The Alaris Capital Advantage

Illustrative Transaction Analysis of an Alaris Partnership with Company XYZ ($000’s)

Key Assumptions:

  • $50 million contribution on December 31, 2013 in exchange for a first year distribution from Company XYZ of $7.5 million.
  • The annual distribution to Alaris will reset at the end of 2014 based on the performance of Company XYZ’s revenue in 2014 vs 2013.
  • There is a 6% +/- collar on Company XYZ’s distribution to Alaris.
Summary Pro Forma Income Statement ($000's) 2013A 2014E 2015E 2016E 2017E 2018E
Revenue $100,000 $115,000 $138,000 $132,480 $137,779 $158,446
% change   15.0% 20.0% -4.00% 4.0% 15.0%
EBITDA 30,000 34,500 41,400 39,744 41,334 47,534
             
Alaris Distribution NA 7,500 7,950 8,427 8,090 8,413
% change in Alaris Distribution (collar of +/- 6%)   NA 6.0% 6.0% -4.0% 4.0%
Cash Flow - Post Alaris Distribution $30,000 $27,000 $33,450 $31,317 $33,244 $39,120
% of economic interest retained by founders/management 100% 78% 81% 79% 80% 82%
% of common shares held by founders/management 100% 100% 100% 100% 100% 100%

Our economic participation in any of our Partnerships is:

Limited by a Collar

The collar on the distribution limits Alaris’ participation in the growth of Company XYZ to 6% in 2015E instead of the 15% increase the company realized in its revenue for the 2014E vs 2013A periods.  Similarly, because Alaris participates in both the up and downside performance of the business, a 4% decline in revenue in 2016E vs 2015E results in a 4% reduction of the Alaris distribution for 2017E.

Limited to Organic Growth

The Alaris distribution is limited to changes based on the % change in organic top-line performance. If Company XYZ was to make an acquisition, the gross revenue from that acquisition would not be included until it can be considered an “organic” part of the business.

Limited in the Long Term

If Company XYZ expects to realize growth over a 5 year period, the company will maintain a higher economic interest in the business under the Alaris structure than could be maintained with a traditional equity provider due to Alaris’ limited participation in growth. The percentage of economic interest retained by the Company XYZ increases from 78% in 2014E to 82% in 2018E.