The Tri-Northern Exit

• Investment Committee Presentation

• John Alcorcon
• Divij Johri
• AJ Lumantao
• Anand Ramasamy
• Richard Saavedra
 Who are We?

Capital Under Management Specialized Focused on Middle Market

 Closely held and family  Based in Texas
businesses solutions GTT  Focused on Texas and Southwest
 Leveraged buyout
 What Do We Do?

We Finance We Invest in We Have We are Focused

Companies Sectors Operated for 13 in Texas
EV between Consumer Products Years
$50-250M Healthcare Fund 1: $250M
Business Services Fund 2: $400M
Manufacturing
Fund 3: $715M
Financial Services
Distribution
Our GP

Mr. Randall Fojtasek

 Executive Officer of Atrium Companies, a leading
manufacturer of residential building products
 Chairman of the Board of Directors of Aakash
Chemicals, Cascade Windows, FullSpeed
Automotive, Wetzel’s Pretzels, GNAP and Service
Champions
 Served as Chairman of the Board of Directors of
TruRoad, BlackHawk Industrial, Southern Tide,
Lone Star, ORS and SESC and was the lead
director of the Board of Rennhack, Cheddar’s and
Tri-Northern
 GTT®

We partner with
owner-families in
our
Generation Transfer
Transactions®
 GTT®

Tax Efficient Provides Liquidity Continued Operating Flexible Capital

Control Structure
 Structure accommodates
future growth
 How GTT® Works

1 2 3 4
We (Brazos)
Transaction was would buy 49.9%
Owner Would
Managers an exchange of of the common
Reinvest a Sum to
achieved Liquidity securities, thus stock and a block
Maintain 50.1% of
and retained cash would not be of preferred
the Common Stock
significant equity taxed until the new shares with
of the New
ownership shares were attached warrants
Company
liquidated for the purchase of
common stock
 How GTT® Works

Family can still control We as minority have

the firm protections
• As long as performance targets were • Significant board representation
met • Supermajority right to block major
• We would own more of the firm if these changes
targets were not met • Severe under-performance = right to
take control of the board
 Market

Alarms, Motion Video Access Control Audio, Visual,

Detectors & Surveillance & & Fire Safety Data & Ancillary
Control Panels CCTV Systems Wiring
Projected Growth Projected Growth Projected Growth Projected Growth
3.7% 9.2% 3.8% 5.3%
 Market
Manufacturers (400 players) Honeywell, Tyco, United Tech
$6.3B $2.7B
70% Market Share 30% Market Share

Distributors ADI,Tri-Northern,
End
(100s of Players) Anixter, Alarmax Co-Ops
$3B $2B $550-650MM Users
60% Market Share 40% Market Share

Dealer Integrator
ADT, Broadview, Protection One (Residential Alarm Players)
$14B Revenue (Product Pass-Through - meaning no labor)
$44B Total Revenue
*Extremely fragmented with 20,000 companies with more
than 50% under $1MM Revenue
 Electronic Security Distributors

Credit Service – Product Warehouse

Knowledge And
Industry
Understanding
 The Deal – Tri-Northern Investment
When?
March 16, 2010, 81 days post signing LOI
How?
• Investment opportunity for acquisition of Tri-Northern pitched by
banker
• Due diligence carried out for both companies
• Assessed the synergy opportunity between both companies &
Brazos
• Developed plan to execute merger
• Acquired debt financing for the deal
 The Deal – Tri-Northern Investment
• M&A deal finalized for $127.1 M (6.5X combined EBITDA of
$19.6 M)
• Brazos ownership – 70% equity stake
• Capital Structure
Debt (66%) Equity (34%)
$54.6 Million - $31.7 Million – Brazos investment
Asset-Based-Loan
$33.4 Million – $10.4 Million – Management equity from tri-
Mezzanine Loan Northern
$3.3 Million – Mezzanine lender
 Why Did We Win?

Muscle Speed Aggression

Fund Size: Within 20 days Interest in
$715Mn presented IOI Investing
 Value Add

Smaller Security Dealer

High-end Integrator
9 Canadian Sales Office, 1
Puerto Rico & 16 US Sales Office
+ 12 Additional Sales Offices

2,000 New Customers

$13M In Additional
Revenue
Value Add

Security & Data Cable

Houston Was Difficult to
Crack for Tri-North and
Were Present in Data-
cabling (Weakness Of
Tri-North)

Martin's Security Depot

Leading CCTV
Distributor In West Coast

 Cross Selling
 Sales Structure
 Common Commission
Program
= $6.3M Savings
National Accounts Group
= $10.5M Additional Revenue
Value Add
Integration of Back Office,
Finance, IT, Professional
Services, and Bringing the
Entire Organization On Same IT
Platform
= $1.5M Savings
 Strong stock rotation rights
 Vendor financed inventory
with manufacturers
 Scale benefits
 Branch Managers incentivized
for freight expenses reduction
 Price harmonization with key
vendors
 Customer paid freight at low
cost
= $2.4 Mn Savings
 Summary of Value Add

Revenue +11% Margin

+18% CAGR 4.5X to 3X
CAGR 2010- enhanced from
EBITDA Leverage Ratio
2012 5.2%- 5.9%
 Sell or Hold

127M 220M 184M 228M

Offer received 3-Year Hold 5-Year Hold
At Inception 3x 2.8x
42% IRR
4.3x
34% IRR
74% IRR

March March March March March March

2010 2011 2012 2013 2014 2015

Indicative 178M 221M 301M

Valuations 2.1x
45% IRR
3.6x
53% IRR
5.9x
43% IRR
 Sell or Hold

Sell Now