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Car Wash Partners

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Car Wash Partners

Type of Deal (the method for making money) “Roll up” vs “Start up” Differences and similarities (“low risk, high return”?) Nature of risk in roll ups (operational scale/execution capacity) Build company quickly by leveraged acquisitions (at low P/EBITDAs) Economies of scale/cost reductions Go public at higher multiple Car Wash Industry Suitable for Roll up? Low risk High margins, “barriers to entry”, simplicity Highly fragmented, unorganized “Leveragable”? “Improvable”? (by applying advanced management techniques) “Upgradable” into more (related) services “First mover” advantages? Does value of improvements affect consumer? Projections Systematic? Credible? How do you know? Sensitivities? What happened to the gross margins? Willing to use these projections for valuation?

Car Wash Partners

Management Tom Curtis – successful entrepreneur from the past. Credible? Curtis capable of leading major change in this industry? No further management team as yet Investors Cabot Brown (Brown & McMillan) Start up-VCs? First deal Who are their investors? Bill Burgin (Bessemer Partners) Experienced VC Investing with a friend? Does the investment fit their needs?

Car Wash Partners

Valuation Who puts up the money? (BMC, Bessemer; total of $6.6) How much is Curtis’ contribution worth at this stage? The “pre-money” value ($1.1; “post-money” value ($7.7, see Exh 9). VCs had 86% of capital) P/EBITDA 1997 (Exh 6); assuming 50% leverage P = $7,700 EDITDA = $629 Ratio = 12.2x In 2001: EBITDA = $50,192 (Increase due to 45x growth in revenues; 1.8x growth in CF margins) ROI = $18.8/$142 = 13.2% (after $135 of new equity financing) In 2001, at Exit via IPO at EBITDA x 12 = $600 million X 15% = 90 4yr ROI = EBITDA x 10 = 500 75 P/E of 25 = 470 70 P/E of 15 = 282 42

85% 77 74 53%

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