served in the United States Marine Corps BS from Youngstown State University, and has completed the Advanced Management Program at Harvard Business School MBA from University of Wisconsin, MA from the University of Virginia, BA from the University of Georgia 20+ years relevant experience 25+ years relevant experience 30+ years relevant experience Andy Hinz | Vice President Andrew Cardona | Associate Patrick Maag | Analyst Former Equity Research Analyst at Robert W. Baird & Co. Former Investment Associate at Prudential Capital Group, working in both the international group and the restructuring group Supports clients in a variety of chemical and materials industries MBA from Northwestern University and BBA from University of Wisconsin-Eau Claire; holds the CFA designation BBA from the University of Wisconsin-Madison 10+ years relevant experience 6 years relevant experience George Yang Liu | Analyst Sarah Toledano| Analyst Supports clients in a variety of chemical and materials industries Supports clients in a variety of chemical and materials industries BA in Economics from Northwestern University BS in Chemistry from Massachusetts Institute of Technology (MIT) Joined Grace Matthews in 2014 BS in Finance from Marquette University 2 years relevant experience Joined Grace Matthews in 2015 8 Grace Matthews: Chemical Team Leaders Douglas Mitman John Beagle John Beagle, Managing Director, is a co-founder of Grace Matthews and has advised clients on mergers and acquisitions since 1991. John has been the lead investment banker on over 100 engagements in a variety of industries including chemicals, coatings and basic materials, as well as in other manufacturing and service industries. Prior to his investment banking career, John was a research engineer at Digital Equipment Corporation, where he was part of the team that developed the patented Alpha chip technology – at the time, the fastest commercial microprocessor ever engineered. John has a B.S. in Materials Science from Cornell University, and an M.B.A. from the Johnson Graduate School of Management, Cornell University. Kevin Yttre Douglas Mitman, Managing Director, is a co-founder of Grace Matthews and has worked in mergers, acquisitions, and capital fundraising since 1993. Doug has completed over 50 transactions ranging in value from $5 million to $500 million, and has sat on the board of several privately-held companies. Prior to forming Grace Matthews, Doug ran an investment banking office in Prague, Czech Republic, and worked as a Trader for Fidelity Investments in Boston and as a Market Maker at the American Stock Exchange in New York. Doug has a B.A. in Economics from Dartmouth College and his M.B.A., with Highest Distinction, from the Johnson School of Management at Cornell University. Benjamin Scharff Kevin Yttre, Managing Director, has worked with clients in a variety of industries including specialty chemicals, commodity chemicals, coatings, and materials. A chemical engineer, Kevin held a number of engineering and management positions with ICI’s Uniqema specialty chemicals business in the U.S. and The Netherlands. Benjamin Scharff, Managing Director, focuses on mergers and acquisitions, leveraged transactions and recapitalizations. Over the course of his investment banking career, Ben has advised clients in a broad range of industries, including chemicals, paints and coatings, construction products and services, and general manufacturing. Kevin holds a M.B.A. from Harvard Business School and a B.S. degree, with Highest Distinction, in Chemical Engineering from the University of Wisconsin – Madison. At the University of Wisconsin, Kevin was awarded the Kurt F. Wendt Memorial Scholarship for outstanding academic performance and the Kowalke-Harr Teamwork Award, and was also named a Dalhke Scholar and Colbeck Scholar. Ben graduated from the University of Wisconsin with a B.S. degree in Economics. Ben is a member of the Association for Corporate Growth (Wisconsin Chapter) and previously served in the United States Marine Corps. 9 Grace Matthews Chemicals Team Thomas Osborne Andrew Hinz Thomas Osborne focuses on new business development and strategic planning for Grace Matthews. Prior to joining Grace Matthews, Tom held a variety of senior leadership positions in the global chemical industry, including CEO of both The Tnemec Company and ICI Paints North America / The Glidden Company. Tom served as Board Chairman of the National Paint and Coatings Association from 2003 to 2005 and received the Association’s highest honor, the George Baugh Heckel award. Tom holds a B.S. from Youngstown State University, and has completed the Advanced Management Program at Harvard Business School. Trent Myers Andrew Hinz, Director, joined Grace Matthews in 2007 and specializes in buy- and sell-side transactions and leveraged finance. Andy has experience in a variety of industries including chemicals, basic materials, coatings and adhesives, printing, and industrial equipment and services. Prior to joining Grace Matthews, Andy was an Equity Research Analyst with Robert W. Baird & Co. in Milwaukee, Wisconsin. At Baird, Andy provided investment recommendations to support institutional equity investors. Andy holds the Chartered Financial Analyst (CFA) designation and received a B.B.A. from the University of Wisconsin - Eau Claire with an emphasis in Accounting and Finance and an M.B.A. from the Kellogg School of Management at Northwestern University. Andrew Cardona Trent Myers, Vice President, has over 20 years experience working in mergers, acquisitions, and leveraged transactions. Trent has been involved in over 100 transactions throughout his career, involving such industries as chemicals, coatings and adhesives, basic materials, and a variety of other manufacturing and service industries. Trent has served as a monthly columnist on economic and M&A issues for Adhesives Age and Modern Paint and Coatings magazines. Trent holds an M.B.A. degree, with an emphasis in Finance, from the University of Wisconsin, an M.A. from the University of Virginia, and a B.A. from the University of Georgia. Andrew Cardona, Associate, joined Grace Matthews in 2013, and assists in buy-side and sell-side transactions, supporting clients in a variety of industries including chemicals, food ingredients, retail, energy, and automotive. Previously, Andrew was an Investment Associate at Prudential Capital Group in Chicago. During his time at Prudential, Andrew worked in both the international group, investing in companies based in Mediterranean Europe, Latin America and Australia, as well as the restructuring group, managing troubled investments and investing in distressed securities. Andrew received a B.B.A. from the University of Wisconsin-Madison, with an emphasis in finance and investment banking. At Madison, Andrew received the UW Student-Athlete Academic Excellence Award and the Arthur Ashe Jr. Award, a National Academic Award for Scholar Athletes. 10 Grace Matthews Chemicals Team Patrick Maag George Yang Liu Patrick Maag, Analyst, joined Grace Matthews in 2013. Patrick supports clients in a variety of chemical and materials industries. Patrick holds a BS in Finance from Marquette University where he was a member of the Applied Investment Management Fund, which teaches fundamental analysis through direct investment of university funds. George Yang Liu, Analyst, joined Grace Matthews in 2014. George supports clients in a variety of chemical and materials industries. George holds a BA in Economics from Northwestern University. George also studied Chinese Political and Economic Development at Peking University in Beijing, China. Sarah Toledano Sarah Toledano, Analyst, joined Grace Matthews in 2015. Sarah supports clients in a variety of chemical and materials industries. Sarah holds a B.S. in Chemistry from the Massachusetts Institute of Technology (MIT), with extensive coursework in finance and accounting through the Sloan School of Management. Sarah also participated in the Ruhr Fellowship in NordrheinWestfalen, Germany, with a focus on global fuels technology. 11 Grace Matthews Recent Chemical Industry Transactions Select Chemical Industry Transactions has been recapitalized by has been acquired by has acquired select assets of the Capcure® business from has been acquired by has sold certain assets to has been recapitalized by a confidential private equity group Grace Matthews, Inc. advised W.F. Taylor Co. Grace Matthews, Inc. advised Compass Chemical International Grace Matthews, Inc. advised Jones-Blair Company Grace Matthews, Inc. advised Polytex Environmental Inks Grace Matthews, Inc. advised Gabriel Performance Products Grace Matthews, Inc. advised Spraylat Corporation has sold its portfolio company a wholly owned subsidiary of has acquired has been acquired by to Management and Syrgis Performance Products, LLC has sold its portfolio company has acquired the assets of has been acquired by Grace Matthews, Inc. advised Eastman Chemical Company Grace Matthews, Inc. advised Silbond Holdings, LLC Grace Matthews, Inc. advised Superior Capital Partners and Edge Adhesives Grace Matthews, Inc. advised Syrgis Performance Products to Grace Matthews, Inc. advised Equa-Chlor, Inc. Grace Matthews, Inc. advised Audax Group 13 Select Chemical Industry Transactions a wholly owned subsidiary of Syrgis Performance Products has been acquired by American Sugar Refining Inc. has acquired has acquired the Specialty Sweetener Division assets of has sold its Resilient Floor Coatings Business to has sold its portfolio company has acquired to from Grace Matthews, Inc. advised Syrgis Performance Products Grace Matthews, Inc. advised Chr. Hansen Grace Matthews, Inc. advised Landec Corporation Grace Matthews, Inc. advised LORD Corporation Grace Matthews, Inc. advised NorthStar Chemicals, Inc. a wholly owned subsidiary of has been recapitalized by has acquired Grace Matthews, Inc. advised Prairie Capital Management, LLC has acquired has acquired the assets of Syrgis Performance Products has merged with has been acquired by Management of Lycus, Ltd. The Flood Company Grace Matthews, Inc. advised Columbia Paint & Coatings Grace Matthews, Inc. advised Fasse Paint Company Grace Matthews, Inc. advised Syrgis Performance Products Grace Matthews, Inc. advised ColorMatrix Corporation. Grace Matthews, Inc. advised AkzoNobel Grace Matthews, Inc. advised Northwest Coatings, LLC 14 Select Chemical Industry Transactions has sold its specialty chemical subsidiary has sold its portfolio company to to Grace Matthews, Inc. advised Chr Hansen, Inc. Grace Matthews, Inc. advised Landec Corporation Grace Matthews, Inc. advised Brockway Moran has been acquired by has been acquired by has sold its U.S. fine chemicals subsidiary to Grace Matthews, Inc. advised the shareholders of CERAC, Inc. Grace Matthews, Inc. advised Raabe Corporation Grace Matthews, Inc. advised Borregaard Synthesis, Inc. has acquired the Excipients Division of has acquired has acquired a majority interest in has acquired the assets of Grace Matthews, Inc. advised AkzoNobel Grace Matthews, Inc. advised Vesta, Inc. Grace Matthews, Inc. advised Pacific Epoxy Polymers, Inc. has licensed exclusive fields of Intelimer technology from Grace Matthews, Inc. advised Landec Corporation Beckers Industrial Coatings has acquired the stock of has sold the assets of Lubrizol Performance Systems to Grace Matthews, Inc. advised Specialty Coatings Company, Inc. Grace Matthews, Inc. advised Lubrizol Corporation 15 Recent Transactions Case Studies Dominus Capital’s Recapitalization of W.F. Taylor Co., Inc. Overview Results W.F. Taylor Co., Inc. (“Taylor” or the “Company”) is a leading North American manufacturer and marketer of flooring adhesives and related products. The Company has a reputation for developing high quality, technologically-advanced adhesives and providing superior customer service. Taylor is a leader in product innovation and offers a broad range of environmentally-friendly products that are free from isocyanates, solvents, and other potentially hazardous chemicals. The process was highly competitive and generated a significant amount of interest from both strategic and financial buyers. Grace Matthews led discussions with a variety of potential buyers with interest in formulated chemicals and the flooring market. Taylor has been family-owned and operated since John Raidy, Sr. acquired the business in 1989. Since that time, Taylor has grown into an industry leader with a reputation for providing high quality and innovative adhesives to installers of floor coverings throughout the U.S. The Company was owned by six members of the Raidy family, including Jack Raidy, Jr. and Mike Raidy, the second generation of Raidys to own and manage the business. Ultimately, the shareholders elected to partner with Dominus Capital, a New Yorkbased private equity fund that had developed an expertise in the flooring market through several prior acquisitions. In Taylor, Dominus recognized another opportunity to leverage its market knowledge and industry contacts with a business that had a reputation for high quality, technologically-advanced and environmentally-friendly products. The transaction provided an opportunity for shareholder liquidity while allowing management, including Jack and Mike Raidy, to retain ownership in the business. The shareholders also viewed Dominus Capital’s broad network of industry resources as an asset to support continued growth. After successfully developing the Taylor brand and expanding into multiple distribution channels throughout North America, the shareholders decided to seek partial liquidity for estate planning purposes. The shareholders engaged Grace Matthews to explore the Company’s options. Process Taylor’s niche market position and strong historical growth made the Company an attractive target for a broad range of both strategic and financial buyers. Given their extensive historical focus on developing a strong brand presence and creating a positive corporate culture, the Raidy family was committed to identifying a partner that would build upon the company’s success and maintain continuity for the operations and employees. has been recapitalized by Grace Matthews, Inc. advised W.F. Taylor Co., Inc. 17 Jones-Blair’s Sale to Hempel A/S Overview Results Jones-Blair Company (“Jones-Blair” or the “Company”) is a niche market leader in the development, manufacture, and marketing of industrial (predominantly oil & gas) and construction coatings (marketed under the NEOGARD brand name). Jones-Blair is well known in the coatings industry for its technologically-advanced, user-friendly products and its industry-leading customer service. The process was highly competitive and generated a significant amount of interest from strategic buyers. Per Grace Matthews’ recommendation, the shareholders allowed extensive further diligence, including QoE reports, management meetings and site visits to multiple interested parties prior to final offers. Albeit time-consuming, this process allowed the company to choose from a few well-diligenced final offers each with a high probability to close. Jones-Blair was founded in 1928 and was privately-held by three families who were not active in the day-to-day operations of the business. The Company was operated by outside, professional managers that shaped it into two distinct, niche business units. After realigning the Company and making significant investments in technology and product development, the managers oversaw a period of strong top- and bottomline growth for Jones-Blair. Recently, Jones-Blair was approached by several strategic buyers, and the shareholders engaged Grace Matthews to explore potential strategic options for the Company. Ultimately, the shareholders elected to sell the business to Hempel A/S, a Copenhagen, Denmark-based world-class manufacturer of high performance coatings. Hempel recognized in Jones-Blair a near perfect strategic fit with its complementary products and technologies, targeted geographies and key personnel additions. Hempel paid a full-value for the business, and it provided a positive outcome on all of the ‘softer’ issues that were important to the stakeholders of Jones-Blair. The final outcome demonstrated that transaction value does not need to be compromised to achieve a win-win for all parties involved. Process Jones-Blair had often received inquiries from both strategic and financial buyers, but the shareholders had not previously explored a formal sale process. Based on the shareholders’ desire to maintain continuity for Jones-Blair’s operations and to preserve confidentiality, Grace Matthews held informal conversations with senior management of a small group of strategic buyers to describe the opportunity and gauge initial interest. One of the challenges of the process was to find a buyer that would place premium values on both the industrial and the construction coatings operations. Also, as is common, Jones-Blair had a few unique characteristics that a buyer needed to fully understand early in the process, to avoid late stage contract issues. has been acquired by Grace Matthews, Inc. advised Jones-Blair Company 18 One Rock Capital Partners’ Acquisition of Compass Chemical International Overview Results Compass Chemical International LLC (“Compass”) is a leading independent producer of specialty and standard phosphonates and other specialty chemicals and a major importer and distributor of phosphorus acid. With operations in Smyrna, Georgia and Huntsville, Texas, Compass serves a diverse base of oilfield, industrial water and recreational water customers. Cooperative product development with customers is a major competitive differentiator for Compass, and has helped the Company build a robust customer base consisting of industry leading blue-chips as well as small to midsize industrial firms. Ultimately, the shareholders of BMMC selected One Rock Capital as Compass’ new partner. One Rock recognized that Compass’ market position, strong management, and industry reputation represented a strong base for future growth, and was selected based on One Rock partners’ industry knowledge and relationships, as well as the cultural fit between the parties. The transaction offered continuity for the existing management team and allowed them to go forward with an experienced partner committed to executing the Company’s growth strategy. Compass was owned by BMMC Holdings, whose shareholders had overseen Compass’ development into an industry leader in phosphonate-based scale and corrosion inhibitors for oilfield and industrial water applications. Because Compass was one of few remaining independent mid-sized North American manufacturers focused on these fast-growing markets, the shareholders of BMMC determined in mid-2014 that the Company was at an inflection point, and that it was an opportune time to consider bringing in new investors that could support the company’s future growth prospects. has made an equity investment in Process BMMC’s shareholders engaged Grace Matthews to explore the Company’s options. Grace Matthews believed that Compass would attract considerable interest from the investment community. In choosing a potential partner, BMMC shareholders and Grace Matthews considered several variables, including opportunities for Compass’ talented management team and potential for continued growth. Grace Matthews, Inc. advised the shareholders of Compass Chemical International 19 Evonik Industries’ Acquisition of Silbond Corporation Overview Results Silbond Corporation, or “Silbond”, is a leading manufacturer and supplier of tetraethyl orthosilicate (TEOS), a specialty silicate material. With a history of growth, high margins, and strong cash flow complemented by a unique, low-cost, highly efficient manufacturing process, Silbond has established itself as a leader in TEOS-related products for the consumer electronics and semiconductors, investment casting, protective paints and coatings, and chemical processing and catalyst industries. Silbond produces TEOS in a unique and inherently clean direct reaction process that allows the company to consistently meet the highest requirements for purity. Having invested significantly in production capabilities and product development over the past five years, Silbond possessed a number of tangible, material growth opportunities that positioned the company well for continued success. Over the course of its long-term engagement with O2 Investment Partners, Grace Matthews worked to navigate ownership through a series of challenging discussions with multiple interested parties. With significant expected synergies and complementary geographic locations and product lines, Evonik Industries successfully acquired Silbond Corporation in February 2014. O2 Investment Partners, supported by Centerfield Capital Partners, acquired the Company along with Silbond’s management team in 2010. After initial meetings in 2012, Silbond Holdings engaged Grace Matthews in a long-term advisory role to help prepare the company for an eventual sale. has been acquired by Process A number of interested acquirers approached Silbond prior to ownership’s decision to formally declare the company for sale. As one party emerged as a serious potential buyer, the shareholders made the decision to ask Grace Matthews to market the company to an limited group of other strategic and high-potential private equity acquirers. Grace Matthews, Inc. advised Silbond Holdings, LLC on this transaction 20 The Gladstone Companies’ and Akoya Capital’s Acquisition of Edge Adhesives from Superior Capital Partners *Winner of the M&A Advisor’s Divestiture of the Year Award for 2014 Overview Results Edge Adhesives, or “Edge”, is a developer and manufacturer of adhesives, sealants, tapes, gaskets, and related materials for the construction, transportation, electrical, HVAC, and other markets. By combining significant formulation and production expertise across multiple facilities and technology platforms with the ability to formulate, compound, extrude, coat, and convert products, Edge developed and commercialized a number of products that are currently recognized as leaders in their respective market niches. The result was a timely, efficient sales process that was quite competitive, and included numerous interested strategic and private equity groups. After acquiring the initial platform company in 2010, Superior Capital Partners, the majority owner of Edge, and Edge’s CEO had successfully integrated a number of acquisitions and achieved substantial cost savings and organic growth. In the summer of 2013, ownership began considering potential exit options and ultimately engaged Grace Matthews to run a sale process targeted at a select group of strategic and private equity buyers. In partnership with Akoya Capital, the Gladstone Companies acquired Edge Adhesives in February 2014. Gladstone and Akoya brought in several key industry executives early in the process that were able to help them understand the value proposition and growth opportunities, which allowed them to get comfortable with the ultimate valuation. The final value of the transaction matched the high expectations of the sellers, and the management team of Edge (which included a significant roll from the CEO into Newco) was very pleased with its new equity partner. This all-around positive outcome underscores the need for a well-managed and executed sale process. Process After working with ownership to position and prepare the company for sale, Grace Matthews was tasked with finding a group of buyers that would value the business off of significant, yet defensible, increased future performance. As such, Grace Matthews leveraged industry relationships to contact the best potential strategic acquirers that could benefit from Edge’s manufacturing footprint, technology and diverse product portfolio. Grace Matthews also contacted a number of targeted private equity groups, interested and familiar with the space, who could acquire the company and deploy additional capital and management resources to continue building upon an already rapid growth trajectory. has sold its portfolio company to Management and Grace Matthews, Inc. advised Superior Capital Partners and Edge Adhesives 21 Gabriel Performance Products’ Acquisition of BASF’s Capcure® Business Overview Results Gabriel Performance Products, a portfolio company of Edgewater Capital Partners, is a manufacturer of proprietary, high-performance chemicals and also provides custom synthesis services to the chemical industry. Gabriel is headquartered in Ashtabula, Ohio. Grace Matthews’ process resulted in a highly synergistic transaction that allowed Gabriel to become a market leader in mercaptan-based epoxy curing agents. Due to the chemical similarities between Gabriel and Capcure’s products, integration of Capcure into Gabriel’s operations was seamless. The Capcure products were manufactured using existing equipment without adding any new fixed costs or overhead. No customers were lost through the integration process and today all incremental gross margin generated from sales of Capcure products directly increases Gabriel’s EBITDA. Gabriel management believed that bolstering its presence in the specialty epoxy curing agents market could provide significant revenue and profit opportunities, and was aware that BASF had an attractive product line of curing agents sold under the Capcure® brand name. Gabriel believed the business to be non-core for BASF, which had acquired the product line through the acquisition of Cognis Corporation in 2010. In early 2012, Edgewater Capital Partners sought out Grace Matthews for assistance in pursuing the acquisition. Process Grace Matthews leveraged prior relationships with senior BASF management at BASF’s Ludwigshafen, Germany Headquarters in order to access key decision makers, and ultimately led negotiations between Gabriel and BASF. A challenging component of the transaction was handling the transfer of customer relationships and inventory from BASF to Gabriel, without revealing confidential information or disrupting customers’ order patterns. Grace Matthews negotiated a transitional agreement that allowed BASF to service customers and reduce inventory for a period of time post-close, while Gabriel finalized production specifications, scheduling, and logistics for distribution of Capcure products from its Ashtabula facility. has acquired select assets of the Capcure® business from Grace Matthews, Inc. advised Gabriel Performance Products 22 Weatherford International’s Acquisition of Syrgis Performance Chemicals Client Results Syrgis Performance Chemicals, or “PChem”, is a manufacturer of specialty oilfield chemicals. PChem primarily services the oil and gas industry with products that are used in a variety of end markets, including drilling and stimulation, production, pipeline transportation and refining. The buyer that emerged from this rigorous process was Clearwater International, a subsidiary of Weatherford International, a worldwide provider of equipment and services used in all phases of oil and natural gas production. PChem’s future growth is expected to accelerate under the new owner, as PChem’s custom formulation capabilities will greatly benefit from Weatherford’s global reach and exceptional marketing resources. The timing of the sale was excellent, as PChem was posting record sales and earnings as the oil and gas industry in North America was experiencing rapid growth due to the discovery and development of shale oil deposits in the U.S. and Canada. PChem, which provides custom-formulated products to match the unique characteristics of oil and natural gas deposits in specific geographic areas, was well positioned to capitalize on growing oil and gas production in North America, as well as continue expanding its overseas footprint with sales in Russia and Central and South America. a wholly owned subsidiary of Syrgis Performance Products, LLC Process Grace Matthews contacted both strategic and private equity buyers for PChem. Management presentations were conducted for a limited group of buyers that expressed a strong interest in acquiring PChem. A smaller subset of potential buyers was allowed to conduct more detailed due diligence. has been acquired by Grace Matthews, Inc. advised Syrgis Performance Products 23 PPG Industries’ Acquisition of Spraylat Corporation Overview Results Spraylat Corporation is a global manufacturer of industrial powder and liquid coatings and is one of the largest privately held coatings companies in North America. Spraylat, known for its technology and customer service, is a leader in many of the niche markets it serves, including automotive wheel and tire coatings, electronic conductive coatings, mirror coatings and solutions, and architectural powder coatings. The company operates manufacturing facilities in North America, Europe, and Asia and has customers in over fifty countries. Grace Matthews’ process resulted in the successful sale of Spraylat Corporation to PPG Industries at a value that exceeded the shareholders’ goals. The cultural, strategic, and product fits between the organizations were a clear driver of value in the transaction. The acquisition strengthened PPG’s capabilities in industrial coatings while simultaneously providing access to Spraylat’s strong, worldwide customer base. Prior to engaging Grace Matthews, the owners of Spraylat had been approached by a strategic buyer that could realize significant synergies in a transaction. With no readily apparent succession plan in place, the owners sought advice from Grace Matthews on possible sale options. Process has sold certain assets to Spraylat’s owners ultimately engaged Grace Matthews to run a timely sale process targeted at strategic buyers that potentially had the most to gain in a synergistic transaction. Grace Matthews identified a small group of global coatings companies that could reasonably be expected to achieve the value goals of the shareholders. After approaching these targets to gauge their interest, Grace Matthews met with each potential buyer to discuss Spraylat and the synergy opportunities that an acquisition could provide. GM then guided the sellers and potential buyers through what became a highly competitive sale process. Grace Matthews, Inc. advised Spraylat Corporation 24 PolyOne Corporation’s Acquisition of ColorMatrix Group Client Results Audax Group, a Boston-based private equity firm, engaged Grace Matthews (along with a co-advisor) to develop and execute a strategy to maximize value to a strategic buyer during the sale of ColorMatrix, a portfolio company of Audax Group and a world leader in colorants and additives for plastics. PolyOne Corporation successfully bid over 11x EBITDA for ColorMatrix, whose global sales and EBITDA for June 30, 2011, were $196.8 million and $43.6 million, respectively. Having advised on ColorMatrix’s founder’s $175-million sale of the company to Audax Group in 2006, Grace Matthews was very familiar with ColorMatrix and the company’s ability to provide technical solutions for beverage packaging, industrial extrusion, performance molding, and fiber end markets. The acquisition of ColorMatrix is a significant milestone in PolyOne’s publicly stated commitment to focus more on specialty chemicals. Process The marketing process for ColorMatrix involved a broad auction that included over 100 prospective private equity and strategic buyers. Grace Matthews, based on our expertise in chemicals, plastics, and additives, focused solely on high potential strategic buyers within the specialty chemicals industry. After extensive research of market participation, product portfolios, geographic footprints, and potential synergies, Grace Matthews proceeded to handpick certain buyers, including PolyOne, for introductory meetings. These “fireside chats” informally introduced the ColorMatrix story, highlighted business fit, and generated strong interest from a number of strategic bidders. has sold its portfolio company to Grace Matthews, Inc. advised Audax Group 25 Landec Corporation’s Acquisition of Lifecore Biomedical Client Results Landec Corporation (Nasdaq: LNDC), based in Menlo Park, CA, is a materials science company that develops and markets patented polymer products for food, agriculture, personal care and drug delivery applications. Grace Matthews has a strong, long-standing relationship with Landec, having advised the company on a number of transactions including its acquisition of Dock Resins and a joint venture with Air Products and Chemicals. Warburg Pincus set a minimum price target for Lifecore based on its return of investment objectives. To meet the targeted value, Grace Matthews negotiated closing consideration of $44.0 million, including $40.0 million in cash and $4.0 million in assumed debt. Additional contingent payments of up to $10.0 million based on Lifecore’s 2011 and 2012 performance were structured by Grace Matthews to help Landec mitigate risk while simultaneously achieving Warburg Pincus’ minimum sale price. Process Landec engaged Grace Matthews to perform an acquisition search that would expand Landec’s capabilities in advanced materials. Working together, Grace Matthews and Landec developed three criteria that acquisition candidates had to possess: growth potential in areas beyond Landec’s core food technology, biomaterial products that had synergies with the company’s Intelimer® polymers, and a level of profitability that would be meaningfully accretive to near-term financial performance. During the process, Grace Matthews identified and qualified a number of acquisition candidates, including Lifecore Biomedical (Chaska, MN), a developer and manufacturer of biopolymers used in a wide range of therapeutic treatments and medical research initiatives and a portfolio holding of Warburg Pincus, a $30 billion New York based private equity firm. Lifecore represents an important investment for Landec’s future in the area of biomaterials. The acquisition significantly advances Landec’s commitment to advanced materials in new, growing markets and achieves all the stated objectives of the company’s acquisition strategy. has acquired from Grace Matthews, Inc. advised Landec Corporation 26 Columbia Paint Company’s Merger with Sherwin-Williams Client Results Columbia Paint Company, based in Spokane, Washington, is a leading manufacturer and retailer of architectural coatings in the Pacific Northwest. The Company services the professional painting contractor, builder and do-ityourself markets through 43 company-owned stores. The process generated three strong, competitive bids for Columbia. Grace Matthews successfully negotiated and structured a merger with Sherwin Williams that achieved the shareholders’ goals at an attractive valuation. Because of its strong regional brands, favorable demographics, and proven growth strategy, Columbia enjoyed sales and profit growth far in excess of industry averages. The final transaction was structured as a cash merger – which provided shareholders with an extremely advantageous tax position for the transaction. Process The shareholders of Columbia engaged Grace Matthews to market the company to select buyers. In agreement with Columbia’s Board and shareholders, Grace Matthews identified a group of the six best strategic buyers that could reasonably be expected to achieve the Board’s objectives relating to valuation, corporate culture and management succession. Grace Matthews approached each of these six ideal buyers with a detailed Offering Memorandum and customized analyses for each that took into account the strategic fit and the buyer’s likely post-acquisition plans for Columbia. has merged with Grace Matthews, Inc. advised Columbia Paint & Coatings 27 Ceradyne’s Acquisition of Minco Client Results The Philadelphia-based private equity group Argosy Capital engaged Grace Matthews to sell their portfolio company, Minco, the world’s leading producer of premium-grade fused silica, a key raw material used in hightemperature precision investment casting. Grace Matthews prepared all of the documentation required for a full, broad-based sale process, including an Offering Memorandum, management presentation, a secure on-line due diligence data room, a summary of synergies in China, and a detailed Letter of Intent: all of which supported a full valuation for the business that would be required for a preemptive offer to be successful. A key consideration was finding a potential buyer that would support Minco's excellent growth prospects - the company had established strategic alliances with major industry partners, and was in the process of setting up a joint venture to enter the rapidly growing markets in China. The process resulted in a very successful vertical integration of two businesses at a purchase price that provided the client with a high return on the initial investment. Process After a thorough business analysis and evaluation, including detailed financial modeling to determine the expected values from both private equity and strategic buyer perspectives, we determined that there was a small group of strategic buyers that would be significantly affected by the sale of Minco, including the Los Angeles-based Ceradyne (NASDAQ: CRDN). Minco was a long-time supplier to Ceradyne’s Thermo Materials division, which stood to gain significant cost savings from the vertical integration of Minco into its operations. Ceradyne showed strong interest in the acquisition, and requested the chance to make a pre-emptive bid for Minco. has acquired Grace Matthews, Inc. advised Minco, Inc. 28 Akzo-Nobel’s Acquisition of Chemcraft Client Results Grace Matthews has a long-standing client relationship with Amsterdam’s Akzo-Nobel, the world’s largest coatings manufacturer. Over the last 10+ years, Grace Matthews principals have advised Akzo on numerous buy- and sell-side transactions. Because of our regular interaction with the debt and equity markets, we were able to quickly and accurately determine the value that an aggressive private equity group would put on Chemcraft. With revenues in excess of $16 billion, Akzo had a strong interest in acquiring Chemcraft, a highly profitable North American manufacturer of wood finishes with annual sales exceeding $150 million. This analysis provided our client, Akzo, with a baseline on which to build an attractive package for both the shareholders and management, which was ultimately accepted by Chemcraft. This creative approach allowed Akzo to participate in and win a competitive sale process while the other interested strategic buyers remained bystanders. Process Despite the exodus of U.S. furniture manufacturing to China, both Akzo and Chemcraft had managed to grow their wood coatings businesses in North America based on product innovation and excellent customer service. The two businesses were a natural strategic fit. Chemcraft’s management initially pursued a private equity-backed management buy-out, and didn’t believe a sale to Akzo or any other strategic buyer would achieve their objectives. has acquired Grace Matthews recognized that only an approach that countered management's objections to strategic buyers would allow Akzo into the process. Grace Matthews, Inc. advised Akzo Nobel 29 RoundTable’s Acquisition of Vesta Client Results Vesta is North America’s leading manufacturer of silicone-based, single-use medical devices. Vesta’s branded and private label products are sold to global leaders in heath care including Abbott Labs, Baxter and Bristol-Myers Squibb. Because of its growth prospects, high margins, and experienced management team, Vesta generated a great deal of interest from the private equity community with about 25 bids in the initial phase of a twostage auction process. As one of the fastest growing businesses in its industry, Vesta had been regularly contacted by both strategic and financial buyers interested in acquiring the business. Of the eight finalists, management partnered with RoundTable Healthcare Partners, a Chicago private equity firm specializing in healthcare. Process The value of the recapitalization was about three times the amount of an offer received just two years earlier, demonstrating the power of a wellexecuted, competitive sale process. Vesta’s founding shareholders wanted to capture some of the value they had created within the Company, but also had an interest in seeing the Company continue as an independent firm with the resources it needed to maintain its strong record of growth. The shareholders were supported by a young management team that had helped build the business and the owners felt a great deal of appreciation and loyalty to them, as well as to the rank-and-file employees. Despite the anticipation of a high level of interest from strategic, synergistic buyers, the shareholders requested that Grace Matthews limit the sale process to leading private equity firms that would provide existing management with the opportunity for a meaningful equity position in the business. has acquired a majority interest in Grace Matthews, Inc. advised Vesta, Inc. 30 Audax Group’s Recapitalization of ColorMatrix Client Results In 2006, the shareholders of privately-held ColorMatrix (Cleveland) engaged Grace Matthews to advise them on the sale of the company. The first phase of the auction process resulted in 41 bids with a wide range of values. ColorMatrix is the world’s leader in liquid colorants for plastics, with operations in the U.S., the U.K., The Netherlands, Brazil and China. Over half of ColorMatrix’s revenues are outside the U.S. Concurrently with the second round of bidding from the eight final parties, we secured a “staple-on” debt package from GE Capital, which was well equipped to underwrite a complex, multi-currency global entity like ColorMatrix. Process Three strong, well-respected private equity groups bid aggressively in the second round, resulting in a successful bid at the high end of the range. The Shareholders and management ultimately chose the Audax Group based on a combination of price, culture and shared values. The company’s founders had grown the business to over $100 million in revenue, and were seeking liquidity through a recapitalization or sale of the business. Grace Matthews assisted the owners with careful planning and positioning the company for a sale, based on its strong management team, loyal customers and solid international growth prospects. has been recapitalized by Based on these fundamentals, as well as a history of high margins and double-digit growth, Grace Matthews recommended a broad two-stage auction that would involve both strategic and financial buyers. Grace Matthews, Inc. advised ColorMatrix Corporation 31 219 North Milwaukee Street, 7th Floor Milwaukee, WI 53202 414.278.1120 www.gracematthews.com © 2015 Grace Matthews, Inc. All rights reserved. Securities are offered through GM Securities, LLC, under common control with Grace Matthews, Inc., and a registered broker dealer and member of the Financial Industry Regulatory Authority.