| CONFIDENTIAL Presentation to Update on Project Ferdinand and Preliminary Valuation Discussion Materials December 14, 2022 |
| 1 CONFIDENTIAL Disclaimer These materials have been prepared and are provided by Goldman Sachs on a confidential basis solely for the information and assistance of the Board of Directors and senior management of Focus Financial Partners (the "Company") in connection with their consideration of the matters referred to herein. These materials and Goldman Sachs’ presentation relating to these materials (the “Confidential Information”) may not be disclosed to any third party or circulated or referred to publicly or used for or relied upon for any other purpose without the prior written consent of Goldman Sachs. The Confidential Information was not prepared with a view to public disclosure or to conform to any disclosure standards under any state, federal or international securities laws or other laws, rules or regulations, and Goldman Sachs does not take any responsibility for the use of the Confidential Information by persons other than those set forth above. 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| 2 CONFIDENTIAL Table of Contents I. Project Ferdinand Process Update II. Update of Ferdinand’s Trading Levels and Valuation III. Review of Ferdinand Projections IV. Preliminary Valuation Analyses V. M&A Update and Sponsor Market Considerations VI. Financial Sponsor Interest Appendix A: Valuation Analyses Back-up Materials Appendix B: Transaction Process Materials Appendix C: Additional Materials |
| CONFIDENTIAL I. Project Ferdinand Process Update |
| 4 CONFIDENTIAL Project Ferdinand Timeline / Events Update Note: Market data as of 12-Dec-20222. Date Description of Events 30-Jun-2022 ◼ Ferdinand Board of Directors discuss illustrative analyses regarding a hypothetical take-private transaction and potentially interested financial sponsors July / August 2022 ◼ Meetings between Ferdinand (“Ferdinand” or the “Company”) senior management and CD&R, , and (no indication to sponsors of a potential process) 14-Sep-2022 ◼ CD&R (the “Buyer”) approaches Ferdinand with an interest in taking Ferdinand private and submits a non-binding indication of interest ◼ The Board verbally engages Goldman Sachs & Co. LLC (“Goldman Sachs”) as a financial advisor to help review and assess the proposal 21-Sep-2022 ◼ Board meeting to discuss the indication of interest and determine next steps ◼ Board agrees to give Buyer a due diligence period so Buyer and Buyer’s consultants can assess Ferdinand’s business 30-Sep-2022 ◼ Buyer provided access to data room to review initial due diligence information 06-Oct-2022 ◼ Full-day, in-person management meeting between Buyer and Ferdinand held at Goldman Sachs office 17-Oct-2022 to 20-Oct-2022 ◼ Subsequent in-person and Zoom due diligence meetings held 03-Nov-2022 ◼ Ferdinand releases Q3’22 SEC filings and holds earnings conference call ◼ Stock up ~14% since earnings release 09-Nov-2022 ◼ Receive oral update from CD&R indicating $45 per share 10-Nov-2022 ◼ Board meeting to discuss process updates and next steps 16-Nov-2022 ◼ Special Committee meeting to discuss update and next steps 23-Nov-2022 ◼ Special Committee meeting to discuss valuation and other topics 01-Dec-2022 ◼ Receive revised indication of interest letter from CD&R at $47.50 per share with accompanying exclusivity agreement 10-Dec-2022 ◼ Receive revised indication of interest letter from CD&R at $50 per share with accompanying exclusivity agreement [***] [***] [***] |
| 5 CONFIDENTIAL Summary of CD&R’s Updated Proposal As of 10-Dec-2022 Key Terms Purchase Price / Consideration ◼ Cash consideration of $50.00 per share for 100% of the Company’s fully diluted shares (assumes 85.1mm shares) — Offer represents ~43% premium to the Company’s three-month volume weighted average price — Assumes that CD&R will cash out vested equity awards at the proposed transaction price (net of any applicable strike prices) and unvested equity awards will be converted into cash awards that remain subject to vesting Financing ◼ Offer assumes that all of the Company’s debt would remain outstanding ◼ The equity portion would be funded through CD&R Fund XII Limited Partnership Approvals & Timing ◼ The proposal has been fully approved by the CD&R investment committee and is not subject to any further approvals ◼ CD&R is prepared to proceed immediately to conclude due diligence, which they anticipate can be completed over a four-week period. CD&R anticipates being in a position to execute definitive transaction documents before January 6th, 2023 Due Diligence Requirements ◼ Key areas of due diligence include: — Access to management of key partner firms for commercial and financial diligence — Demographic data for principals at key partner firms and review of succession planning — Review of latest 2023 forecasts, including anticipated Q4 cash and debt balances — Regulatory, compliance, and cybersecurity review — Customary legal, HR, benefits and tax diligence — Confirmation that the Company’s agreements do not require affirmative consents from clients in connection with the proposed transaction (i.e., they are structured as “negative consents”) Exclusivity ◼ Exclusivity was requested with an anticipated expiration of the exclusivity agreement on January 6th, 2023 ◼ A draft exclusivity agreement was included with the delivery of the proposal Management & Equity Arrangements ◼ CD&R anticipates further discussing management agreements and management’s rollover of its existing equity stake Advisors ◼ Financial and Legal Counsel: Moelis and Kirkland & Ellis, respectively ◼ Quality of Earnings and Technology: PwC and EY Parthenon, respectively ◼ Business Due Diligence: McKinsey |
| 6 CONFIDENTIAL Ferdinand – Key Considerations Pros ◼ Achieve cash premium at time where market, macro and geopolitical risks are heightened — 43% premium to 90-day weighted average share price ◼ Eliminates downside risk and risk of fully achieving business plan / process ◼ Focus has struggled to achieve desired valuations as public company — Go-forward business plan is generally consistent with historical plan ◼ Opportunity to more significantly transform the business as a private company than may be feasible in the public markets — Private ownership allows for more flexible capital structure and greater ability to restructure business / shift strategy as a private company ◼ CD&R is a well-respected and credible buyer — Very few other bidders have emerged historically Cons ◼ Elimination of future upside (and downside) in the business for most shareholders ◼ Value of CD&R’s $50 per share offer relative to view of intrinsic / standalone value — Value assumes debt capital structure can remain in-place / Stone Point continues to be large equity holder — Can value be increased beyond $50 per share? ◼ Challenging debt and overall markets may increase execution risk and impact valuation today – wait for better market? Note: Market data as of 12-Dec-2022. |
| CONFIDENTIAL II. Update of Ferdinand’s Trading Levels and Valuation |
| 8 CONFIDENTIAL Ferdinand Stock Price Performance Since IPO Source: Bloomberg, Capital IQ and IBES market data as of 12-Dec-2022. 1 Since 14-Sep-2022. 0 1,000 2,000 3,000 4,000 5,000 6,000 $ 0.00 $ 10.00 $ 20.00 $ 30.00 $ 40.00 $ 50.00 $ 60.00 $ 70.00 $ 80.00 Jul-2018 Apr-2019 Jan-2020 Oct-2020 Jun-2021 Mar-2022 Dec-2022 Volume (000) Price per Share Volume Ferdinand IPO Price: $ 33.00 All Time High: 18-Nov-21 $68.21 Current Price: $37.59 All Time Low: 18-Mar-20 $13.88 CD&R Updated Offer $50.00 Current Market Statistics Market Cap (mm) $ 3,107 Enterprise Value (mm) 5,714 Price / Earnings: 2022E 8.7 x 2023E 8.7 x Enterprise Value / EBITDA: 2022E 11.0 x 2023E 10.1 x Weighted-Avg Price 30 Days $ 37.90 90 Days 34.98 1 Year 42.06 Since CD&R Original Offer1 34.81 |
| 9 CONFIDENTIAL 30% 100% 170% 240% 310% Jul-2018 Apr-2019 Jan-2020 Oct-2020 Jun-2021 Mar-2022 Dec-2022 Indexed Price Ferdinand Brokerage / Wealth¹ Tech-Enabled Wealth² Traditional Asset Managers³ Insurance Brokerage⁴ S&P 500 92.6 % 92.5 % 40.6 % 15.7 % 13.9 % 0.9 % Performance (%) YTD 1Y 3Y Since Last Follow-On⁵ Since IPO⁶ Ferdinand (37.1)% (41.9)% 33.3 % (38.4)% 13.9 % Brokerage / Wealth¹ 14.3 15.6 81.9 15.1 92.6 Tech-Enabled Wealth² (16.1) (14.2) (13.2) (17.5) 0.9 Traditional Asset Managers³ (24.7) (25.0) 16.3 (23.6) 15.7 Insurance Brokerage⁴ (21.7) (20.4) 47.1 (20.5) 92.5 S&P 500 (16.3) (15.3) 25.9 (15.3) 40.6 Source: Bloomberg as of 12-Dec-2022. Notes: ¹Brokerage / Wealth includes AMP, LPLA, RJF, SF, BCOR. ²Tech-Enabled Wealth includes ENV, AMK. 3 Traditional Asset Managers includes APAM, AMG, VCTR, VRTS, BLK, TROW, BEN, AB, IVZ, JHG, FHI, CNS, CIXX, PZN, WETF, BSIG, WHG. 4 Insurance Brokerage includes MMC, AON, WTW, AJG, BRO, RYAN.K, BRP, GSHD, TIG. 5 Since 15-Dec-2021. 6 Since 26-Jul-2018. Relative Stock Price Performance Since IPO |
| 11 CONFIDENTIAL 60% 91% 91% 100% 100% 100% 90% 40 % 9 % 9 % 10 % $0.0 $20.0 $40.0 $60.0 $80.0 0% 20% 40% 60% 80% 100% Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Current Buy Hold Sell Price (USD) Median Target Price (USD) $ 46.00 $ 37.59 10 11 11 10 8 9 10 Price Target Methodology Rating / Price Target Rating / Price Target Date Key Commentary ◼ 10x 2024E EPS of $5.40 ◼ Buy ◼ $54.00 ◼ 3-Nov-22 ◼ EBITDA trends are more defensive than markets appreciate ◼ Two-year forward P/E based on 12 comparable stocks ◼ Outperform ◼ $57.00 ◼ 4-Nov-22 ◼ Market is revenue headwind, but expense base, recurring fee-based revenues, and earnings preference offer downside protection ◼ 10x Q5-Q8 P/E ◼ Buy ◼ $44.00 ◼ 3-Nov-22 ◼ Pace of deal activity remains relatively active despite market volatility ◼ 10-14x 2022E EPS ◼ Buy ◼ $46.00 ◼ 3-Nov-22 ◼ Operating beat; year-over-year organic revenue growth +3.4% ◼ 9.5x 2024E EPS ◼ Outperform ◼ $46.00 ◼ 3-Nov-22 ◼ Overall good quarter driven by higher revenues & EBITDA margin ◼ Lowering estimates on weaker guidance ◼ 9.5x 2023E Adj. EPS of $4.06 (adding back non-cash equity comp) ◼ Underweight ◼ $36.00 ◼ 4-Nov-22 ◼ Weaker than expected Q4 guidance ◼ Net leverage is rising, but RIA target multiples are softening ◼ 9.0x 2024E EPS of $4.99 ◼ Outperform ◼ $45.00 ◼ 3-Nov-22 ◼ Business resilience despite challenging market backdrop ◼ Consolidation not deterred by market ◼ 10.0x NTM2 EPS of $4.07 supplemented by DCF analysis ◼ Outperform ◼ $41.00 ◼ 3-Nov-22 ◼ Market headwinds lead to margin pressure ◼ Still active on the M&A front despite leverage constraints ◼ 10x CY23 EPS of $4.65 ◼ Outperform ◼ $46.00 ◼ 3-Nov-22 ◼ Better than expected Q3 results despite market volatility ◼ M&A pipeline seems solid Median $46.00 Research Analyst Perspectives Overview of Analyst Commentary and Ratings Analyst Recommendations and Target Price1 Source: Selected analyst research. Market data as of 12-Dec-2022 1 Includes undisclosed analysts. # of Analysts |
| CONFIDENTIAL III. Review of Ferdinand Projections |
| 14 CONFIDENTIAL Key Projection Assumptions Ferdinand Management Projections – Received 15-Nov-2022 Source: Ferdinand Management and Ferdinand public filings Note: Market data as of 12-Dec-2022. Ferdinand Management Revenue ◼ Market related revenue growth: — Net flows (true organic growth) of 4% in 2023 and onward — S&P 500 ends 2022 at 3,900 (currently 3,991), then grows at 5% in 2023E and 7% thereafter — Fixed income, alternatives, and other investments grow at 4% ◼ RIA non-market-correlated revenues grow 5% per year throughout forecast years ◼ Business managers’ services grow 7% per year throughout forecast years ◼ $15mm annual performance fee revenue from 2024E onwards Expenses ◼ 3% expense growth for 2023 and future periods ◼ 2023E HoldCo compensation and SG&A flat to 2022, ~4.5% of revenue for other periods ◼ Management fees automatically adjust with profitability of respective partner firms via contractual base and target earnings M&A ◼ Moderate M&A in Q2-Q3’23 and ~$1.5bn target capital deployment (including deferred) from 2024E onwards ◼ Blended acquisition multiples of 11.0x for M&A, with a reduction by 1x in 2023E and 2024E ◼ 90% of new partner firms and 100% of mergers/Connectus paid in cash ◼ For Q2-Q3’23, upfront cash multiple of 4.25x, with remainder paid in deferred installments ◼ 50% of future EBITDA acquired from new partners, 25% from mergers, and 25% from Connectus ◼ 90% of purchase consideration creates incremental tax shield Capitalization ◼ Leverage — Refinance in Q4’22 of Term Loan and Revolver with upsize of ~$400mm — Incremental $750mm Term Loan raises in various quarters in outer projection years ◼ No future UpC exchanges / TRAs / stock option exercises |
| 16 CONFIDENTIAL Summary of Ferdinand Projections (2/3) Received 15-Nov-2022 - ($ in millions) Source: Ferdinand Management projections, received 15-Nov-2022. Adjusted EBITDA Adjusted EBITDA Margin 22.1 % 23.6 % 25.1 % 24.7 % 25.4 % 26.2 % 27.8 % 29.1 % 30.2 % 2019A 2020A 2021A 2022E 2023E 2024E 2025E 2026E 2027E YoY Growth 32.7 % 19.2 % 40.3 % 15.8 % 17.5 % 26.7 % 30.1 % 26.3 % 23.4 % YoY Change (bps) - 18 + 149 + 146 - 43 + 77 + 79 + 156 + 131 + 108 $ 270 $ 322 $ 451 $ 523 $ 614 $ 778 $ 1,013 $ 1,279 $ 1,579 2019A 2020A 2021A 2022E 2023E 2024E 2025E 2026E 2027E |
| 18 CONFIDENTIAL Observations on Projections Ferdinand Management – Received 15-Nov-2022 Source: Ferdinand Management and Ferdinand public filings. 1 Includes both cash and equity purchase consideration. Overall ◼ Overall robust growth assumptions ◼ Revenue grows at 21.3% CAGR, EBITDA and EPS grow at >25% CAGRS for 2023E-2027E — Faster than historical growth across all key metrics despite much larger company / base ◼ ~$6bn of M&A during projection period; limited valuation arbitrage at current / projected multiples ◼ Almost 500 bps projected margin expansion; ~250 bps over prior four years ◼ EPS in 2023E / 2024E slightly below Street consensus; other metrics above Street consensus Market Sensitive Revenue ◼ Projections imply ~7% average market return in the S&P 500 from year end 2022 to year end at 2027 ◼ Organic growth of 4% annually; higher than CD&R’s view of “true organic growth” for Focus Capital Deployment1 ◼ Following a moderate increase in 2023E, upfront capital deployment for M&A accelerates to $1,300mm in 2025E and continues slight increases to $1,375mm in 2027 — Forecast assumes a slowdown in M&A through Q3 2023, with a significant ramp in Q4 as dela backlog drives an acceleration in pipeline realization ◼ Forecast represents a 26% and 33% increase, respectively, from prior peak year (2021) ◼ Nearly $6bn in upfront capital deployed over 5-year forecast vs. ~$3bn in the 5 years since being public (2018-2022) Adjusted EBITDA Margin ◼ Adjusted EBITDA margins expand to ~30% by 2027E vs. ~25% currently and ~22% in 2019 |
| CONFIDENTIAL IV. Preliminary Valuation Analyses |
| CONFIDENTIAL V. M&A Update and Sponsor Market Considerations |
| 31 CONFIDENTIAL Relative Competition for RIA Acquisitions Has Accelerated Sellers have a wider range of potential partners than ever before ◼ Strategics: Remain active and interested given potential cross-sell / distribution synergies and attractive growth ◼ Sponsor Backed Platforms: Remain highly active though need to be more selective given capital limitations from market volatility ◼ Financial Sponsors: Remain deeply interested in wealth platforms and are willing to stretch downmarket for the “beginnings” of a platform Wealth Management Acquirors Select Strategics Sponsor Backed Firms Sponsors / Family Offices Keen for Larger Opportunities Insurance Distributors Insurance Brokers Retirement Platforms |
| CONFIDENTIAL VI. Financial Sponsor Interest |
| 34 CONFIDENTIAL Largest Global Financial Sponsors and Interest / Investments in Wealth Management Source: Pitchbook, GS FSIG 1 Represents total AUM of global buyout and core funds Sponsor AUM1 ($bn) Current Wealth Investment(s) / Observations $ Will not pursue wealth management investments given potential conflict with key distribution partners (wirehouses) for retail product Strong interest in wealth management and recently met Rudy; bar very high given lack of any significant investment to date; needs to be a very clean story Very value-oriented; interested in wealth but little active dialogue / historical activity, likely biased toward a structured investment Engaged as part of process; not interested in submitting a bid until markets stabilize Engaged as part of process and met Rudy; did not follow up / pursue opportunity post meeting Significant time spent on wealth management; biased toward an integrated platform; have not engaged after discussed previously No demonstrated interest in wealth management Sponsor AUM1 ($bn) Current Wealth Investment(s) / Observations $ Engaged as part of process and met Rudy; did not show interest in pursuing Technology-focused investing style Beginning to look at wealth management but biased toward technology and unlikely to transact near term Technology-focused firm; disbanded FIG team post small wealth and asset management investment No demonstrated historical interest in wealth management Actively engaged in process Significant interest in US wealth management but focused on fully integrated advisory platforms or wealth tech No demonstrated interest in wealth management Technology-focused Reviewed Ferdinand take-private opportunity [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***][***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] |
| 35 CONFIDENTIAL Summary of Feedback from Additional Potential Buyers Commentary ◼ Rudy met with at in August ◼ GS had follow-up discussion with in late August ◼ Appear to be positive on company and opportunity; would like to pursue meaningful changes to business model if taken private ◼ Unclear if positive interest to date is sufficient to seriously pursue opportunity at this point in time ◼ Have continued to raise with ; little further engagement to date ◼ Strong interest in wealth management and recently met Rudy ◼ Have followed-up with and indicated there is no pathway to actionability; no follow-up from to date ◼ Bar very high given lack of any significant investment to date; needs to be a very clean story ◼ Enthusiastic about the company and investing in the wealth space ◼ Uncomfortable putting forth a bid in August due to financing market backdrop and inability to form a view on pro forma capital structure ◼ Asked to stay close and re-engage when financing markets normalize ◼ No recent follow-up ◼ Rudy met with in August ◼ likes business and indicated they would be interested in supporting a deal (but cannot lead) ◼ No recent follow-up ◼ Rudy met with President ( ) in July ◼ FIG team at was going to do “real work” post Labor Day and reach back out to GS ◼ No feedback at this point; does not appear to be an area of focus to date [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***][***] [***] [***] [***] |
| CONFIDENTIAL Appendix A. Valuation Analyses Back-up Materials |
| CONFIDENTIAL Appendix B. Transaction Process Materials |
| 44 CONFIDENTIAL Sale Process Alternatives Full Auction Process “Market Check” Pre-Signing “Go-Shop” Provision Fiduciary Out Description ◼ Contact broad list of credible potential buyers prior to signing of transaction ◼ Contact a focused number of potential buyers prior to signing of a definitive agreement ◼ Contact typically made in the 2-4 week period prior to targeted signing ◼ Process may be extended if any buyers express legitimate interest ◼ Will allow active solicitation of other buyers for a period of time after signing definitive merger agreement ◼ During the go-shop period, the level of deal protection may be reduced ◼ Typically includes a reduced termination fee during the go-shop period ◼ Standard in M&A purchase agreements for public company targets ◼ Allows Board to terminate the deal to accept a superior offer from another company - typically subject to termination fee Pros ✓ Increases probability of maximizing valuation / terms ✓ Provides greatest protection to Board ✓ Buyers more likely to engage in full auction process relative to post-announcement alternatives ✓ Provides opportunity for Board to check other buyers’ potential interest prior to signing ✓ Potential buyers may be more willing to engage pre-signing vs. post-announcement — No break fee, private vs. public forum, not “breaking-up” signed deal, etc. ✓ As a public company, Focus is well known to most potential buyers, allowing them to move quickly if interested ✓ May be undertaken as long as not limited by an exclusivity agreement with the bidder ✓ Provides structured opportunity to proactively / openly pursue other potential buyers ✓ Easier for buyer to engage under “go-shop” provision relative to only including fiduciary out provision ✓ More common in PE-led take private ✓ Common / routine provision ✓ Likely no objection from the bidder Cons Limited number of motivated, credible buyers at high premium levels; large equity check Requires longer time period to execute Higher degree of leak risk; difficult for a public company to manage Some bidders may not participate in broad auction process Depending on timing, may have shorter period for parties to complete due diligence, which may modestly discourage some potential buyers from participation Significant leak risk Typically contact “focused” list of potential buyers rather than exhaustive list Reaction from the initial bidder? Potential to lose interest Some potential buyers may still be reluctant to engage / “break-up” public deal Other buyers may be reluctant to pay break-up fee, even if at a lower level Some buyers may be reluctant to “break-up” a publicly announced deal Requires payment of termination / break-up fee |
| 45 CONFIDENTIAL Treatment of TRAs in Precedent Change of Control Transactions Alternatives: Full Upfront Payout per TRA Terms Reduced, Upfront TRA Payout Negotiate for TRA Crystallization Negotiate for Change of Control Waiver Full or Partial Waiver of TRA Overview ◼ TRA accelerates and is paid upfront ◼ TRA holder agrees to partial reduction in upfront payment, but remaining payment is still made ◼ TRA to crystallize payments under a change of control ◼ TRA stays in place, as if no change of control had happened ◼ TRA holders agree to forfeit their rights to current and future payments under the TRA Key Benefits ✓ Simplicity ✓ Elimination of the TRA ✓ Mitigates the upfront cost ✓ May free up borrowing capacity to pay the necessary purchase price for target’s equity ✓ Eliminates financing challenges for the buyer ✓ Easier to sell to the TRA holder who still gets paid for tax assets ✓ No acceleration payment ✓ May be most feasible where tax assets covered by the TRA have limited value to the buyer (pro forma) and target (standalone) ✓ Simplicity ✓ No acceleration payment ✓ Eliminating TRA obligation reduces ongoing complexity of TRA administration Key Considerations Payment requires additional upfront financing Requires buyer to underwrite the value of the acquired tax assets — Buyer exposed to risk that tax rates or taxable income drop Could create litigation risk if viewed as differential M&A consideration to TRA holders — Likely involves special committee of target’s Board Challenging to reach agreement if TRA holders do not stand to benefit from the M&A premium — For instance, if they no longer own material amount of target equity Still requires additional upfront financing Still requires buyer to underwrite the value of the acquired tax assets — Buyer exposed to risk that tax rates or taxable income drop Future TRA payments may far exceed the actual tax benefits to the buyer — Crystallized payments assume adequate taxable income TRA holder remains exposed to future tax reform risk Negotiation may be challenged, as TRA holders relinquish their rights to current TRA payment TRA holders become exposed to buyer’s tax planning and operations of the target business TRA holder remains exposed to future tax reform risk Significant concession for TRA holder, particularly if covered tax assets have economic value for buyer Precedent Transactions A B C D E Source: Company Filings |
| 46 CONFIDENTIAL Additional Detail of Upfront TRA Payments in Change of Control Transactions Source: Company Press Releases, Merger Agreements and Public Filings. A B Target Acquirer Transaction Close Total Deal Consideration ($mm) TRA Payment Amount ($mm) TRA Payment as a % of Deal Consideration Change Healthcare UnitedHealth Pending $ 12,686 Not Disclosed Not Available Plurasight Vista Equity Partners 4/6/2021 $ 3,416 $ 127 4% VWR New Mountain Capital 11/21/2017 $ 6,418 $ 56 1% Advance Pierre Tyson Foods 6/7/2017 $ 4,394 $ 224 5% Norcraft Companies Fortune Brands 5/12/2015 $ 547 $ 44 8% Athlon Energy Encana 11/13/2014 $ 6,612 Not Disclosed Not Available Graham Packaging Reynolds Group 9/8/2011 $ 4,369 $ 245 6% |
| 47 CONFIDENTIAL Change of Control Definition Waiver and Amendment No. 10 to First Lien Credit Agreement – November 28, 2022 A Change of Control occurs if: — At any time prior to an IPO, the Permitted Holders cease to own in aggregate at least 35% voting stock of Borrower OR — If any person other than Permitted Holders acquire over 35% of the voting stock Unless (in both cases): — Permitted Holders still have the right to elect at least a majority of the board of directors ◼ Permitted Holders: — Initial Investors and their Affiliates — Members of management of the Borrower and its Subsidiaries ◼ Initial Investors: — Stone Point Capital LLC & Affiliates — KKR Freya Aggregator L.P. — Trident FFP LP — CP Falcon AIV L.P. — Centerbridge Capital Partners SBS II, L.P. — CCP IIV Falcon AIV — Management Ferdinand Change of Control Definition |
| CONFIDENTIAL Appendix C. Additional Materials |
| 49 CONFIDENTIAL Ferdinand Equity Capitalization (in millions, except per share data) Source: Management, Company filings, CapIQ. 1 Assumes normal Dec-2022 time-based vesting. 2 Includes Non-Compensatory Options (NCOs) and Non-Qualified Stock Options (NQSOs). Type of Unit Holders of Unit LLC or Corp. Voting Performance Vest? Class A Public Shareholders, Stone Point Corp. Yes No Class B LLC Owners (Advisors, Management / Employees, Stone Point) Corp. Yes No Incentive Advisors, Management, Other Hold Co. Employees LLC No Some units subject to performance vest NQSO Advisors, Other Hold Co. Employees Corp. No Some units subject to performance vest NCO Advisors, Other Hold Co. Employees Corp. No No RCU Management, Other Hold Co. Employees LLC No No RSU Other Hold Co. Employees Corp. No No Total Equity Linked Instruments Reported Fully Diluted Shares in Latest Applicable Provided by Client at Transaction Price SEC Filing 30-Sep-2022 as of 18-Oct-2022¹ (Treasury Method) Basic Shares Outstanding Common Shares Outstanding - Class A 65.9 65.9 65.9 Common Shares Outstanding - Class B 11.7 11.7 11.7 Total Basic Shares Outstanding 77.5 77.6 77.6 Potentially Dilutive Securities Incentive Units 16.2 13.4 6.8 Stock Options² 2.2 2.0 0.5 Restricted Common Units 0.2 0.1 0.1 Restricted Stock Units 0.2 0.1 0.1 Total 96.2 93.2 85.1 $ 50.00 Fully Diluted Equity Value $4,254 |
| 50 CONFIDENTIAL Ferdinand Enterprise Value Bridge ($ in millions) Source: Management, Company filings, CapIQ. Market data as of 30-Sept-2022. 1 Debt not pro forma for current financing that is in-market. As of 30-Sep-2022 Standalone Value Transaction Value Comments Price per Share $ 31.51 $ 50.00 Diluted Shares Outstanding 85 85 Fully Diluted Equity Market Capitalization $ 2,681 $ 4,254 Net Debt (+) Debt $ 2,439 $ 2,439 Per Earnings Supplement / Principal Outstanding (-) Cash and Marketable Securities (129) (129) Per Balance Sheet Total Net Debt $ 2,310 $ 2,310 Enterprise Value Before Adjustments $ 4,991 $ 6,564 Enterprise Value Adjustments (-) Investments (Using Cost Accounting Method) $(20) $(20) Includes Smart Asset (-) Investments (Using Equity Accounting Method) (10) (10) Includes Osbourne Partners and Beryllus (+) Contingent Liabilities (Earnouts from Acquisitions to Date) 189 189 Per 9/30/2022 Balance Sheet (+) NPV of Existing TRA¹ 138 138 Stone Point and 5 NEOs comprise 19% Enterprise Value With Non-Transaction Adjustments $ 5,288 $ 6,861 Transaction Adjustments (+) NPV of TRA Triggered by Change of Control $ 0 $ 156 GS estimate based on management provided estimates Enterprise Value With All Adjustments $ 5,288 $ 7,017 |
