George A. Haloulakos, CFA DBA SPARTAN RESEARCH AND CONSULTING E-mail: [email protected] Cell phone: 425-241-5016 VALUATION SERVICES TO SUIT YOUR INDIVIDUALITY SUMMARY OF QUALIFICATIONS Over 30 years in finance, strategy and new business ventures *ENTREPRENEUR* *AUTHOR* *TEACHER* • 2 years - graduate assistant in economics. • 13 years - senior analyst in securities research, asset management and investment banking. • Running own consulting practice (Spartan Research) since 1995. • Award winning instructor at various universities and corporations teaching finance, economics, management and mathematics since 1998. Service Offerings • • • • • • Capital market research Due diligence Expert witness testimony Mergers & Acquisitions Restructuring & asset sales Licensing formulas EXAMPLE #1: Capital Market Research, Due Diligence & Restructuring • Client: Fortune 500 engineered lumber products company with leading market share. • Problem: Persistently unprofitable window business depresses stock price [$21 per share]. • Solution & Aftermath: Company adopts our divestiture recommendation [$2 charge to EPS & Book Value] to refocus on core business. Regains profit growth immediately, positions itself for eventual sale to larger, vertically integrated forest products company at $42 per share 4-1/2 years later. Total value of $720 million represents 2x increase in market value or annualized return of 16% over holding period. EXAMPLE #2: Expert Witness Testimony & Asset Sales Summarizing the facts of the case: Plaintiff claims that the Partnership and its partners were disadvantaged by the fact the Partnership did not enter into a lease on the terms in LIS lease proposal and instead sold the property to TNG. Plaintiff is part of the Partnership and alleges material loss of income from sale of property to TNG versus the lease proposal from LIS. Defendant is majority owner in Partnership and initiated sale of property. Our assignment: provide a valuation analysis to aid the Defendant in refuting the Plaintiff claims. EXAMPLE #2: Expert Witness Testimony & Asset Sales - (continued) Based on our research and analysis, we concluded that the Partnership and its partners were not disadvantaged by, and actually benefited from, the fact the Partnership did not enter into a lease on the terms in the LIS lease proposal and instead sold the property to TNG. We therefore recommended / petitioned for dismissal of the Plaintiff’s claim. Plaintiff dropped its case. EXAMPLE #2: Expert Witness Testimony & Asset Sales – (continued) • • • • • Plaintiffs' analysis fails to discount to present value the expected lease income from LIS lease proposal. On this basis, this reduces the plaintiff's expected lease income by $112, 711 from $668,952 to $556,241. Plaintiff's analysis fails to specifically break down significant cash outlays over the expected 5-year investment horizon that further reduce future income. Moreover, these outlays are not discounted to present value. The outlays on a present value basis NOT factored into plaintiff's analysis include capital upgrades ($160,000), debt service ($153,231), real estate taxes ($24,759) and payoff of remaining loan balance ($233,002). Plaintiff's analysis fails to specifically explain how capital upgrades are to be financed. Presumably, the beginning partnership reserve ($168,152) will be the source of funds, leaving a residual partnership reserve of $8,152. The net result of the aforementioned factors is a negative net present value of ($6,599) for the LIS lease proposal, not a surplus as contended by the plaintiff. The deficit of ($6,599) compares with the $100,000 forecasted by the plaintiff. By comparison, the TNG sale, on a present value basis yields CASH ON HAND of $1,522,519. This includes partnership reserve ($118,000) less the loss of rent for the seven-month period from October 2004 through April 2005. EXAMPLE #3: Licensing & Due Diligence • Client: Oceanography equipment firm. • Problem: Developed technology product and sought licensing agreement but lacked valuation framework for negotiation with potential corporate partners. • Solution & Aftermath: Client adopts our valuation study and strategy that provides upfront cash payment plus long-term royalty income. Total present value of this plan to client in first 3 years of $540,000. Corporate partner agrees to plan. EXAMPLE #3: Licensing & Due Diligence – Client Feedback (continued) “My wife and I had spent years developing a technology product with our own resources and were financially exhausted. We were at the point of negotiating a licensing agreement when we were introduced to George. George helped us to establish a valuation for our technology and to develop a strategy for working with the company that is producing our product. His help gave us far more confidence entering into these negotiations by giving us a clear sense of what our intellectual property was worth and how we might be compensated. It's invaluable that we had George's help prior to writing contracts and starting with the legal side of the process. It's also important that his approach was not generic or cookbook, he worked with us to take what we knew about our particular industry and helped us to frame that information in terms that made business sense. He clearly cared deeply that we were successful. The result has been a successful venture alliance where all parties are benefiting.” OTHER NOTABLE ACHIEVEMENTS • Published author: Dollar$ and Sense: A Workbook on the ABCs of Investments. • Over 300 security analyst reports on diversified companies and various industries. • 3-time Chair [plus organizer & presenter] -- AIMR Biennial Forest Products Industry Conference. • Successful initial public equity and private debt offerings and share repurchase programs totaling $100 million in emerging growth, technology and forest product companies. • Investment performance added 1 percentage point [or $40 million of added value] to $4 billion equity portfolio of internally managed assets for E.I. du Pont Pension Fund. • Researched impact of tax policy on capital formation & financial markets plus how monetary policy changes affect currency exchange rates [Center for Study of Private Enterprise].