Private Equity Presentation

Private EquityLong-term investing to build stronger & more competitive

companies

2AFLG Investments Private Equity

“We care about your organization and your success. We help you tackle your toughest challenges. We measure ourselves

by our clients’ success and particularly by the impact you achieve in the market. ”

Freddy Russian is a Founder, Chief Executive Officer and Managing Director of American Family Legacy Group and AFLG Investments Private Equity forthe Global Private Equity and Global Market Strategies. As founder of American Family Legacy Group in 2009 and AFLG Investments Private Equity in2013, Mr. Russian has led AFLG Group to become a highly successful and trusted Global Firm. His experience and achievements have guided AFLGInvestments to become a Powerful Player Globally.

Mr Russian began his career in 1991 as a Head Currency Trader managing over a billion dollars in currencies. In addition different roles in “Wall Street” asFinancial Analyst ,Senior Rating Bond Analyst (Dow Jones), in Private Client Group as an Assistant Vice- President (Bank of America/Merrill Lynch)Always using different strategies and innovation for the ultra-high network families and institutions.

Mr. Russian has a BA in Business Administration and Finance from the University of Central Oklahoma and many other industry certifications. In addition,throughout his career has been recognized with many awards, including the “Silver Spur” award and the “Director’s Club” award.

FREDDY RUSSIAN

AFLG Group, President & CEO

AFLG Investments Private Equity


But in reality, private equity is much more…

By definition, private equity is an asset class in which financialbuyers purchase stakes in companies that are not publiclytraded.

A source of capital for companies in need.

A job creator and employer of millions of Americansacross the country.

A key driver of economic growth and innovation.

A steady source of income for its investors such aspublic and private pension funds, universityendowments and charitable foundations.

Private Equity is:




Originated in the US in the 40s with the founding of

two Venture Capital firms American Research and

Development Corporation (ARDC) and J.H. Whitney

& Company.

First Leveraged Buyout in 1955. LBO boom in the 80s with the emergence

of KKR.

Purchase of RJR Nabisco for $31.1

billion in 1989 standout LBO deal and subject of a book (Barbarians

at the Gates)



Managers unlock significant value by:

LeverageMultiple

ExpansionSuperiorReturns

EBITDA GrowthTopline Grown

Efficiency Improvement+ + =

Improving Business Strategy

Injecting Managerial Expertise

Advancing Production Technology

Expanding Distribution

The essence of private equity is the alignment of interests between management and business owners. This structure supports long-term planningwithout constant pressure of delivering quarterly results to public shareholders focused on short-term results.

There is one shared objective: increasing company value. Together, management and owners make business decisions to achieve this goal.


AFLG Investments Fund Structure

Projects

Limited Partners

Institutional Investors

Private Individuals

Onshore Institutional

Investors

Onshore Private

Individuals

American Private Equity , LLCGeneral Partner

M & A Services

American Family Legacy Group,

LLCManagement

Company

AFLG Investments Delaware Limited Partnership



PE Entry ExitValue Creation Within 3-5 Years

Financial Support

• Raising new equity rounds and debt financing• Financial Planning & cost control• Introducing transparent reporting system

M&A Support

• Developing M&A strategy• Search and valuation of attractive acquisition

targets• Legal support and deal structuring• Integration assistance

Operational Support

• Help in bringing top experience people to the team to bridge personnel gaps• Attracting independent board members and industry experts• Motivation schemes implementation• Development of tax and legal structure, IT systems• Access to anew partner and client network, help in expanding abroad• Optimization business processes and internal decision-making

Help in forming / adapting company strategy

• Business model adaptation to changingmarket realities

• Implementing company development planand setting KPI’s

Preparing company for an IPO or trade sale

• Improvement of corporate governance• Substituting investment banks at exit• Legal support and deal structuring



• Companies are acquired using Financial Leverage• Leverage can account for between 50% and 90% of total

transaction cost• Target companies usually mature with strong cash flows• Cash flows generated by company used to pay down debt• Value generated when debt portion is paid down

Leveraged Buyouts

• Funds buy partial stake in an early stage company• Early stage companies go through various rounds of funding –

Stage A, B, C, D, E, etc.• Funds typically exit their investment with IPO or buyout from

subsequent funding rounds• Funds usually go public after scaling• Riskier than typical PE investment due to business failure• High return potentials e.g Google, Microsoft, Facebook

Venture Capital

• Company seeking expansion• Typically profitable and able to generate cash, but not

enough to finance expansion• PE company approach is typically more hands on.• Value is generated via• Good entry price• Operational/Margin improvements• Growth due to expansion

Growth/Expansion Capital

Management Buyouts• PE fund supports existing management to take over company• Reliance on management to derive value• Inherent alignment of interest is invaluable

Distressed Investments• Investment in equity or debt securities of financially stressed

companies.• Value is generated by turning around the business in addition to

the typically undervalued entry price• PE funds typically have relevant industry experience

Others



The private equity industry:

Includes more than 2,400 U.S. based private equity firms, and3,400 worldwide.

Invests more than $1.6 trillion in 15,200 U.S. basedcompanies over the last ten years.

Sponsors companies that employ more than 8 millionworkers worldwide.



1

2

3 6

54

Public Pension Funds

Private Sector Pension Funds

Others

Sovereign Wealth Funds

Endowment Plans

Banks & Investment Banks

7

8

Foundations

Insurance Companies



Limited partner investors receive the lion’s share of returns generated by private equity.

Original Investment - $10 billion

Limited Partner Investors Private Equity Fund Managers

Returns from $10 billion fund assuming a 3x multiple

Profit - $15.6 billion

Profit - $4.3 billion



11.3%

39.6%

2.7% 6.3%0%

10%

20%

30%

40%

50%

U.S. Private Equity Index Top QuartilePrivate Equity Funds(Vintage Year 2001)

S&P 500 Index Russell 2000 Index

10-Year Annualized Return

Private equity investing provides outsized returns to help investors meet their retirement, educational and charitable goals



Private equity-backed companies that went public have outperformed their competitors and the markets.

23%

12%

0%

10%

20%

30%

Private Equity-Backed Companies Publicly Traded Competitors

Average Return in 2014

Productivity at private equity-backed companies grows 2 percentage points faster than at their competitors.



2015-H1 Industry Investments Totals (Billion)

$73

$69

$19

$19

$16

$31

$9

Business Products & Services

Consumer Products & Services

Healthcare

Information Technology

Materials & Resources

Energy

Financial Services



Companies in the top ten states receiving private equity investment employ more than 4.5 million people. (2014)

0

200,000

400,000

600,000

800,000

1,000,000

$0

$50,000

$100,000

$150,000

$200,000

$250,000

Texas California New York Illinois New Jersey Pennsylvania Florida Georgia Tennessee Connecticut

Number of EmployeesCapital Invested

Capital Invested Number of Employees

Private EquityLong-term investing to build stronger & more competitive

companies

Private Equity Presentation

Education

Transcript of Private Equity Presentation