[company] growth strategy final presentation month dd, yyyy

[Company]Growth Strategy

Final PresentationMonth DD, YYYY

Contents• Project scope and work plan• Lay of the Land analysis• Core and Adjacent Markets analysis• New Product and Service Opportunity

Brainstorming output• New Product and Service Opportunity analysis• Recommended Next Steps

Overall Work Plan - Original

Timing Month 1 Month 2 Month 3 Month 4

Module Lay of the Land Analysis Core Markets Analysis New Product and Service Opportunity Brainstorming

New Product and Service Opportunity Analysis

Goal Analysis of the company’s

professional services business as follows

Analysis of the core and adjacent markets of the

professional services division

Lead and contribute to three different brainstorming

sessions

Analysis of the overall opportunity characteristics of each of the top ten most

promising opportunities

Activities

• Company interviews:– Core capabilities– Growth constraints– Market presence in

each core market of ________ services and ________

– Product and service bundle

• Core capability analysis:– Expert interviews– Customer interviews– Capability

benchmarking

• Market analysis – detailed market analysis that includes the size, segments and locations of ______ services firm in the U.S.

• Competitor analysis:– Strategic positioning

overview– Competitive landscape

summary– Competitor profiles

• Customer Profile analysis– Customer overview– Expert interviews– Key customer profiles and

segments– Trends

• Adjacent market analysis:– ________: ______, _______,

and _______– ________: ______, _______,

and _______

• Employee brainstorming session

• Management team brainstorming session

• Executive team brainstorming session

• Industry• Financial• Operational• Product/Service• Customer

Overall Work Plan - Revised

Timing Month 1 Month 2 Month 3 Month 4

Module Lay of the Land Analysis Core Markets Analysis New Product and Service Opportunity Brainstorming

New Product and Service Opportunity Analysis

Goal Analysis of the company’s

professional services business as follows

Analysis of the core and adjacent markets of the

professional services division

Lead and contribute to three different brainstorming

sessions

Analysis of the overall opportunity characteristics of each of the top ten most

promising opportunities

Activities

• Company interviews:– Core capabilities– Growth constraints– Market presence in

each core market of ________ services and ________

– Product and service bundle

• Core capability analysis:– Expert interviews– Customer interviews– Capability

benchmarking

• Market analysis – detailed market analysis that includes the size, segments and locations of ______ services firm in the U.S.

• Competitor analysis:– Strategic positioning

overview– Competitive landscape

summary– Competitor profiles

• Customer Profile analysis– Customer overview– Expert interviews– Key customer profiles and

segments– Trends

• Adjacent market analysis:– ________: ______, _______,

and _______– ________: ______, _______,

and _______

• Employee brainstorming session

• Management team brainstorming session

• Executive team brainstorming session

• Industry• Financial• Operational• Product/Service• Customer

Month 1

Month 2

Month 3

Month 4

Summary of Work Completed

• Lay of the Land Analysis:– 33 internal interviews with the company’s leaders and managers

• _________• _________• _________

– 44 subject matter expert interviews• 40 _______________• 4 analysts and investment bankers

– 20 market interviews– Financial analysis of ____________

• Core Markets Analysis:– Analyzed the ___________ market– Analyzed the ___________ market– Analyzed the ___________ market– Prepared competitor profiles of the big three _________ firms

• New Product and Service Opportunity Brainstorming– Created opportunity template– Cataloging underway for several add-on product and service ideas

• New Product and Service Opportunity Analysis– Developed potential growth paradigm– Created opportunity screening process– Analyzed all __________ areas– Surveyed 40 __________– Prioritized the top 10 opportunities with the steering committee– Analyzed the top 10 opportunities

• Recommended Next Steps – Outlined the recommended next steps

Core Capabilities, Strengths and Weaknesses

CapabilityBoard/C-Level

ExecsCorp. Mgmt

TeamDivision Mgmt

Team

ability to execute deals

Ability to integrate deals

Ability to grow organically

Ability to grow via product line extensions with add-on servicesAbility to leverage technology operationally

Deep industry expertise

Culture of making plan and managing expensesCulture of excellence and mission accomplishment

Culture of cross-training and team-building

Culture of standing behind our work

Culture of continuous process improvement

Excellent customer relationships

Source: Internal interviews

Strong on Doing Deals, But Integration of Deals Appears

Weaker• Ability to execute deals

– “The CEO is a deal guy, it’s in his DNA” – Corp. mgmt team

– “The company is really, really good at executing deals” – Board member

– “When a company meets with the CEO and he walks in the room, it’s a done deal – he is just so impressive” – Division mgmt team

• Ability to integrate deals– “We are really staffed too lean to integrate properly. We

should be better at planning the integrations instead of trying to figure them out as we go.” – Corp. mgmt team

– “There wasn’t a lot of consistent communication after the deal. There also was not a unified marketing strategy. In fact all communication needs to be better. We need to feel like we are part of the team.” – Division mgmt team that was acquired


Widely Felt that Organic Growth Needs More

Attention• “As a company we are deal focused, not sales focused. We need

to study and understand the sales process for each business unit.” – Corp. mgmt team

• “It’s hard for us to grow organically because of the two hats our partners wear. We need a better process.” – Corp. mgmt team

• “We need to have better compensation programs that insure our professionals are focusing on sales” – Division mgmt team

• “Our sales effort is done by ________, who do not necessarily have the sales skills necessary” – Division mgmt team

• “[Our customers] really want to talk to ___________ in terms of when we sell” Corp c-level exec

• “I’m not sure we should worry about organic growth because acquisition growth has almost always been cheaper, but we need to analyze that for new segments we enter.” – Board member


Widely Felt that Product Development Needs More

Attention• “I waste a lot of time on little marketing issues. I wish I

had someone that could develop more of my ideas for me” – Division mgmt team

• “We really don’t have any way of knowing what our other division is offering” – Division mgmt team

• “I was talking to someone at the other division and I had no idea of all of the additional services they were offering that we should be offering here in our division” – Division mgmt team

• “We don’t really have a sales tool kit at all in terms of demos or brochures” – Division mgmt team

• “Website? I’m not sure if we have a branded website or not. I’ll have to check on that” – Division mgmt team


Using IT to Automate Process Management is a Key Strength

• “The company is very, very good at taking manual processing and automating away the cost” – Board member

• “We give the customer high touch on the front-end and the back-end of our ____________ process and have highly automated everything in between – Corp c-level exec

• “We carefully map out a process first and then we take automated code development software that we’ve developed and create an automatic process that is directly linked to the process map” – Division mgmt team

• “Our business analysts work closely with our line managers to determine what improvements to make” - Division mgmt team


Deep Subject Matter Expertise Gives the Benefit of the

Experience Curve• ______ hires many industry insiders

from the _________ customers• Both ____ and ____ have high staff

loyalty and low turnover• Employee expertise and longevity

are both key to the high margins [Company] enjoys due to the “Experience Curve” impact– A 40% decrease in cost for every doubling

of cumulative output– Effect holds true for manufacturing and

services companies– Does not “kick in” if an organization has

high employee turnover – employees are not able to apply the appropriate level of “learning”

– The Unit Cost is value-added cost adjusted for inflation and does not include materials cost

– The Experience Curve is inclusive of both the Learning Curve observed in labor-intensive companies and the impact of increases in quantity observed in process-related companies


Unit Cost (logarithmic scale)

Cumulative

Output

$1

$10

$100

- 10,000 20,000 30,000 40,000 50,000 60,000 70,000

[Division] Culture is a Unique Strength…

• Wide-held conviction that [Division] is absolutely the best in the business– “We are better and faster than anyone else”– “We are by far the best at what we do”

• Sharp focus on customer satisfaction– “If the customer says the sky is purple, then it is purple”– “We will do whatever it takes to make it right, even if we have

to write a big check – we stand behind our work”• Excellent grasp of expense management

– “I really watch my overtime expenses”• Good understanding of process management,

process improvement and process automation– “We manufacture __________ widgets”– “We write code to automate what we do”


…But is Somewhat Disconnected Across Offices…

• Lack of a big picture view and vision of how the parts of [Division] fit together– “We don’t talk much to the other offices”– “I’d love to go help out our smaller offices, but not sure

how I could do that”– “I heard that down in [other division] they offer services

that we don’t here in our division”• A sense that full integration is a long way off– “I’ve only met a few others from other offices, we don’t

get much of a chance to talk, much less figure out how to work together”

– “There are a lot of things we could centralize in one location or another, but I’m not sure that anyone is looking at that”


…and Has Some Unique Limiting Aspects

• Difficulty of ______in managing the responsibilities, loyalties and value tradeoffs of both the _____ firm and [Division]

• Lack of clear boundaries between ____ firm and [Division] and even employee awareness of boundaries

• Narrow focus of only one state for each major platform

Leads to “structural”growth constraints


[Division] Revenue is Fairly Flat, Only TX and CA Have Organic Growth…

Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 $-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

NDeX - MINDeX - INNDeX - MNNDeX - TXNDeX - CANDeX - GANDeX - NV

Avg Quarterly Rev*

Most RecentQtr Rev

Variance to Most Recent

Qtr[Division] - MI 10,171,595 8,931,925 (1,239,670)[Division] - IN 3,129,081 2,120,597 (1,008,484)[Division] - MN 1,373,945 1,335,758 (38,187)[Division] - TX 15,770,246 17,086,931 1,316,686 [Division] - CA 6,405,796 6,306,416 (99,379)[Division] - GA 168,299 159,131 (9,168)[Division] - NV N/A N/A N/ATotal Revenue 37,018,961 35,948,359 (1,078,203)

Revenue

Source: [Company] Data and Venture Advance analysis

* First quarterly results not used due to partial quarterly results that skews the average

Q3-

06Q

4-06

Q1-

07Q

2-07

Q3-

07Q

4-07

Q1-

08Q

2-08

Q3-

08Q

4-08

Q1-

09Q

2-09

Q3-

09

$- $5,000,000

$10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 $45,000,000

NDeX - NVNDeX - GANDeX - CANDeX - TXNDeX - MNNDeX - INNDeX - MI

…and [Division] PAEBITDA is Down

Avg Quarterly PAEBITDA*

Most RecentQtr PAEBITDA


Qtr[Division] - MI 4,609,632 3,023,814 (1,585,817)[Division] - IN 638,345 (476,519) (1,114,864)[Division] - MN 620,977

528,107 (92,871)

[Division] - TX

4,687,144 5,844,484 1,157,340

[Division] - CA 3,787,206 3,710,398 (76,808)[Division] - GA 89,450 72,964 (16,486)[Division] - NV N/A N/A N/ATotal PAEBITDA 14,432,753 12,710,848 (1,729,506)

Source: [Company] Data and Venture Advance analysis

* First quarterly results not used due to partial quarterly results that skews the average

Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 $(1,000,000)

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

NDeX - MINDeX - INNDeX - MNNDeX - TXNDeX - CANDeX - GANDeX - NV

PAEBITDA

Avg Quarterly PAEBITDA*

Most RecentQtr PAEBITDA


Qtr[Division] - MI 45% 34% -11%[Division] - IN 19% -22% -41%[Division] - MN 45% 40% -6%[Division] - TX 29% 34% 5%[Division] - CA 58% 59% 0%[Division] - GA 48% 46% -2%[Division] - NV N/A N/A N/ATotal PAEBITDA 41% 32% -9%

Board and Executive Level View of Growth Constraints

• “We do not fully understand our adjacent market opportunities”

• “Capital”• “We are very good at running

branches, but we have not yet proven the ability to run a separate SBU”

• “We are not proven on operations outside of the U.S.”

• “The management model in each of our businesses is very unique”


Line Manager’s View of Growth Constraints

• Insufficient IT resources to extend IT platform capability– __________ changes distractions– Integration of new acquisitions distractions– Lack of high-quality Business Analysts– Lack of line managers that understand business process

redesign– Lack of a clear IT roadmap that clarifies and prioritizes IT

projects• Insufficient product/service development resources

– Lack staff that is focused on creating this capability– Lack leadership focus on growing in this manner

• Loss of speed and flexibility– Sense that they cannot easily hire staff and do what is necessary

to take on new opportunities


Other Items That Came Out of the Interviews

• Desire to better understand the big picture– How do I and the division I work for fit in with the big picture?– Why did we do the ________ acquisition?– Why didn’t we hear about the acquisition before it was publically

announced?– Why didn’t we get a message explaining the rationale for the deal?

• Some frustration with a large company bureaucracy; frustration is deeper at lower levels– We used to be a family company that could move fast, but now we are not

as nimble and quick to meet customer requirements– We used to be able to staff up for a big customer opportunity/need, but now

it takes so long to get a new hire approved• Some frustration with the disproportionate attention spent on

the Business Information division vs. other business divisions in the company communications and newsletter

Recommend more frequent internal communications regarding all business divisions as well as the overall vision of

the companySource: Internal interviews

Investment Banking and Analyst View of the Market

• There are unique opportunities to help customers leverage their time and work product with automated process platforms

• Areas of _______ services is viewed by some as more attractive than __________ services

• Providers need focus their efforts on who they serve and their service platform

• Market segments have significantly different growth and profitability

• Acquire a software company to expand earnings multiples

Source: Investment banker and analyst interviews

Unique Opportunities To Help Customers Leverage Their Time

and Work Product“While the big three are focused on growing their current content in the __________ services and compliance management, I think there is a unique opportunity due to a big sea change in the __________ services space. In the past, there was no incentive for customers to get work product done quickly. But the industry is changing to flat rates and other alternative fee arrangements. This means customers are looking for ways to leverage projects and get better access to material. The winning formula is going to be to help customers generate work product a lot more efficiently.”

» ___________, ________& Co.


Areas of _______ Services Viewed by Some As More Attractive Than __________ Services

“I really like the ______ process. This segment is still growing nicely and has not been impacted by the economy because ______ is non-cyclical. This segment is more conducive to workflows and process orientation and software-enabled embedded content where you can inject expertise. It is a repeatable process in that Federal taxes are the same for everyone. Of course there are state differences at the state level, but still lots of leverage within a state. _________ [process] does not have this favorability.”

» ___________, _______


Providers Need to Focus On Who They Serve and Their Service Platform

“There are a couple of key strategic areas that providers in the industry need to determine:– Do they want to do business with the

__________ counsel at companies or with customers?

– Do they want to be a software company, workflow management company or an information management company?”

» ___________, ________& Co.


Acquire a Software Company to Expand Earnings Multiple

• “[Company] should acquire a __________ software company. It would allow them to reposition themselves and get credit for the fact that they already have a lot of software embedded in their business model. One challenge is that they will likely pay a high multiple for a software company and it would be hard to explain. A software acquisition would be transformational for the company as opposed to merely incremental. It would help with their multiple expansion.”

» ___________, ________

Increased leverage:

• Repeatability

• Scalability

• Process automation

Market Segments Have Significantly Different Growth and Profitability

__________ Technology / Software

_________ Management

__________ Information

__________ Publishing

__________ Support Services

Document Mgmt Services

Growth

Profitability

Additional analysis is neededfurther quantify this perspective


The Strategy of the Big Three Appears Similar…

Company

• _____________

• _____________

• _____________

Offering

• Tools:– Information and

decision support tools

– Enterprise management software

– IP content, analytical and visualization tools

• Capability– Deep domain

expertise– Managing structured

and unstructured information

– Applying user context

– World-class technology

Market Growth Focus

• Global / large communities

• Higher growth in developing countries

• Add additional content and capability to current platforms

Own the customer desktop:Surround the customer (or other professional) with everything they need and get stuck with a

mixed bag of products and services

…Whereas the [Company] Strategy is Clearly Differentiated

Collection of best of breed highly-focused, market-leading __________

support services with high customer touch and embedded expertise in a

process-managed IT-enabled platform

Other Suggestions or Ideas That Arose During the Project

• Manage new product/service development pipeline to broaden service offering

• Manage sales pipeline to get, keep and grow customers organically

• Centralize and consolidate [Division] processing capability whenever possible

Manage New Product/Service Development Pipeline to Broaden

Service Offering• Create/improve/manage a new product/service development

capability within each business division to create and test “bolt-on “ products and services– Map out a unique process for each division– Analyze the requirements, potential value added and key success factors for

each division– Create job descriptions of any new staff or additional duties for any current staff– Create the necessary control reports to insure proper focus and success – Create a product map by office within [Division] to insure full rollout of all

currently-offered products and services across all offices• Create capability that includes creating the sales and marketing

kit for each new bolt-on product or service introduction– Identify the resource requirements for the business development staff in terms

of sales and marketing collateral– Map out a unique process for each division on the development and

maintenance of the sales and marketing collateral, including any key vendors and other resources

Manage Sales Pipeline to Get, Keep and Grow Customers Organically

• Build and manage three sales-related pipelines in each business division: – A sales pipeline of new customer targets– Across-sell opportunity pipeline with current customers– A branch office expansion pipeline to grow branches if possible

• Create/improve/manage an overall sales pipeline management capability– Map out a unique process for each pipeline for each division– Analyze the requirements, potential value added and key success factors for each

division– Create job descriptions of any new staff or additional duties for any current staff– Create the necessary control reports to insure proper focus and success

• Create and manage an account management process to retain current customers– Map out a unique process for each division– Analyze the requirements, potential value added and key success factors for each

division– Create job descriptions of any new staff or additional duties for any current staff– Create the necessary control reports to insure proper focus and success

Centralize and Consolidate [Division] Processing Capability

Whenever Possible• Many processes that lend themselves to centralization

are done in each of the various [Division] office locations

• Centralization and consolidation should lead to additional process stability, process quality and lower process cost

• Analyze the various [Division] processes to determine the target processes for centralization and consolidation

• Analyze the various [Division] office operations to determine the best location for each process to be located

• Create a roadmap for the process centralization and consolidation within the overall IT and Process Improvement priority list

Key factor

Scale intensive

Face-to-face interaction required/desired

Control requirements

Repeatability

Statistical variation at a local level

Expertise availability

Centralize

High

Low

High

High

High

Low

Decentralize

Low

High

Low

Low

Low

High

Potential Framework for Thinking About Process Centralization

[Competitor] Profile

__________ Services Product Line Strengths

Perceived Strategy for __________ Services Weaknesses

Source: Expert interviews

Top __________ Process Outsourcers

Rank Company Name 123456789

1011121314151617181920


1011121314151617181920


1011121314151617181920

2009 Top 20 __________ Administrative Support Services Outsourcers

2009 Top 20 Core __________ Services Outsourcing

2009 Top 20 Document Process Outsourcing Vendors

Source: http://www.theblackbookofoutsourcing.com/

http://www.theblackbookofoutsourcing.com/

71% of ____Firms Offshore __________ Services and 39% Offshore in Excess of

$50k per Year

Source: Survey of 51 customers; __________ Process Outsourcing blog (http://__________lyours.blogspot.com/)

29%

18%14%10%

6%

24%

Do not use legal offshoring< $25k$25k - $50k$50k - $250k$250k - $1M> $1M

http://legallyours.blogspot.com/

_______________ Market Summary

• Overall market:– Very large market dominated by a handful of large customers in

a handful of states, processed by a handful of processors– Market trends tend to be negative, but core market looks

strong– Pricing fixed by reimbursement levels make it difficult to gain a

price premium and difficult to get customers to pay for additional services

• [Division] market positioning– Appears to be very strong, but more analysis is required to

properly position the division– Large size positions [Division] well to react quickly to large

customer needs and swings in the business

Top Ten __________as of Q2-2009

• Source: National _______ News, “Quarterly Data Report Q2-2009; Venture Advance analysis and estimates

Dst 9

Dst 5:

Dst 10:

Dst 8:

Dst 7: Dst 6:

Dst 11:

Dst 4:

Dst 3:

Dst 2:

Dst 1:

Rank Organization NameTotal # _____

Q2-2009% US

Market______Rate

Est. 2009_____

______ Revenue @ $550/each

1 13.8m 20.9% 2.7% 378k $208m

2 12.2m 18.1% 1.9% 235k $129m

3 10.1m 14.6% 3.8% 382k $210m

4 5.4m 7.8% 1.5% 81k $44m

5 2.7m 3.9% 1.5% 40k $22m

6 1.1m 1.8% 2.3% 26k $14m

7 1.1m 1.7% 1.5% 18k $10m

8 1.0m 1.7% 4.9% 48k $27m

9 1.0m 1.5% 1.5% 14k $8m

10 0.6m 1.4% 1.5% 10k $5m

Total 49.1m 73% 2.5% 1,232k$678m

________by Top _____ in Top-Ranked States (2008 Data)

•Source: (1_________; (2, 3) Est. based on ___________

1 2 3

Rank State Total _____1 Top _____2_____ Share of

State3

1 California 823,000 18.7%2 Florida 489,000 37.8%3 Arizona 152,000 28.2%4 Ohio 141,000 47.7%5 Michigan 138,000 42.8%6 Nevada 123,000 36.2%7 Texas 120,000 21.0%8 Georgia 114,000 36.0%9 Illinois 113,000 37.6%10 New Jersey 67,000 46.5%11 Colorado 66,000 35.2%12 Virginia 64,000 40.9%13 Indiana 58,000 37.2%

The ________ Industry is Highly Concentrated…

0 10 20 30 40 50 60 70 80 90 1000.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%Cumulative % Market Share

# of __________

The largest 10 ______ account for 73.5% of the market

Bank of America

Wells Fargo

Chase

Citi

GMAC

National City

US Bank

SunTrust

OneWest

PHH

Source: ________________

____________ by State: 3.1m Total ________ (2008 Data)

32k

24k11k

1k

823k18k

1k

123k

152k

66k

120k

58k

113k

138k7k

52k

25k67k

3k

8k1k

55k

42k141k

64k

49k

114k

489k

1k

1k

6k

24k

39

23k

2k8k

16k

3k

15k

8k

3k

4k41k

16k

1k

8k

9k5k

• Source: ____________________ Current markets are indicted with an outline

Highest number of filings

Moderate number of filings

Lowest number of filings

Trends that May Impact the Core Business: [Division]

Trend Potential Impact Indicator

Customers using analytics and scorecards as their primary processor allocation decision as opposed to processor relationships

• Implies a need to focus more attention upon the scorecards and rely less upon our existing relationships

• Increased dependence upon the third-party provider platform companies such as ______ due to their increasing influence

Increased power of 3rd party intermediaries such as ______

• Lose control of the primary provider relationship and servicer decision-making

• Threat of the 3rd party backwards integrating into _____ services

Continued government interference and regulation changes

• Lower ______ rates• Longer potential hold times of ____ and more

potential cost to process ______• Increased need for IT platform “tweaks” to bring

the company into conformance with the most recent laws and rules reduces IT focus on the core process improvements

• Increase need for process and rules changesContinued ______ boom anticipated for the next year or two

• Continued growth in revenue and earnings

The slow down of ________ as the market recovers

• Lower revenue and earnings• Lower-cost acquisitions

_________ Services Market Summary

• Overall market - Very small “niche” market with significant market threats of simplification and automation

• __________ positioning:– A necessarily narrow focus:

• ________• __________• __________

– High market share in current markets with some new market growth opportunity– Premium priced

• Growth opportunities:– Tuck-under acquisitions – very limited– Organic growth – very limited, except for a few additional new markets– New product/service development – growth available– Process improvement and IT development – growth available– Note: management team states that growth trends lag the market by two years – could

bode ill for the next two years

Key question: Is ___ a platform that [Company] wants to add new service platforms to or should it continue to

stand alone?

________ Market Interviews

• Methodology: Blind telephone survey of 20 appeals customers in all current states that ___ serves

• Respondent demographics:

What is the size of your law firm?Very small (1 -

5 customers)Global (>500 customers)

Large (50 - 500

customers)

How long ago did you graduate from law school?

Less than 5 yearsOver

20 years

10 – 20 years

5 – 10 years

What percentage of your personal case load is spent

handling appeals?

51% - 75%

>75%

26% - 50%

<25%

[company] growth strategy final presentation month dd, yyyy

Documents

competitor analysis

services firm

sessionexecutive team

work planlay

internal interviews

companys leaders

summary of work completedlay

contentsproject scope