E B I T D A I m p r o v e m e n t

M e t h o d o l o g y

1

V a l u e o f S t r a t e g i c T r a n s f o r m a t i o n

Minimal improvements in a company’s margin and or marginal reductions in its SG&A

spend can correlate to an increased value of a specific portfolio company. Making

those improvement across a portfolio can have a profound, transformational impact

on an equity firms enhanced enterprise value. CohnReznick’s CFO Advisory and

Business Transformation Practice works with equity firms and their portfolio companies

to identify, prioritize, and deploy strategic programs designed at maximizing ROI and

improving enterprise value.

Company 1 Company 2 Company 3

EBITDA $10M $15M $20M

Margin Improvement $.25 M $.6M $2.5M

SG&A Reduction $1M $1.4M $.75M

Industry Multiplier 7 5 9

Additional Value $8.75M $10M $29.25M

$48M

Equity

Firm’s

Enhanced

Enterprise

Value

2

E v o l u t i o n t o O p e r a t i o n a l E x c e l l e n c e

AD HOC / REACTIVE IMPROVEMENT Primary Value Proposition: Focused improvement Effort Narrow improvement is driven by the heroic efforts of relatively few individuals in reaction to business changing business need.

Challenge: Establishing repeatable and planned efforts

Advisory Focus: Tool development, process facilitation, domain expertise consultation,

TRANSFORMATION PROGRAM STANDARDIZATION Primary Value Proposition: Consistent and Standardized Business Transformation Initiatives are defined and organized using consistent methodologies.

Challenge: Transformation not fully embedded across enterprise

Advisory Focus: Process Design Implementation, Requirements Definition, Best Practice and Operational Procedure Creation

TRANSFORMATION AS OPERATIONAL ASSET Primary Value Proposition: Measuring and Communicating Impact Integrated and managed transformation processes recognized as strategic assets to gain competitive advantage.

Challenge: Monitoring improvement Opportunities and Impact Capture

Advisory Focus: Establishing measurement and management frameworks, analytics/dashboard development

TRANSFORMATION AS STRATEGIC VALUE DRIVER Primary Value Proposition: Transformation Driven Business Value Creation Sustained and optimized operational excellence programs that are embraced and fully integrated into the organizational culture.

Challenge: Enterprise Leadership and performance management

Advisory Focus: Center of Excellence Creation, Cultural Identity Development

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Assessment

S t r a t e g i c T r a n s f o r m a t i o n a n d E B I T D A

I m p r o v e m e n t T i m e l i n e

Discovery Planning Execution /

Implementation

Week 1-2 Week 2-4 Week 5-6 Throughout the Implementation

• Deep dive data

analysis

• Order to cash boot

camp

• Procure to pay boot

camp

• Record to report

boot camp

• Financial Planning

and Analysis boot

camp

• Financial Data

analysis

• High level data

analysis

• Peer benchmarking

• Executive boot camp

and key interviews

• Executive read out

• Transformation and

EDITDA improvement

roadmap

• Executive and

Stakeholder adoption

• Revenue

Enhancement

initiatives

• Operating Efficiency

initiatives

• Cost (SG&A)

Reduction initiatives

• Program

Management

4

E B I T D A I m p r o v e m e n t O p p o r t u n i t i e s

Revenue Enhancement Operating Efficiencies Cost (SG&A) Reduction

• CRM

• Omni-channel

• Detailed process and policy

design

• Applicable system selections

and corresponding

technology deployment

• Process measurement and

reporting program

• Financial Analysis & Planning

deployment

• Integrated business planning

deployment

• Insurable risk realignment

• Tax outsourcing

• Telecom spend

• Benefits program realignment

• HRIS and Payroll transformation

• Internal audit outsourcing

Program Management

Collaboration, Innovation, Domain Expertise

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C F O A d v i s o r y & B u s i n e s s

T r a n s f o r m a t i o n S e r v i c e s In today’s slow-growth economy, CFOs are challenged to simultaneously drive corporate performance

management, optimize the financial function, and identify and finance strategic growth initiatives.

CohnReznick’s CFO Advisory and Business Transformation Services Practice professionals, some former CFOs

themselves, provide solutions to help CFOs address their business challenges at every stage of financial

transformation.

S t r a t e g i c T r a n s f o r m a t i o n

7

E n t e r p r i s e T r a n s f o r m a t i o n

I m p r o v e m e n t M e t h o d o l o g y

8

Ta r g e t e d Va l u e S t r e a m

T r a n s f o r m a t i o n M e t h o d o l o g y

9

D e t a i l e d D a t a A n a l y s i s

• Historical Financial statement review for review for trends and key EBITDA

improvement opportunities to identify high impact line items

• Complete review of company's exposures and insurance policies as well as

a recommendation of needed changes in coverage and potential

opportunities for cost savings

• A strategic baseline inventory and analysis of your current

telecommunications spend, in every location, as well as developing an

understanding of your future needs

• Leverage research and benchmarking to provide the strategic context to

gauge overall benefit program efficiency, cost and value, as well as

competitive positioning.

• Review operational performance and evaluate against peers to identify gaps

in operational efficiency and effectiveness

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P e e r B e n c h M a r k i n g

Leveraging our relationship with APQC and access to the different benchmarking tools

(specifically the Rapid Performance Assessment tool), we can quickly provide clients with

validated data to identify performance gaps. We can complete short, online assessments

on high-level key performance indicators (KPIs), and within a few business days receive

a summary report of the clients’ metrics with industry, revenue, and geographic

comparisons.

Rapid Performance Assessments can be performed for:

• Develop and Manage Products and Services

• Market and Sell Products and Services

• Deliver Products and Services

• Develop and Manage Human Capital

• Manage IT

• Manage Financial Resources

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Innovation labs help build an innovative business culture that’s fast and nimble,

seizing opportunities before the competition, to get ahead, and stay there. Key

attributes of an innovation lab include:

Developing fast and advanced solutions using accelerated approaches in a lab

environment can rapidly accelerate capabilities and innovation. It introduces new

ideas and skills, involves end users, showcases technology, and connects

to extended networks to drastically reduce time from idea to result.

Innovation Lab

Enables Transformation

• Speed: Accelerate the innovation process to get maximum

results in the least possible time.

• Creativity: Discover what the world’s best innovators and

companies do to come up with break-through ideas.

• Risk: Reduce innovation risk while increasing innovation

performance.

• Engagement: Achieve effective collaboration throughout

across the organization, and unleash the hidden great ideas

waiting in every corner.

• Leadership: Insights from breakthrough innovators and best

practice companies will accelerate the right choices and get

the entire organization on the move.

I n n o v a t i o n L a b a s a C o m p e t i t i v e

W e a p o n

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E x e c u t i v e B o o t C a m p

Executive stakeholder involvement is critical to the success

of any Strategic Transformation program. We will conduct an

executive level collaborative Process Discovery Boot Camp

with the Transformation Steering Committee to gain a top-

level, strategic view of the “as-is” values streams

• Global collaboration of critical key, executives

• Decomposing the organization into key value streams

• Mapping strategic enterprise objectives into tactical project

objectives

• Perform an exercise to rate, rank, and prioritize the tactical objectives into

manageable projects

• Voice of the customer analysis (leverage a SWOT analysis

template)

• Maturity model self assessments

• Problem statements and charter definition

• Data flow mapping exercise

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D i s c o v e r y a n d A s s e s s m e n t

For each and any of the value streams in scope, leveraging the Innovation Lab

we would conduct a series of collaborative Process Discovery Boot Camps with

the process owners, process participants, and other key stakeholders, including

staff from accounting and IT, to gain a top-level, strategic view of the "as-is" work

streams • Global collaboration of critical key, process owners

• Decomposition of the value stream into key milestones and

activities

• Build out and validation of the problem statements and

definition of key themes and findings that put pressure on

EBITDA growth

• Location and / or facility site visits and walkthroughs

• Global, collaborative review and discussion of key findings and

recommendations with key stakeholders

• Exercise to map recommendations and projects back to the

improvement opportunities and to assess impact and

complexity of improvement projects

• Process to prioritize improvement projects and define the

implementation plan based on ROI and greatest impact

INITIATIVE

Initiative Impact

Weighting

Analysis

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ER

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Metrics Weigh

t Rank

RxW

Rank

RxW

Rank RxW

Rank

RxW

Enterprise Risk 4 5 20 1 4 5 20 5 20

Reputation Risk 3 1 3 1 3 1 3 1 3

EBIDTA 2 1 2 5 10 1 2 3 6

Cash Flow 1 1 1 1 1 2 2 3 3

Total 26 18 27 32

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M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 M15 M16 M17 M18

Enhance setup of PayComm and Paychex (in

support of benefits reporting)

Establish Change Management Program

PayComm rollout to all clients

Implement analytics and reporting tool to

support reporting needs

Establish performance management program

Collaborative process redesign

Develop process, procedure, and policy

documentation

Technology assessment and selection -

transactional processing

Process implementation

Technology assessment and selection - workflow

and project management

Technology assessment and selection - budget

and forecasting

Transition to the fully outsourced model

Organization redesign and implementation

Execute training and communication plan

R o a d m a p D e v e l o p m e n t

Upon completion of the Assessment phase, we will work with the Transformation Steering

Committee to finalize the identification and prioritization of the opportunities for

improvement and formalize the Transformation Roadmap. Components would include:

• High, medium, and low ROI and impact improvements.

• Detailed process and policy design initiatives

• Opportunities to improve the use of existing technology platforms.

• Recommended use of additional technology platforms to improve performance.

• Organizational realignment and shared services opportunities

• Design of an analytics and reporting program