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pdfOMB Approval No. 3245-0062
Expiration Date: xx/xx/xxxx
409 3rd St., SW • Washington, DC 20416 • (202) 205-6510
THE SBIC PROGRAM
Application Instructions
Form 2181, 2182 & 2183
Form 2181:
Form Format:
Applicant Narrative
Excel Supplement
Word
Excel
Form 2182: Principal Exhibits
Exhibits A through F: MAQ & License Application
Exhibit A.
Exhibit B.
Exhibit C.
Exhibit D.
Exhibit E.
Exhibit F.
Experience
Legal Questionnaire
Other SBIC Activities & Relationships
References
Track Record
Portfolio Detail
Word
Word
Word
Excel
Excel
Word
Exhibits G through J: License Application ONLY
Exhibit G.
Exhibit H.
Exhibit I.
Exhibit J.
Identified Parties & Fingerprint Cards
Statement of Personal History (Individuals)
Statement of Personal History (Entities)
Authorization to Release Information
Word
Word
Word
Word
Form 2183: Fund Exhibits
Exhibit K. Capital Certificate
Exhibit L. Transferor’s Liability Contract
Exhibit M. Declaration of Significant Investors
Exhibit N. Offering Memoranda & Other Documents
Exhibit O. Organizational Documents of Applicant
Exhibit P. Opinions of Counsel
Exhibit Q. Management Services & Other Agreements
Exhibit R. Bank Letter & Third Party Debt
Exhibit S. Legal Documentation Certification
Pre-Licensing Worksheet
Legend:
MAQ & License Application
License Application Only
Word
Word
Word
Word
Word
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Table of Contents
Table of Contents................................................................................................................................................... 2
The SBIC Application Process ................................................................................................................................. 3
Pre-Screening ........................................................................................................................................................3
Management Assessment Questionnaire .............................................................................................................3
License Application ...............................................................................................................................................3
Submitting your Applications ................................................................................................................................. 5
Pre-Screening ........................................................................................................................................................5
Management Assessment Questionnaire .............................................................................................................5
License Application ...............................................................................................................................................5
Saving your Files for Submission ...........................................................................................................................7
Application Instructions ......................................................................................................................................... 8
General Instructions ..................................................................................................................................................8
Forms in Microsoft Word ...........................................................................................................................................9
Forms in Microsoft Excel..........................................................................................................................................10
Form 2181: Excel Supplement ............................................................................................................................10
Form 2182: Exhibit D. References .......................................................................................................................10
Form 2182: Exhibit E1. Track Record – Preparing the Exhibit .............................................................................12
Form 2182: Exhibit E1. Track Record – Completing Exhibit E1 ...........................................................................14
General Data Entry Guidelines: ......................................................................................................................14
E1-A: Fund Overview: .....................................................................................................................................15
E1-B. Portfolio Companies ..............................................................................................................................17
E1-C. Financing Descriptions ..........................................................................................................................18
E1-D. Covenant Defaults .............................................................................................................................2120
E1-E. Valuations ..........................................................................................................................................2221
E1-F. Portfolio Company Financials ................................................................................................................22
E1-G. Active Involvement ...............................................................................................................................23
E1-H. Portfolio Cash Flows..........................................................................................................................2625
E1-I. Fund Cash Flows .................................................................................................................................2827
Guidance for Non-Traditional Fund Track Records: ...................................................................................3130
Form 2182: Exhibit E2. Track Record ..................................................................................................................31
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The SBIC Application Process
Applying for an SBIC license is a three-part process that consists of a Pre-Screening review, the
submission of the Management Assessment Questionnaire (“MAQ”) and the submission of the License
Application.
Pre-Screening
The “Pre-Screening” review is an optional step but one that is highly recommended for first-time
applicants to the SBIC Program. Prospective applicants are invited to submit an Executive Summary of
their SBIC fund proposal and receive feedback from Investment Division staff. The feedback is informal
and non-binding, but it helps prospective applicants better understand SBA’s underwriting criteria and
reassess their own fit with the program. More information on the “Pre-screening” process is available
online at http://www.sba.gov/content/pre-screening-instructions.
Management Assessment Questionnaire
Once you have decided to move forward with the application process, the next step is to prepare and
submit the MAQ, which consists of the following:
Form 2181:
Applicant Narrative
Excel Supplement
Form 2182: Principal Exhibits:
Exhibits A through F
Upon receipt of your MAQ, an SBA analyst will be assigned to review your application and will make an
initial assessment of your qualifications. The analyst will present his/her recommendations to SBA’s
Investment Committee, which will vote on whether to invite your team for an in-person interview at SBA
headquarters.
After the interview, the Investment Committee will again consider whether your management team has
the experience and skills necessary to manage an SBIC. If they vote affirmatively, your team will be emailed a “green light” letter inviting you to submit a License Application.
License Application
The License Application consists of an updated version of your MAQ and two additional forms. The
entire package includes the following:
Form 2181 (UPDATED):
Applicant Narrative
Excel Supplement
Form 2183: Firm Exhibits:
Exhibits K through S
Pre-Licensing Worksheet
Form 2182: Principal Exhibits:
Exhibits A through F (UPDATED)
Exhibits G through J
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Upon receipt of the License Application, a licensing analyst will review the materials and present a
recommendation to SBA’s Divisional Licensing Committee for approval. If approved, the analyst will
make a final presentation to SBA’s Agency Committee, which will vote on whether to recommend your
application for final approval by the Administrator of SBA.
Throughout this process, from Pre-Screening through Licensing, you will be working closely with the
analysts and managers of SBA’s Investment Division. At various times, you may receive both informal
questions and formal SBA Comment Letters. Prompt and courteous replies will minimize delays and
help ensure your experience as an SBIC applicant is a positive one.
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Submitting your Applications
Pre-Screening
Guidance on how to prepare your Executive Summary is available on our website at:
http://www.sba.gov/content/pre-screening-instructions.
Management Assessment Questionnaire
Follow the steps below to properly submit your MAQ. Please note that other than the certification
pages listed below, your MAQ should be submitted electronically. Hard copies will not be accepted:
1. Compress your MAQ files into a single or multiple “ZIP” files and e-mail them to
[email protected] using the subject line “MAQ: Name of Applicant”. Please be aware that any
single e-mail exceeding 10 MB will be rejected by SBA’s e-mail network due to size restrictions.
If necessary, submit your files in a series of e-mails, identifying each part in the subject line as
follows: “MAQ: Name of Applicant (Part # of #)”
2. Each principal should sign and date the certification pages of Exhibits B of Form 2182 ONLY and
a scanned copy of each certification (in pdf format) should be sent along with the MAQ files.
You will be notified of the receipt of your application via e-mail within 5-7 working days.
License Application
Follow the steps below to properly submit your License Application. Please note that unlike the
submission of your MAQ, your License Application must be submitted both electronically and in hard
copy as described below:
1. Update your MAQ submission as necessary, prefacing any changes you make with the marker
[CHANGE]. This will help your analyst quickly identify areas in need of review.
2. Compress your License Application files into a single or multiple “ZIP” files and e-mail them to
[email protected] using the subject line “License Application: Name of Applicant”. Please be
aware that any e-mail exceeding 10 MB will be rejected by SBA’s e-mail network. If necessary,
submit your files using a series of e-mails in order to bypass the size restriction.
3. Prepare three (3) hard copies of all application materials except Exhibit F, which should be
submitted in electronic format only.
4. Prepare a package for mailing that includes the following:
a. Three (3) signed and dated copies of your License Application and accompanying
attachments
b. A check for the applicable application fee payable to the U.S. Small Business
Administration (see 13 CFR 107.300 for latest fee schedule):
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i. All Applicants (Base Fee): $10,000
ii. Partnership Licensees: $15,000
iii. Early Stage SBIC Applicants: $25,000
5. Deliver the package to:
Chief of Licensing
Investment Division
U.S. Small Business Administration
409 3rd St., SW
Washington, DC 20416
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Saving your Files for Submission
The list below provides guidance on how you should name each of the files included in your application.
Using these file naming conventions will help your SBA analysts quickly identify the materials in your
application. The text in bold should be replaced with your information:
Form 2181:
1. Form 2181 – Narrative (Applicant Name).docx
For the attachments requested in Section 8 of Form 2181: Applicant Narrative, please use the
following file naming convention:
1. Form 2181 – Attachment ## (Title of Document).xxx
2. Form 2181 – Supplement (Applicant Name).xlsx
Form 2182:
3. Form 2182 – (Principal Name).docx
4. Exhibit D – (Applicant Name).xlsx
Exhibit E1:
o
5. Exhibit E1 – (YYYY Portfolio Name).xlsx
o
For synthesized track records, please use the following file naming convention:
5. Exhibit E1 – (SYN YYYY Portfolio Name).xlsx
6. Exhibit E2 – (Portfolio Name).xlsx
For the documents requested in Exhibit F – Portfolio Detail, please use the following naming
conventions:
LP Annual Reports:
6. Exhibit F – LP Annual (Fund Name – YYYY).xxx
Recent Quarterly Reports: 6. Exhibit F – LP Quarterly (Fund Name – #QYY).xxx
Investment Memoranda:
6. Exhibit F – Memo ## (Portfolio Company Name).xxx
Form 2183:
7. Form 2183 – (Applicant Name).docx
8. Exhibit N,O,P… – (Applicant Name). xxx
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Application Instructions
General Instructions
Before you begin completing the Application, you should read each section of this document. For
assistance with any questions during the preparation of your responses, send an e-mail with your
question to [email protected] and include your name, the name of your firm and a phone number at
which you can be reached.
The completion of the SBIC Application Materials requires the following two computer software
programs:
Microsoft Word (version 2007 or later)
Microsoft Excel (version 2007 or later)
The instructions that follow provide guidance on how to complete the forms using these two programs.
If you do not have access to Word or Excel, please contact SBA via e-mail at [email protected] for
guidance.
Defined Terms
The application contains terms that carry special meaning within the context of the SBIC Program:
Use of the term “SBIC:” This term refers to a proposed SBIC if you are submitting a MAQ or a License
Application. It can refer to an existing SBIC if you are applying for a change of management or change of
control.
Use of the term “principal:” This refers to any individual who engages or proposes to engage in the
management of the applicant, and customarily includes officers and directors of a corporation, general
partners of a partnership and managers of a limited liability company. However, it may also include
other individuals, especially if they have either a vote or a veto in the investment decision. Whether
one qualifies as a principal is based upon authority, responsibility and actions. Title is not
determinative and, in its sole discretion, SBA may determine that a person with a relationship to the
SBIC is a principal.
Regulatory Terminology: When the Application refers to specific sections of SBA regulations, you should
read those particular sections of the regulations before composing your response. Where you find
words capitalized that are normally not capitalized in ordinary usage, it indicates that this is a defined
term with a specific meaning within SBA regulations. For example, you may find the term Associates
used in some questions. This term, which describes certain categories of related parties, is defined in 13
CFR 107.50 and should be read carefully.
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Forms in Microsoft Word
With the exception of Form 2181: Excel Supplement, Form 2182: Exhibit D and Form 2182: Exhibit E, the
entire SBIC Application should be prepared using Microsoft Word. Follow these instructions to ensure
you complete these forms correctly.
Applicants are encouraged to draw from existing materials in preparing their SBIC application. The
content you have already prepared for your Private Placement Memorandum or LP “pitch decks” may
be useful in completing the application. However, you must ensure that your responses are direct,
complete and concise. Failure to provide the requested information or unnecessarily long responses
may delay the review of your application.
The application takes advantage of several features included in Microsoft Word versions 2007 and later
of which you should be aware:
You will notice that each question is followed by a text box that contains sample text in light
gray. Select these boxes to enter your response. This will ensure your answers are properly
formatted. If you encounter difficulties using the text boxes, simply delete them and format
your responses as follows:
Font:
Times New Roman
Font Size:
11pts.
Line Spacing: Single (1)
The forms also make use of checkboxes. Where you see a series of boxes, simply click on the
box next to the appropriate response.
Please DO NOT edit the section headings (colored in blue) used in the application document.
These headings are linked to the Table of Contents located at the beginning of the form and are
helpful in navigating the application.
To easily navigate the document, select the “View” tab in the ribbon (Microsoft Word 2007 and
later), then click the box next to “Navigation Pane.” A navigation pane will open on the left side
of the document with links to each of the sections of the application.
To update the Table of Contents, click on the “Table of Contents” button in the Navigation Pane.
Next, right-click on any of the text in the Table of Contents. A menu will appear. Select “Update
Field,” then “Update Page Numbers Only” to update the page numbers contained in the Table of
Contents.
Please DO edit the headers of the document, where applicable. At several points in the
application document you will notice the header (the section of the document colored in gray
and located above the main body of the text) contains a text box asking you to enter the name
of your fund or the date of submission [Ex. Enter Name of Applicant (Date of Submission)].
Where you see these text boxes, double click on the header region and enter the information
requested. To return to the main body of the text, double-click the main body.
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Forms in Microsoft Excel
Form 2181: Excel Supplement, Form 2182: Exhibits D & E and Exhibit T, should be completed using
Microsoft Excel to facilitate the input and analysis of applicant information. The instructions that follow
not only discuss how to input your data, but also contain important information on the type of data you
should include.
Form 2181: Excel Supplement
Specific instructions on how to complete the Excel Supplement are included in the document itself.
Generally, though, you should only enter information in yellow cells. Other cells may contain formulas
and should not be edited. If you encounter difficulties completing the exhibit due to these restrictions
or have other special needs, please contact SBA for guidance at [email protected].
SBA analysts will review the Excel Supplement alongside the Applicant Narrative. Please ensure that the
information you provide is consistent across these two documents. For example, if your investment
strategy is described in the Applicant Narrative as having a regional focus, the geographic distribution
you provide in the Excel Supplement should reflect this aspect of your strategy.
Form 2182: Exhibit D. References
The due diligence process is a key component of SBA’s underwriting process and involves confidential
calls to references familiar with your qualifications and background. Use the guidance below to compile
a list of references for each of the principals included in your SBIC application. Avoid overlapping
references. If a person can serve as a reference for two or more principals, simply associate him/her
with one principal and include a note in the “Notes” column. You should consolidate each principal’s
references and submit only ONE file for the entire team. DO NOT submit separate files for each
principal.
Each principal should include five (5) references in each of the following categories:
Supervisors/Partners
Associates/Peers/Subordinates
Portfolio Company Co-Investors (Co-lenders, Deal sponsors)
Fund Investors
Each principal or team should also provide the following:
A full roster of portfolio company CEOs or CFOs for each of the companies included in Exhibit E1
or E2. These references should be the primary individuals with whom you or your team dealt
during the period of your investment. Provide the most recent contact information you have
available and associate the relevant principal with each CEO/CFO.
Provide the contact information for any employees of the SBIC applicant’s firm that have
departed within the last five (5) years.
Please Note: SBA’s due diligence process involves reference calls to both "on-list" references you have
included in Exhibit D as well as to "off list" references SBA analysts themselves identify.
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While SBA analysts will generally contact you before making reference calls, this may not always be the
case. Please be aware that the reference calling process may begin immediately upon SBA's receipt of
your application. If you have any special concerns about SBA contacting current employers, current
partners, or any other on- or off-list references, please notify SBA in advance of submitting your
application and include a cover letter notifying us of your concerns.
Cover Worksheet:
Name of Applicant:
Principal Last Names:
On the worksheet labeled “Cover,”
please enter the name of the SBIC
Applicant and the last names of each
principal included in the SBIC
application.
Name of Applicant, LP
Firm
Last Name
Insert rows above this line --->
References Worksheet:
Name of Applicant, LP
References
Current Firm
McKinley Engineering, Inc.
Start Year of End Year of
Relationship Relationship
2002
2012
First Name Last Name Title
Bill
Smith
CEO
Polly Partner
Susan
Anthony
Associate Small Business Partners, Inc. Departed Employee SBIC Capital Fund I
2005
2008
Carry d'Intrest
Thomas
Jefferson
CFO
2003
2007
Kennedy Plastics
Reference Type
PC CEO
Associated Fund
Associated Portfolio
or Co.
Company
SBIC Capital Fund I McKinley Engineering, Inc.
Principal/Firm
Firm
PC CFO
SBIC Capital Fund II VanBuren Construction
Work Phone
(987) 654-3210
Mobile Phone
(123) 456-7890
(222) 222-2222
(111) 111-1111
Home Phone
E-mail 1
[email protected]
E-mail 2 Notes
Bill was brought on as CEO when the sponsor
of this transaction initiated a management
change at the time of financing. This was a
deal led by former colleagues and thus is not
associated with any principal in particular.
[email protected]
Susan was an Associate with the firm for three
years. She left the firm in 2008.
Thomas was the CEO of VanBuren
Construction, an SBIC Investors II portfolio
company.
[email protected]
Principal/Firm:
From the drop-down list, select the principal with whom the reference
is associated. If the reference is not associated with any particular
principal, but is associated with the Applicant more generally (such as
a departed employee), you may select “Firm” from the drop-down.
First Name:
Enter the first name of the reference.
Last Name:
Enter the last name of the reference.
Title:
Enter the current title of the reference.
Current Firm:
Enter the name of the firm at which the reference is currently
employed. If the reference is not employed, please indicate “retired,”
“unemployed” or another relevant term.
Reference Type:
From the drop-down list, select the reference type. If the reference
does not fit within one of the categories provided, type-in your own
category.
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Associated Fund/Company:
Enter the name of the fund or company at which the principal was
employed when he/she worked with the reference. For example, if
the reference was a co-investor in a deal the principal completed while
working for “SBIC Investors I, LP,” you would enter in this cell “SBIC
Investors I, LP”
Associated Portfolio Company:
If the relationship between the principal and the reference involved a
particular portfolio company included in Exhibit E1 or E2, please enter
the name of the portfolio company. For example, if the reference was
the CEO of a company in which the principal’s firm was an investor,
you would enter the name of that company in this cell.
Start Year of Relationship:
Enter the year in which the relationship with the reference effectively
began.
End Year of Relationship:
Enter the year in which the relationship with the reference effectively
ended.
Work Phone:
Mobile Phone:
Home Phone:
E-mail 1:
Please provide at least one phone number and e-mail address, if
available. Additional contact information is not required, unless it will
be needed to reach the reference in a timely manner.
E-mail 2:
Notes:
Briefly explain the context of the relationship and any other notes that
may be relevant.
Form 2182: Exhibit E1. Track Record – Preparing the Exhibit
Exhibit E (1 & 2) is critical to the analysis of your team’s qualifications for an SBIC application and should
be completed with care. SBA will treat your submission of Exhibit E as a representation of your
complete investment experience. Exhibit E1 should be used to present investment experience that
meets the eligibility criteria outlined below. All other experience should be presented using Exhibit E2.
E1 Eligibility
Prepare an Exhibit E1 for all funds or individual investments in which your decision-making role meets
either of these two criteria:
i.
You were a voting member of the investment or credit committee responsible for approving
the investment, or;
ii.
You were the “deal lead,” responsible for conducting the due diligence, structuring the
investment, presenting the opportunity to the investment committee, and monitoring the
transaction post-close.
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For investment experience in which your role differs from the two descriptions above, use Exhibit E2.
E1 Presentation
For E1 eligible investment experience, please follow these general presentation guidelines:
1. Submit an Exhibit E1 for all funds that are currently active or which include investments that
have been exited within the past ten years. Principals that share investment history should only
prepare one exhibit for each portfolio.
2. For track record that qualifies under the first eligibility criterion (investment/credit committee
membership), you must include all transactions approved by that committee during your
membership, whether or not you were the “deal lead.” You should not include deals approved
prior to or after your committee membership, nor should you present performance results past
the date of your departure from the fund.
3. For track record that qualifies under the second eligibility criterion (deal leadership), include
only those transactions that meet the eligibility criterion. Do not include investments you did
not lead, even if they were part of the same portfolio.
4. Use the “Notes” section of Exhibit E1-A to explain the criteria you used to select the investments
included in the exhibit. Indicate whether any transactions have been excluded as a result of the
restrictions discussed here (e.g. “the exhibit excludes those investments the fund made after my
departure”).
While SBA places the greatest weight on investment experience gained as a principal in a traditional
fund environment, we recognize that other types of investment experience may be relevant. If you have
made investments on a “one-off” basis, but your track record lends itself to being viewed as if it were an
actual fund, you may present a “synthesis” of those transactions using Exhibit E1. Synthesized track
records should include all qualifying investments currently held or which were terminated within the last
ten years. Follow these guidelines to determine if your investments qualify for inclusion in a synthesized
Exhibit E1:
1. You may include investments made:
a. Individually with your personal funds;
b. Through an entity for which you had full discretionary voting authority, such as a trust of
which you were the trustee;
c. Through an entity (such as a limited partnership or LLC) that was formed for the specific
purpose of making the investment, where you had decision-making authority over all
aspects of the investment as general partner or managing member and were primarily
responsible for raising the entity’s capital from investors.
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2. You may NOT include investments in which you were a founder of the company, an officer or
employee of the company, or an advisor or consultant to the company prior to your initial
investment in the company.
3. The amount of your investment should be limited to those funds over which you had control. If
your investment was made as part of a club or syndicate, do not include investment amounts
other than your own.
4. Use the “Notes” section of Exhibit E1-A to explain the criteria you used to select the investments
included in the exhibit.
Form 2182: Exhibit E1. Track Record – Completing Exhibit E1
General Data Entry Guidelines:
- The worksheets in Exhibit E1 are locked and you will only be able to enter data into the yellow
cells. Cells not colored yellow may contain formulas and should not be edited.
-
Though the worksheets are locked, several of them do give you the ability to Hide/Unhide rows.
Hiding unused rows will make it easier for you to navigate and print the exhibit. To Hide a row
or a series of rows, select the rows you would like to hide, right-click to reveal a drop-down
menu and select “Hide”.
To unhide a set of hidden rows, select the rows above and below the hidden rows, right-click to
reveal a drop-down menu and select “Unhide”.
-
Where necessary, you may add rows to the Exhibit. To ensure the formulas work correctly,
always add rows above the last row in the table. To do so, select the last row in the table, rightclick, and then select “Insert Row” from the menu that appears.
-
Any numbers you input should be rounded to the nearest dollar. Do not round to the nearest
thousand or million. The spreadsheet will automatically apply the appropriate formatting. For
example, ‘$50,350,200’ should be entered as ‘50350200’ and NOT as $50 or $50.4 M.
Please note that Exhibit E1 is designed for the presentation of traditional, private equity fund track
record information. For those presenting non-traditional track records, please refer to the Guidance for
Non-Traditional Fund Track Records at the end of the section.
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E1-A: Fund Overview:
SBIC Investors, LP
SBIC Applicant:
TTS SBIC Applicant, LP
Principal Nam e:
Initials:
Peter General
Polly Partner
Harold Principal
Sally Carry
PG
PP
HP
SC
Vintage Year:
Mgmt. Fee (%):
Preferred Return (%):
Carry (%):
2002
2%
8%
20%
Valuation Date:
Dec-12
Fund Type:
Other
If Other Fund Type:
<--- Insert Additional Rows if necessary
Total Com m itted Capital:
Total Private Commited Capital:
Total SBA Leverage Commitment:
Total Other Leverage Commitment:
Total Paid-In Capital:
Total Private Capital Called:
Total SBA Leverage Draw n:
Total Other Leverage Draw n:
$100 M
$100 M
$0 M
$0 M
$80 M
$80 M
$0 M
$0 M
Strategy Description & Benchm ark Type:
SBIC Investors, LP w as a small buyout fund that financed management buyouts and other change of control transactions largely in the
manufacturing, distribution and transportation sectors of the Southeast United States. The most appropriate benchmark w ould be a 2003 vintage
year, U.S. small buyout benchmark. The 2003 vintage year is recommended because w hile the fund's first investment w as in 2002, it w as made in
December and is the only investment that w as made in 2002.
Please list and provide contact inform ation for the 10 largest lim ited partners of this fund.
Lim ited Partner
Teachers Union of Texas
Texas U College Endow ment
Georgia State Employee Pension
Jeremy Worth Trust
Smith Family Office
Nashville City Workers Pension
College Endow ment Advisers
Hatfield Family Office
McCoy Family Office
Regional Community Bank of the South
Contact Person
Joe Limited
Sally Cio
Beth Pension
Jeremy H.N. Worth
John Trustee
N.C. Worker
Jim Consultant
John Jennings
Nate Nelson
Barbara S. Banks
Phone
(713) 202-2020
(214) 897-0148
(333) 444-5555
(214) 888-1212
(212-555-4646
(416) 222-1000
(212) 555-1234
(214) 399-3000
(713) 444-4250
(919) 777-9000
Em ail
[email protected]
[email protected]
[email protected]
w orth@jw t.com
[email protected]
ncw orker@ncw p.org
[email protected]
[email protected]
[email protected]
[email protected]
Notes:
The investments in this portfolio include only those transactions on w hich the principals voted as members of the investment committee. SBIC
Investors, LP made tw o investments after Peter General and Polly Partner left the firm in December 2012. These tw o investments are not included
in the exhibit.
[NAME OF FUND]
Enter the name of the fund/portfolio being presented in the exhibit in
the yellow bar at the top of the worksheet. The name you enter here
will be carried over to the rest of the worksheet and will not need to
be entered again.
SBIC Applicant Name:
Enter the name of the SBIC Applicant.
Principal Name:
Enter the names of all the senior-level personnel involved in managing
this portfolio, including all deal leads and investment committee
members. First list in bold the names of those included in the SBIC
application as principals. Next list any other senior-level person
involved in managing the portfolio but who are not part of the SBIC
application.
Initials:
Enter two letter initials for all those listed as principals.
Vintage Year:
Enter the vintage year of the fund (YYYY). This should be the year in
which the first investment was made.
Mgmt. Fee:
Enter the initial management fee charged during the fund’s investment
period. Enter ‘0’ if not applicable.
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Preferred Return:
Enter the LP preferred return (“hurdle rate”) agreed to in the fund’s
LPA. This is the minimum return to investors before the GP may earn
carry. A preferred return of 8% means that the limited partners need
to achieve a return of at least 8% per annum before the profits are
shared with the GP. Enter ‘0’ if not applicable.
Carry (%):
Enter the carry percentage earned by the GP of the fund as established
in the fund’s LPA. Enter ‘0’ if not applicable.
Valuation Date:
Please note that this cell is not meant to be edited. It will display the
valuation date you select in cell B111 of Tab E1-H.
Fund Type:
Use the drop-down menu provided to select the fund type that most
appropriately describes the portfolio being presented. If none of the
options are satisfactory, select “Other” and enter a one or two word
term to describe the fund type in the box that appears.
Total Private Committed
Capital:
Enter the total amount of private capital that has been committed to
the fund. If the fund being presented is a participating securities SBIC,
include SBA participating securities leverage here.
Total SBA Leverage
Commitment:
IF APPLICABLE, enter the total amount of SBA debenture leverage
committed to the fund. If this fund was not an SBIC or did not receive
SBA debenture leverage commitments, enter ‘0.’
Total Other Leverage
Commitment:
IF APPLICABLE, enter the total amount of non-SBA leverage committed
to the fund. If this fund did not receive third-party leverage
commitments, enter ‘0.’
Strategy Description &
Benchmark Type:
Provide a brief description of (i) the investment strategy used to make
the investments included in the portfolio and (ii) the benchmark
category you feel is the most relevant representation of peer
performance (e.g. small buyout, mezzanine, etc.). Justify your
selection.
Limited Partner Information:
Provide the requested information for each of the 10 largest limited
partners of this fund.
16 of 3332
Use this space to explain how you determined which investments to
include in the exhibit. You may reference this instruction document
and the eligibility criteria listed above.
Notes:
For instance, in some cases a principal may not have been a member
of a fund’s investment committee throughout its entire investment
period. In such a case, the principal would only include in the exhibit
those deals on which he/she voted while an investment committee
member. This space would be used to provide the following comment:
“This portfolio contains the transactions on which Polly Partner voted
as a member of the investment committee. Excluded are two
transactions the committee approved after Polly Partner departed the
firm in December 2012.”
E1-B. Portfolio Companies
This worksheet requests data specific to each company included in the portfolio. Please begin the list
with those companies in which your investments have been fully exited, followed by those in which you
have exited one security but still hold another, then finish with those companies in which none of your
investments have been fully exited.
SBIC Investors, LP
TTS SBIC Applicant, LP
PLEASE START LIST WITH THE NAMES OF COMPANIES IN ALL FINANCINGS HAVE BEEN REALIZED
Portfolio Com pany
YPC Com pany
APG Com pany
Diver Tech Co.
10
State of Co.'s
Prim ary Offices
(Abbrev.)
SC
OK
GA
Industry
Agriculture/Forestry/Fishing
Consum er Related
Manufacturing
Description of Products / Services
Producer of farm -raised catfish
Them e parks operator
Manufacturer of gauges for scuba industry
Deal Source
Auction
Conference
Referral
Later
Later
Later
ABC Investm ent Advisors
Lake Street Partners
Im agim ax
TX
Medical/Health
Healthcare im aging
Referral
Later
ABC Investm ent Advisors
Bank Capital Partners, Wall
Street Equity Partners
Tuna Business Services
NM
Business Services
Outsourced accounting services
Later
Nice Hardw are
NC
Manufacturing
Retail niche hardw are
SBIC Partners
Equity Capital Partners
U
Financial Conference Associates
Rapid Fuel Services
National DOG Scan
Energy Services
FL
LA
FL
TX
Business Services
Business Services
Medical/Health
Business Services
Financial Conference Organizers
On-site fuel delivery services
Veterinary services
Natural gas fueling stations
Referral
Investm ent
Bank
Attorney
Accountant
Referral
Referral
Cherry Tree Capital
Wall Street Equity Partners
SBIC Partners
U
U
U
U
Num ber of Portfolio Com panies:
Stage
Change of Control
Change of Control
Later
Later
Later
Co-Creditors (if applicable)
Equity Sponsors (if applicable)
Realized/Unrealized
(All Invested
Securities)
R
R
R
R
R
Portfolio Company
Enter the name of the portfolio company. Please note, this is the only
worksheet in which you will be able to provide the names of your
portfolio companies. These names will be carried through the
remainder of the spreadsheet to ensure consistency.
State of Co.’s Primary Offices
(Abbrev.)
Select the state in which the company’s primary offices are located. If
the company is located abroad, please select ‘INTL.’ If none of the
options provided in the drop-down menu are appropriate, select
‘other.’
Industry
Select the company’s industry from the drop-down. If none of the
options are appropriate, please type-in your own industry
classification.
Description of
products/services
Use 4-5 words to describe the product or service this company
provides.
17 of 3332
Deal Source
Use the drop-down menu to select the source of this transaction. If
none of the options provided are appropriate, please enter your own
1-2 word term identifying the source of the deal.
Stage
Use the drop-down menu to select the stage of this company at the
time of investment. The following definitions should serve as your
guide:
•
Seed Stage - The initial stage. The company has a concept or
product under development, but is probably not fully operational.
Usually in existence less than 18 months.
•
Early Stage - The Company has a product or service in testing or
pilot production. In some cases, the product may be commercially
available. May or may not be generating revenues. Usually in
business less than three years.
•
Expansion Stage - Product or service is in production and
commercially available. The company demonstrates significant
revenue growth, but may or may not be showing a profit. Usually
in business more than three years.
•
Later Stage - Product or service is widely available. Company is
generating on-going revenue; probably positive cash flow. If not
profitable, usually likely to be within 12 months.
•
Change of Control - Leveraged buy-outs or management buy-outs
such as spin-outs of operating divisions of public companies and
ownership succession of private companies.
•
Turnaround - Investment is made into company that is failing with
the goal of making major operational and structural financial
changes and achieving profitability. May include working with
companies that are in bankruptcy or pre-bankruptcy.
Co-Creditors (if applicable)
Enter the names of the company’s creditors during the period in which
you were an investor in this company. Separate multiple names with a
comma.
Equity Investors (if applicable)
Enter the names of any equity sponsors or other major equity holders
present during the period in which you were an investor in this
company. Separate multiple names with a comma.
E1-C. Financing Descriptions
Each row of this exhibit should be used to identify the types of securities used to finance each portfolio
company. For example, the purchase of preferred equity shares and subordinated debt securities from
the same company should be presented here using two rows, one for the equity and one for the debt.
18 of 3332
Please list the portfolio companies in the same order in which they are listed in ‘E1-B. Portfolio
Companies.’
Portfolio Company
Use the drop-down menu to select the name of the portfolio company
from which the security was purchased. You will only be able to use
the names of the portfolio companies you provided in E1-B. To add a
company to the list, return to E1-B and add it there.
Debt or Equity
Indicate whether the security purchased is a ‘Debt’ security or an
‘Equity’ security.
Type of Security
Specify the type of security purchased. A drop-down menu has been
provided as a guide, but you may enter your own description of the
security. Examples include subordinated debt, subordinated debt with
warrants, common equity, preferred equity, etc.
Percentage Ownership (fully
diluted)
Indicate the ownership percentage, on a fully-diluted basis, associated
with the security. If the security does not include any ownership stake
in the company, please leave the cell blank.
Current Pay Component
(CP/”Blank”)
Indicate whether or not the security was structured with a current pay
component at issuance. Current pay includes cash payments only,
such as periodic interest payments or dividends. It does not include
PIK, accrued interest, accrued dividends or other types of capitalized
proceeds.
Select “CP” if the security was structured with current pay at issuance.
Leave the cell blank if it was not structured with current pay.
Senior Leverage Multiple
(Senior Debt/EBITDA)
This multiple should be calculated based on the company’s balance
sheet at transaction close. To calculate this multiple, divide the total
amount of senior debt on the company’s balance sheet by the
company’s Last Twelve Months (LTM) EBITDA as of the transaction
close.
Total Leverage Multiple
(Debt/EBITDA)
To calculate this multiple, divide the total amount of debt capital on
the company’s balance sheet (on a post-close basis) by the company’s
LTM EBITDA as of the transaction close.
19 of 3332
DEBT ONLY: Covenant
Violations (CV), Restructuring
(RS) or both
This information should be provided only for debt securities.
Indicate whether at any time in the life of this security the company (i)
violated a covenant (CV), (ii) the security was restructured (RS), or (iii)
experienced both.
Please note that if you indicate the company violated a covenant or
the security was restructured, you will be asked for provide a brief
explanation in worksheet ‘E1-D. Covenant Default’
Exit Type
This information is requested for realized/liquidated securities only.
Use the drop-down menu to select the type of exit used to liquidate
this security. If none of the options provided are appropriate, please
enter your own 1-2 word term identifying the type of exit.
Date of Initial Investment
Provide the month and year the security was issued. You may enter
the precise day (DD/MM/YYYY), but the spreadsheet will only display
the month and year.
Date of Exit (if realized)
This information is requested for realized/liquidated securities only.
Leave this cell blank for unrealized financings.
Provide the month and year the security was liquidated. You may
enter the precise day (DD/MM/YYYY) but the spreadsheet will only
display the month and year.
Realized/Unrealized
Please indicate whether the security has been realized, including any
warrants (R) or remains unrealized (U).
A security has been “realized” if the following has occurred:
-
The fund liquidated the investment for cash. Full repayment of
debt is included in this category. Exit proceeds equal the
amount of cash received.
-
The fund distributed freely tradable public securities to its
investors. Exit proceeds equal the value of the securities
based on their closing price on the distribution date.
-
The fund wrote-off the investment. An investment does not
have to be written off for income tax purposes in order to be
shown as a write-off. You should base your assessment of
realized v. unrealized investments on the operating status of
the company, the prospects for any meaningful financial
recovery and any other relevant facts.
20 of 3332
Enter the total, cumulative amount of financings made using this type
of security. Please be precise as this information will be used in
calculating the fund’s performance metrics. Round the amount to the
nearest dollar. For example, $50,350,200 should be entered as
‘50350200’ and NOT as 50.4 or $50.35M
Total Financing Amount
E1-D. Covenant Defaults
The securities you indicated had covenant violations or which were restructured will automatically
appear in the first column of this worksheet. Please complete the information requested in the yellow
cells.
SBIC Investors, LP
TTS SBIC Applicant, LP
Portfolio Com pany
Security Type
Covenant
Violation,
Restructing
or Both
YPC Com pany
Sub Debt
Diver Tech Co.
Sub Debt w /Warrants
Both
Tuna Business Services
Sub Debt w /Warrants
RS
Financial Conference Associates
Sub Debt w /Warrants
CV
Covenant Violation Type
CV
Covenant
Violation Type
Interest
Coverage
Tim e in
Default
(Months)
Default
Interest
Rate
Charged
Principal
Lead
6
15.0%
PG
Discuss the reasoning behind any restructurings, the
causes of any covenant violations and the m easures taken
to address these issues.
Weak cash flow from econom ic dow nturn cause violation of
interest coverage ratio. Default interest rate w as charged
and interest w as PIK'd until the ratio recovered to the
threshold am ount. Com pany never failed to m ake
paym ents.
Portfolio com pany perform ed strongly, refinanced our
existing position. The fund chose to participate in the new
financing, accepting a low er current interest rate.
This information is requested only for those securities that
experienced covenant violations.
Identify the covenant(s) that were violated.
Time in Default (Months)
This information is requested only for those securities that
experienced covenant violations.
Indicate the number of months in which the company was in default
on its covenant(s).
Default Interest Rate Charged
This information is requested only for those securities that
experienced covenant violations.
If the company was charged a default rate of interest, please indicate
what rate it was charged.
Principal Lead
Using the principal initials provided on E1-A., please indicate which
principal(s) within your firm took the lead in addressing the covenant
violations with company management and co-investors or leading a
restructuring. If responsibility for these activities was handled
primarily by co-investors, leave blank.
21 of 3332
Discuss the reasoning…
As explained in the exhibit, please discuss the reasons why the
company defaulted on its covenants, what caused it to miss payments
or why the security was restructured. Further, describe any measures
taken to resolve the issues that caused the default or restructuring.
These explanations should be brief. The SBA analyst assigned to
review your application will request additional information if
necessary.
E1-E. Valuations
This worksheet requires you to classify the primary valuation methodology used to determine the
residual value of the unrealized positions in your portfolio.
SBIC Investors, LP
TTS SBIC Applicant, LP
Portfolio Com pany
Nice Hardw are
Financial Conference Associates
Rapid Fuel Services
National DOG Scan
Energy Services
Security Type
Com m on Equity
Sub Debt w /Warrants
Sub Debt w /Warrants
Com m on Equity
Senior Secured Debt
Valuation Methodology
Held at cost
Marked-dow n to reflect perform ance deterioration
Future realization proceeds
Held at cost
Held at cost
Portfolio Company
This column will automatically populate with the names of portfolio
companies with unrealized securities.
Security Type
This column will automatically populate with the securities identified
as unrealized.
Valuation Methodology
Use the drop-down menu to select the primary valuation methodology
used to determine the residual value of the unrealized security. If the
menu does not contain an appropriate description of your
methodology, you may type-in your own.
E1-F. Portfolio Company Financials
This worksheet requests financial information about each of the portfolio companies in your portfolio.
Provide the requested data for two time periods: (i) at the time of initial investment and (ii) at the time
of valuation or full exit, depending on whether the fund still holds unrealized securities in the portfolio
company.
22 of 3332
SB Investors I, LP
SB Investors II, LP
Com pany Financials at Tim e of Initial Investm ent
Com pany Financials at Tim e of Full Exit OR as of Valuation Date
YPC Com pany
R
Data as of
MM/DD/YY
12/31/01
APG Com pany
R
6/30/02
Y
18
$48.5 M
$10.7 M
$1.7 M
$0.5 M
$29.4 M
9/30/06
Diver Tech Co.
R
3/31/03
Y
32
$97.4 M
$20.3 M
$4.3 M
$1.2 M
$29.4 M
12/31/07
Im agim ax
R
3/31/03
Y
19
$60.8 M
$9.8 M
$2.4 M
$0.9 M
$29.4 M
Tuna Business Services
R
3/31/03
Y
34
$35.7 M
$30.4 M
$4.6 M
$0.7 M
Nice Hardw are
U
6/30/07
N
101
$223.8 M
$58.9 M
$11.2 M
Financial Conference Associates
U
12/31/07
Y
15
$47.7 M
$7.7 M
Rapid Fuel Services
U
12/31/07
Y
14
$22.0 M
National DOG Scan
U
12/31/07
Y
26
Energy Services
U
6/30/08
Y
22
Com pany Nam e
Realized/
Unrealized
SUM TOTALS
Sm all
Business
Num ber of Enterprise
LTM
Em ployees
Value
Revenue
Y
21
$49.4 M
$15.0 M
$2.9 M
$0.4 M
$20.0 M
302
LTM
EBITDA
Cash &
Equivalents Total Debt
Data as of
MM/DD/YY
12/31/06
Num ber of Enterprise
LTM
Em ployees
Value
Revenue
21
LTM
EBITDA
Cash &
Equivalents Total Debt
$62.0 M
$16.0 M
$3.5 M
$0.4 M
$18.0 M
12
$45.8 M
$10.1 M
$1.6 M
$0.5 M
$20.8 M
36
$176.4 M
$36.8 M
$7.8 M
$0.5 M
$20.8 M
9/30/12
31
$78.2 M
$12.6 M
$3.1 M
$0.5 M
$20.8 M
$29.4 M
9/30/12
52
$60.6 M
$51.6 M
$7.8 M
$0.5 M
$20.8 M
$0.9 M
$29.4 M
12/31/12
140
$273.6 M
$72.0 M
$13.7 M
$0.5 M
$20.8 M
$2.2 M
$0.6 M
$29.4 M
12/31/12
18
$57.0 M
$9.2 M
$2.6 M
$0.5 M
$20.8 M
$6.3 M
$0.9 M
$0.9 M
$18.0 M
12/31/12
15
$23.0 M
$6.1 M
$0.9 M
$0.5 M
$20.8 M
$30.1 M
$4.3 M
$0.4 M
$0.5 M
$29.4 M
12/31/12
32
$65.0 M
$7.4 M
$0.7 M
$0.5 M
$62.5 M
$64.3 M
$8.5 M
$1.9 M
$1.3 M
$38.6 M
12/31/12
16
$58.2 M
$7.6 M
$1.2 M
$0.5 M
$20.8 M
$679.7 M $171.9 M
$32.5 M
$7.9 M
$282.4 M
$899.8 M $229.4 M
$42.9 M
$4.9 M
$246.9 M
373
Data as of MM/DD/YY
Provide the date as of which the financial information presented was
prepared.
Small Business
Indicate whether the portfolio company would have been considered a
“small business” at the time of your initial investment based on SBA
size standards. SBA’s general definition of a “small business” is a
company with (i) less than $18 million in tangible net worth, and (ii)
less than $6 million in average net income, after Federal taxes, for the
preceding two fiscal years. More specific guidance on SBA size
standards, including industry specific standards, can be found in 13 CFR
121.301(c)1 and 2.
Please note: SBA will not consider your response a formal
determination of size. Instead, we will consider this information to be
your “best estimate.”
Number of Employees
Enter the number of full-time equivalent employees at the firm.
Enterprise Value
Enter the company’s enterprise value (market value of equity + net
debt).
LTM Revenue
Enter the company’s revenue, calculated over the last twelve months
(LTM).
LTM EBITDA
Enter the company’s EBITDA, calculated over the same twelve month
period used to calculate the LTM Revenue.
Cash & Equivalents
Enter the amount of cash & equivalents on the company’s balance
sheet.
Total Debt
Enter the total amount of debt on the company’s balance sheet.
E1-G. Active Involvement
The “Active Involvement” spreadsheet will help SBA identify those responsible for executing the
transactions included in your portfolio. Your SBA analyst will devote a portion of his/her reference calls
to confirming the deal attribution presented here.
23 of 3332
Use the same two letter initials you entered in the Principal List on E1-A. to indicate the individual(s)
within your firm responsible for each element of the investment process. Where more than one person
can claim responsibility for leading an activity, enter each set of initials and separate them with a
comma (e.g. AB, CD).
Please use this worksheet to present the activities of every member of the fund’s senior management
team, including deal leads and members of the investment committee. Do not limit attribution solely to
those principals included in your SBIC application. The roles played by former colleagues and partners
should be reported here, even if they are not joining your SBIC application. Leave the cell blank if no
one within your firm was responsible for the activity.
SBIC Investors, LP
TTS SBIC Applicant, LP
PLEASE IDENTIFY THE ROLES PLAYED BY EVERY MEMBER OF THIS FUND'S INVESTMENT COMMITTEE
PP
SS
PP,PG,HP,
SS
PG
PP
HP
PP
PP
PP
HP
PP
PP
PP,PG,HP,
SS
PP
PP
SS
SS
PP
PP
SS
PP
PP
PP
SS
SS
PP
PP
SS
PP
PP
PP
SS
APG Com pany
Diver Tech Co.
Im agim ax
Tuna Business Services
Nice Hardw are
Financial Conference Associates
Rapid Fuel Services
National DOG Scan
Energy Services
PP
PP
PP
SS
PP
PP
PG
PG
PG
PG
PG
PG
PG
PP
PP
PP
PP
PP
PP
PP
HP
HP
HP
PG
PG
HP
PP
PG
PG
PG
PP
PP
PP
SS
SS
PG
PG
SS
HP
PG
PG
SS
PG
PP,PG,HP,
SS
PP,PG,HP,
SS
PP,PG,HP,
SS
PP,PG,HP,
SS
PP,PG,HP,
SS
PP,PG,HP,
SS
PP,PG,HP,
SS
PP,PG,HP,
SS
PP
PP
Discussion of
Pre-Investm ent Role
PP - Deal source and co-lead. Played key role in
structuring and due diligence.
PP-Deal source and internal lead on deal. Led
strucuting and w orked w ith syndicate partners
closely.
PP-Involved in due diligence and monitoring. Sourced
by former partner, Edw ard Carry.
PP-Internal lead on deal. Sourced by former partner,
Edw ard Carry.
PG
X
Exit Process
PG
Board Observer
Made
Recommendation to
Investment/Credit
Committee
SS
Board of Directors
Lead Due Diligence
SS
Officer of the
company
Lead Structuring
PP
Top Ranking Officer
Replaced
Market Research
PG
Negotiation
Financial Analysis
SS
Investment/Credit
Committee
Deal Source
YPC Com pany
Deal Co-Lead
Portfolio Com pany
Post-Investm ent Active Involvem ent in Com pany
Deal Lead
Pre-Investm ent Role
Discussion of
Post-Investm ent Role
PG - Audit/Compensation Committee
PP
PP
PP
PP-Internal lead on deal
PP
PG-Internal lead on deal
PP
PG
PP-Internal lead on deal
PG
PP
PG-Involved in due diligence and monitoring. Sourced
by former partner, Edw ard Carry.
PG
PP
PG
PG-Internal lead on deal
PG
PG - Internal lead on deal. Sourced by PP.
PG
PP
X
PG
PP
PG - Audit/Compensation Committee
PG - Audit/Compensation Committee
Pre-Investment Roles
Deal Lead
The “deal lead(s)” have responsibility for moving the investment
through the fund’s investment process from sourcing through close to
post-monitoring.
Deal Co-Lead
The “deal co-lead(s)” also have responsibility for moving the
investment through the fund’s investment process, but generally play
a more supportive role than the deal lead.
Deal Source
The “deal source(s)” can claim responsibility for bringing the
investment opportunity to the fund.
Financial Analysis
The principal(s) responsible for “Financial Analysis” may either have
conducted the analysis themselves or supervised the work of
subordinates/colleagues.
Market Research
The principal(s) responsible for “Market Research” may either have
conducted the analysis themselves or supervised the work of
subordinates/colleagues.
24 of 3332
Lead Structuring
The principal(s) responsible for leading the deal structuring prepared
the term sheet or represented the firm with co-investors as the term
sheet was prepared.
Lead Due Diligence
The principal(s) responsible for leading the due diligence process took
the lead in conducting reference calls, managing third-party accounting
and legal diligence contracts and synthesizing the results.
Made Recommendation to
Investment/Credit Committee
The principal(s) responsible for presenting the recommendation to the
investment/credit committee prepared the investment memo,
distributed it to colleagues and defended the recommendation at
committee.
Investment Committee
Investment Committee members are identified in the fund’s legal
agreements as having the authority to vote on the purchase or sale of
investment securities. For non-fund track records, investment
committee members are those who individually or collectively have
responsibility for the final approval of transactions.
Negotiation
The principal(s) responsible for negotiating the transaction take the
lead in negotiating the final terms of the transaction with
counterparties.
Discussion of Pre-Investment
Role
Add any important details about each principal’s pre-investment role.
Do not simply restate what is already indicated. If no details are
relevant, leave blank.
Post-Investment Roles:
Top Ranking Officer
Added/Replaced
Enter an ‘X’ if, during the fund’s tenure as an investor, the top-level
management team was expanded to include a new position/individual
OR if a top ranking officer at the company was replaced.
Officer of the Company
Enter the initials of any principal(s) who took a position as an officer of
the company. If no one, leave blank.
Board of Directors
Enter the initials of any principal(s) who served as a member of the
company’s board of directors. If no one, leave blank.
Board Observer
Enter the initials of any principal(s) who served as non-voting board
observers. If no one, leave blank.
Exit Process
Enter the initials of any principal(s) who played a significant role in
facilitating an exit from this company for investors. Leave blank if
involvement was minimal or if the investment remains unrealized.
Discussion of Post-Investment
Role
Add any important details about each principal’s post-investment role.
Do not simply restate what is already indicated. If no details are
relevant, leave blank.
25 of 3332
E1-H. Portfolio Cash Flows
SBA analysts use worksheet ‘E1-H. Portfolio Cash Flows’ to assess the performance of your portfolio on a
security-by-security basis. To complete E1-H. Portfolio Cash Flows, please follow the steps outlined
below:
1. Verify Prior Entries: To avoid errors and
frustration, please ensure that you have
properly completed all prior worksheets
contained in Exhibit E1. Verify that all of
the portfolio companies and investment
securities appear in the top rows of the
worksheet E1-H. This data is prepopulated from the entries you made in
prior worksheets.
2. Enter Valuation Date: Select cell B111 and enter the last day of the Valuation Quarter using the
format MM/DD/YYYY (Q1: 03/31/YYYY, Q2: 06/30/YYYY, Q3: 09/30/YYYY, Q4: 12/31/YYYY).
The Valuation Quarter is the last day of
the quarter in which the unrealized
positions in your track record were
valued. As noted in the “eligibility”
instructions on page 12, if you departed
the firm that managed the portfolio
being presented, the Valuation Quarter
you select should be no later than the
date you departed the firm.
Once you enter the Valuation Quarter in cell B111, all prior dates in column B will adjust
automatically.
3. Enter Cash Flows: Each investment security you identified in E1-C is included in this worksheet and
has a column dedicated to its quarterly cash flow schedule. Based on the investment and exit dates
you provided in E1-C., the cells corresponding with each investment’s hold period should be
highlighted in yellow.
Beginning with the quarter in which the security was initially issued, enter the net quarterly cash
flows associated with the investment security. Net cash outflows from the fund should be entered
as negative numbers and cash inflows to the fund should be entered as positive numbers. You
should only include cash flows associated with the investment security itself. Consulting fees,
investment banking fees, board fees or any other service fees charged to portfolio companies should
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not be included in these schedules (the next worksheet, E1-I,will request this information
separately).
For example, if a $5,000,000 security was purchased from Portfolio Company A on January 5th of
2005 and interest payments of $150,000 were received on March 5th, 2005 and June 5th, 2005 your
entry would be as follows:
Portfolio Company A
3/31/2005
($4,850,000)
6/30/2005
$150,000
4. Enter Residual Values: Once all of the net cash flows have been recorded through the Valuation
Quarter, you should next enter the value of all unrealized positions. In row 111, the cells highlighted
in yellow will correspond to those investment securities you categorized as unrealized. Enter the full
“residual value” of each unrealized investment security as of the Valuation Quarter.
For debt securities structured with warrants, include the value of any outstanding warrants in the
full “residual value” entered in row 111, but also indicate the value of the warrants alone in row
113.
5. Review: Verify the data presented below the cash flow schedules for each security, as well as the
fund level performance information presented in the bottom right corner of the worksheet. Ensure
these numbers are consistent with your own estimates. If there are inconsistencies, consider the
following:
-
The IRR calculation used in this worksheet annualizes the results of Excel’s IRR function. It
does not use Excel’s XIRR function, which employs the exact dates on which each cash flow
occurred. The difference in method may be a source of discrepancy.
-
The “Multiple of Invested Capital” is a cash-on-cash calculation that uses the “Investment
Amount” you entered in Exhibit E1-C. as the denominator. If you failed to enter the exact,
cumulative amount invested in each security type, the multiple may not be accurate.
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For other problems, you are encouraged to contact SBA for guidance. Reach out to your Analyst or
send an e-mail with your name, the name of your firm and your phone number to [email protected].
E1-I. Fund Cash Flows
Unlike E1-H, which is concerned exclusively with “gross” portfolio performance, E1-I deals primarily with
the cash flows occurring between the fund, the limited partners, the general partner, the management
company and any fund-level debt providers.
The worksheet is structured to account for the movement of cash to and from the fund:
-
Fund Inflows, such as LP capital contributions, borrowing, or fees earned from portfolio
companies are recorded as positive cash flows. This is cash deposited into the fund.
-
Fund Outflows, such as interest payments on debt, distributions to LPs or carried interest paid to
the GP are recorded as negative cash flows. This is cash withdrawn from the fund.
The worksheet reconciles to a quarterly cash balance and should account for all sources and uses of cash
during the quarter. The table that follows outlines the quarterly reconciliation process with references
to the columns of the worksheet in which each item is recorded:
Prior Quarter Ending Cash Balance
Column AB
+/-
Net Portfolio Cash Flow
Column C
+
Non-Portfolio Income Flowing to the Fund
Fees (Consulting, Investment Banking, Other)
Other Income (Explain – A)
-
Non-Portfolio Expenses Flowing from the Fund
Management Fees
Interest Expense – SBA Leverage
Interest Expense – All Other Lenders
Carried Interest
Other Expenses (Explain - B)
Column I through M
+
Contributions to the Fund
LP Capital Draws
Leverage Drawn – SBA
Leverage Drawn – All Other Lenders
Other Capital Contributions (Explain - C)
Column P through S
-
Distributions made by the Fund
Distributions to LPs
Principal Repayments – SBA
Principal Repayments – All Other Lenders
Column V through Y
Column E & F
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Other (Explain - D)
=
Ending Quarterly Cash Balance
Column AB
Completing the Worksheet:
1. Starting Cash Balance: To complete E1-H, begin by entering
the Starting Cash Balance in cell C5. This is the amount of
cash on the fund’s balance sheet prior to any other activity
reported in the Exhibit.
If you are unsure of the precise starting cash balance, you
may adjust this figure at the end of the process to ensure the Final Cash Balance reconciles to zero
(see Step 5).
2. Non-Portfolio Income Flowing to the Fund (+): The first column in the worksheet, Column C, is
automatically populated with the Net Portfolio Cash Flows you entered in E1-H. In Column E and F,
you should account for any income earned that is unrelated to the investments of the fund. Under
Fees you should input all fee income earned during the quarter.
If the fund earned any other receipts, please enter those in the column labeled Other Receipts
(Explain – A). Next, scroll down to row 118 and describe the source of this income in the box
labeled “Explain – A.”
3. Non-Portfolio Expenses Flowing from the Fund (-): In the next section, you should account for any
fund expenses incurred during each quarter. This includes management fees paid to the GP or
management company, interest expense paid on SBA-guaranteed leverage, interest expense paid on
other debt, carried interest paid to the GP or “Other Expenses” that do not fit within one of these
categories.
If the fund had “Other Expenses,” please scroll down to row 119 and describe the nature of these
expenses in the box labeled “Explain – B.”
4. Contributions to the Fund (+): Use the next section of columns to account for cash inflows from the
fund’s capital providers. For each quarter enter the amount of LP capital drawn, SBA-guaranteed
leverage drawn, leverage drawn from other lenders and any capital drawn from other capital
providers.
If the fund had “Other Capital Drawn,” please scroll down to row 120 and describe the nature of
these capital draws in the box labeled “Explain – C.”
5. Distributions from the Fund (-): In Columns V through Y, account for the capital distributed from the
fund back to the capital providers. This includes distributions to LPs, principal repayments of SBA29 of 3332
guaranteed leverage, principal repayments to other lenders and “Other” distributions to capital
providers.
If the fund distributed capital to “Other” capital providers, please scroll down to row 121 and
describe these capital providers and the nature of the distribution in the box labeled “Explain – D.”
6. Reconciliation: The final step in completing the worksheet requires entering the “Final Fund Cash
Flows” in Rows 110 and 111. This section asks you to account for the final cash flows that would
occur if the fund were fully liquidated and closed-out as of the Valuation Quarter:
-
The liquidation process begins with the “residual value” of the unrealized positions in
the portfolio. This value is presented in cell C111. For the purposes of this final
calculation, the worksheet assumes the full conversion of the residual value to cash.
-
Moving left-to-right from cell C111, the worksheet will add all the outstanding
“Receivables” you enter in the next two yellow-cells. The worksheet will assume these
receivables are fully converted to cash.
-
The worksheet will then subtract all the fund’s outstanding “Payables,” such as
outstanding management fees, interest payments due, and importantly, the carry
payment due to the GP upon the liquidation of the portfolio. The worksheet assumes
these payables are fully paid-out in cash.
-
In the next several cells, the worksheet has automatically calculated the total capital
drawn from LPs and leverage providers. You do not need to make any additional entries
in these cells.
-
The final step in the reconciliation process is to enter the “Final Distribution to LPs” and
the “Final Repayment of Leverage.” This represents the total amount of cash that would
be distributed to LPs and lenders upon liquidation of the portfolio.
Please note that the “Final Repayment of Leverage” cells have been automatically
calculated based on your entries in prior cells. However, these cells are not locked and
you are free to adjust these numbers as needed.
-
Based on your entries in row 111 the “Final Cash Balance” reported in cell AB111 should
reconcile to zero, indicating that all remaining value in the fund has been fully converted
to cash and distributed to the various interested parties.
Please be aware that the “Starting Cash Balance” you select at the beginning of the
process will remain part of the cash balance unless it is distributed or expensed. If you
are unsure of the precise “Starting Cash Balance” you may use this cell as a “plug,”
adjusting the amount to ensure the Final Cash Balance reconciles to zero.
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Guidance for Non-Traditional Fund Track Records:
Exhibit E1 is designed for the presentation of traditional private equity fund track records, but we
recognize that not all applicants will have investment experience that fits this profile. If your track
record involves the partial presentation of a larger portfolio or is a “synthesis” of investments made
outside a fund structure, you may face difficulties in completing the entire exhibit. Please follow the
guidance below to accurately present your performance results.
-
E1-A: For the presentation of synthesis track records, you may omit information that does not
apply such as vintage year, mgmt. fee, carry percentage or LP information. However, please use
the notes section to explain any omissions.
For the presentation of partial fund portfolios, please enter the information for the entire fund,
including the full private capital commitment to the fund, the total amount of leverage
committed, the management fee, carry percentage and other requested information. Use the
notes section to indicate that the track record is a partial portfolio.
-
E1-B through E1-H: These worksheets should not pose any difficulties. Complete as instructed.
-
E1-I: This worksheet is designed to track the cash flows that occur between an investment fund
and limited partners, the general partner and the other entities that comprise the traditional
limited partnership structure. Applicants with non-traditional track records may find this
worksheet particularly challenging. Please follow the guidance below:
o
Principals presenting “synthesis” portfolios or non-fund track records, such as bank loan
portfolios, do NOT need to complete E1-I.
o
Depending on the availability of data, applicants with partial fund track records should
only include those cash flows associated with the transactions detailed in E1-H. For
instance, only the LP capital draws or leverage draws used to finance the applicant’s
investments should be provided. Similarly, you may adjust any “overhead” expenses,
such as management fees, on a pro-rata basis. Please use the “General Notes” box in
Row 118 to explain your approach.
o
Those applicants with limited access to fund level data should nonetheless provide any
and all information they do have available. Even though a partially-completed
worksheet will not reconcile, each individual cash flow schedule (i.e. LP Capital Draws,
Management Fees, Distributions to LPs, etc…) has analytical value.
Form 2182: Exhibit E2. Track Record
Use Exhibit E2 for all track record information that is not eligible for inclusion in Exhibit E1. All E2eligible track records should be included in one Excel file per principal. Duplicate the worksheets as
necessary to present all of your experience.
Before entering data, please rename the
worksheet tabs (located at the bottom of the
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screen) from “Portfolio #” to the name of each track record.
Small Business Investors, LP
Principals (Initials):
Total Fund Size:
Valuation Date:
Teddy Rooselvelt (TR), John Adams (JA)
$24.0 M
6/30/2012
Name of Company
Washington Widgets
Lincoln Group
Jefferson Trucks
Kennedy Textiles
VanBuren Windows
Cleveland Communications
Wilson Components
Industry
Manufacturing
Business Services
Trucking
Textiles
Manufacturing
Communications
Electronics
Stage
Later Stage
Change of Control
Growth Stage
Later Stage
Later Stage
Later Stage
Later Stage
Security Type
Sub-Debt
Sub-Debt
Equity
Sub-Debt
Second Lien
Sub-Debt w/Warrants
Senior Debt
Date of
Inv.
Dec-05
Mar-06
Apr-06
Jun-06
Feb-07
Aug-07
Aug-07
(Note: If you need to insert additional rows, please do so above the last line)
Date of
Exit
Jun-09
Oct-10
Jun-07
TOTAL:
Invested
Capital
$2.5 M
$1.8 M
$5.3 M
$1.5 M
$2.4 M
$3.1 M
$2.0 M
Realized
Value
$3.1 M
$2.4 M
$3.5 M
$0.8 M
$1.0 M
$2.1 M
$1.8 M
Unrealized
Value
$0.0 M
$0.0 M
$0.0 M
$2.0 M
$1.5 M
$1.8 M
$0.5 M
Cash
Multiple
1.24x
1.33x
0.66x
1.87x
1.04x
1.26x
1.15x
$18.6 M
$14.7 M
$5.8 M
1.10x
IRR
15.4%
14.2%
(15.0%)
21.0%
8.0%
16.0%
6.0%
Inv/Credit Committee
(Initials)
TR, JA
TR, JA
TR, JA
TR, JA
TR, JA
TR, JA
TR, JA
Led/Co-led Deal
(Initials)
TR
JA
JA
TR
TR
7.5% <-- Gross IRR
2.5% <-- Net IRR (Gross IRR net of fees)
Description
Please describe the investment experience presented above and why it is relevant to the SBIC proposal
Small Business Investors, LP made lower middle market investments in the same industries and company stages as
those to be targeted by the SBIC.
Please describe your role in mak ing the investments described above.
This group of transactions reflects deals on which Teddy Roosevelt and John Adams worked as Associates at Small
Business Investors, LP. They conducted due diligence, assisted with the structuring of the investments, attended
negotiations and assisted with the presentation of the transactions to the Small Business Investors investment
committee. However, they did not lead these transactions or serve as members of the investment committee.
Footnotes:
Include any footnotes below.
[FUND Name #]
Enter the name of the portfolio being presented. This name should be
the same as the one used to name the worksheet tab.
Principals (Initials):
Enter the names of all the principals included in the SBIC application
who are claiming involvement in this track record. Unlike Exhibit E1,
you are not required to provide the names of former colleagues
involved in the track record.
Immediately following the name of the principal, please provide a twoletter initial. For example, Jane Smith should be entered as: Jane Smith
(JS)
Total Fund Size:
Provide the full dollar amount of capital committed to or invested in
this portfolio.
Valuation Date:
If the track record contains any unrealized positions, please ensure you
enter the date on which the positions have been valued.
Name of Company:
Enter the name of the portfolio company.
Industry:
Enter the name of the industry sector in which the company operates.
Stage:
Enter the stage of the company at the time of the initial investment.
32 of 3332
Security Type:
Describe the type of security used to make the investment. You are
NOT required to use a separate row for each type of security used to
invest in a single portfolio company. You may use this space to
describe all securities used.
For example, a debt and equity investment in a single portfolio
company could be described here as: “subordinated debt w/warrants;
preferred equity”
Date of Inv.
Enter the date the investment was made.
Date of Exit.
IF APPLICABLE, enter the date when the investment was fully
exited/realized.
Invested Capital
Enter the full amount of capital invested using the investment security
or securities you have identified.
Realized Value
Enter the full amount of cash proceeds received from inception to the
valuation date or exit, which ever applies.
Unrealized Value
Enter the full amount of residual value remaining in the investment.
This should include any accrued dividends, PIK interest, outstanding
principal or the value of any equity positions.
Cash Multiple
Enter the cash-on-cash multiple for the investment, calculated as
(Realized Value + Unrealized Value)/Invested Capital.
IRR
Enter the annualized IRR for the investment.
Investment Committee
(Initials)
Enter the initials of those principals that were members of the
investment, credit or other authorizing committee that approved these
deals. If no one, leave blank.
Led/Co-led Deal (Initials)
Enter the initials of those principals that led or co-led the transaction
on behalf of the firm. If no one, leave blank.
<-- Gross IRR
Enter the portfolio IRR before any management fees, carry or other
similar charges.
<-- Net IRR (Gross IRR net of
fees)
Enter the Net IRR of the portfolio, which should be equal to the Gross
IRR after any management fees, carry or other similar charges.
Descriptions
Follow the instructions provided.
Footnotes
Include any footnotes necessary for SBA to understand the data being
presented.
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| File Type | application/pdf |
| Author | JFinkel |
| File Modified | 2016-12-21 |
| File Created | 2016-12-21 |