Outsourced Private Equity

Search Fund Historical Performance1 Search Fund Overview Principia Capital (Principia) is a search fund formed by Bryan Luce to identify, acquire and operate an existing private company with initial enterprise value between $5 and $20 million. The purpose of the search fund is to provide investors with the opportunity to participate in the staged financing of the search for and acquisition of an existing private company. Search Fund Historical Performance1 Search Fund Facts ROI IRR 10.0x 34.9% 2.3x 23.4% Asset class since 1984 Entrepreneurship through acquisition core MBA curriculum Rice, Stanford, Harvard All search funds Removing five best performing funds* *134 eligible funds - fund raised that acquired a company or shut-down fund; 117 included in calculation (8 removed as operating less than one year, 9 removed due to insufficient data); ROI & IRR are aggregate pre-tax

Quality Evaluation Dimensions Search Criteria Acquisition screening criteria: Sound reasoning for sale (management transition, absentee owner, retirement) Privately-held and based in the U.S. Three year history of profitable operations Revenue between $5MM and $50 MM Minimum EBITDA margin of 15% Minimum annual EBITDA of $1.5 MM Likelihood for geographical, product/service expansion (including adjacencies) Recurring revenue critical search criteria component Quality Evaluation Dimensions People Seller(s) Middle management Employee base Customer, suppliers Industry Size, growth and stability of primary demand Fragmented Threat of external shocks Cash Flows Recurring High margin, growing Diverse (customer, products, markets) Low seasonal, cyclical risk Market Position Defensibility High switching costs Competitive advantage Operations Simple, transferrable Returns on invested capital Improvable Liquidity Options Ability to generate 35% compound annual return on investor capital

Search Stages & Timeline Stage Time Stage 1: Raise the Search Fund 2 – 4 months Stage 2: Source & Evaluate Opportunities 1 – 24 months Stage 3: Finance & Close a Transaction 2 – 6 months Stage 4: Operate the Business 4 to 6 years Stage 5: Exit the Business 4 – 6 months On average, transactions are completed within 19 months

LP Operations Update

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