Selling a Student Loan Relief Business August 2016 125 South Wacker Drive | Suite 3020 | Chicago, IL 60606 | Phone 312.425.8160 | www.coladv.com

Colonnade is the leading financial advisor to the specialty finance sector

Our transaction experience gives our clients an advantage Frequent discussions with CEOs/owners of the leading specialty finance companies across multiple asset classes, including niche commercial finance and subprime consumer credit Active dialogue with potential investor/buyers Over 14 years spent cultivating relationships in the specialty finance sector Transaction experience and dialogue inform our views on strategic objectives, competitive dynamics and financial capabilities of the players Proprietary transaction database can be a powerful tool in negotiation and analysis “Lessons learned” in recent deals accrue to the benefit of our clients Parties on the other side of the table know Colonnade has an information advantage

Colonnade advised Endurance on its sale to TRP Capital Partners and management Endurance is vertically integrated, focused on direct-to- consumer marketing, administering and financing vehicle service contracts nationwide Rapid growth coupled with high cash flow and strong margins Only VSC company both A+ rated by the Better Business Bureau and certified by the Vehicle Protection Association Transportation Resource Partners Provides private capital to high quality, lower middle market businesses in the transportation sector Former portfolio companies include Penske Group. Roger Penske is a Managing Director of TRP Based in Bloomfield Hills, MI Transaction details Broad, highly competitive process with strong interest among private equity firms and strategic acquirers Significant management reinvestment Retained value of future trust reserve releases for sellers Strong valuation plus substantial earn-out

Colonnade is a leading advisor to major financial institutions, private equity firms and entrepreneurs

INDUSTRY OVERVIEW – An outsider’s perspective

Student Debt - the Big Picture $1.4 trillion of student debt outstanding, up from less than $500 billion in 2006 More than total auto loans outstanding More than total credit card debt outstanding Student debt is growing by over $2,500 PER SECOND according to the StartClass.com student debt “doomsday clock” Student debt per student averages $37,713

Student borrowers are struggling; student loan repayment plans are confusing About 43 million Americans (13.5% of the U.S. population) have student loans outstanding Student loans that are seriously delinquent (over 90 days past due) grew steadily from under 7% in 2006 to over 11% in 2016. ”Non-payment rate” on student loans is actually much higher since many loans are in deferment, grace periods or forbearance (those loans are not considered delinquent although no payments are being made) Large group of young borrowers are saddled with high student debt levels; this can limit the ability of this population to participate in other economic activities (such as buying a home, buying a car, starting families and saving for retirement). Student debt is a “hot button” national issue – witness the campaign of Bernie Sanders, the introduction of the Reducing Educational Debt Act early this year, the America’s College Promise Act in late 2015, etc. U.S. Department of Education offers multiple forbearance, deferment, loan consolidation, forgiveness, cancellation and discharge options with detailed application and qualification procedures – this can confuse and immobilize borrowers seeking assistance.

Components of a Quality Debt Relief Business Attractive Acquisition Audited financials Full disclosure “A-rating” from BBB Critical Mass Certified by ASFLR Track record of growth No major lawsuits Strong team Solid IT systems Proactive compliance

Valuation and sale process

Publicly-traded consumer debt collection firms provide an indication of equity market valuation Student loan relief businesses aren’t “perfectly comparable” to these companies, but theses firms have similar dynamics

Vehicle service contract direct-to-consumer marketers face dynamics similar to debt relief firms M&A ACTIVITY: VSC DIRECT-TO-CONSUMER MARKETERS EV/ EBITDA of 8.0x – 10.0x Date Target Buyer Comments Mar-16 ForeverCar Credit Union National Association (minority investment) ForeverCar is an online marketplace for VSCs. CUNA made a minority investment. Jun-15 Endurance Warranty Services Transportation Resource Partners Endurance is a vertically integrated VSC company. Endurance administers, finances and directly sells VSCs. Transportation Resource Partners purchased a majority position, with management reinvestment. Mar-15 Kingstar (Repair Defense Network) Flexpoint Ford (minority investment) RDN is a direct-to-consumer marketer of VSCs via direct mail. Flexpoint Ford made a $30 million minority investment in the company. 2012 CarChex Assurant (minority investment) CarChex is primarily a pre-purchase vehicle inspection company. CarChex added extended warranties in 2004.

Milestones in Process CLOSE Due Diligence, Write CIM Contact potential buyers Non-binding indications of interest Buyer meetings, data room, etc. Letter of intent Legal docs, quality of earnings, final DD CLOSE

Process and indicative timeline for typical transaction

Project Ironman case study: buyer funnel 133 Contacted 103 private equity firms and 30 strategic buyers 132 Distributed “blind” executive summary 75 Received executed NDAs from interested parties and distributed Confidential Information Memorandums 11 Received indications of interest 8 Granted access to data room and conducted management meetings 3 Received letters of intent 1 Selected winner; proceeded through detailed due diligence, documentation and closing

Our disciplined sale process drives price discovery, delivers superior terms, and minimizes transaction execution risk Case study: Sale of specialty finance company Colonnade’s process Winner Final bids (7) Indications of interest (19) 40% above unsolicited offers Unsolicited offers (4) Objective of an auction is to exploit inherent information asymmetry to drive the highest value and best terms n New Entrant u Competitor l Private Equity Firm 16 weeks