1. Grabbing Your Share of the Private Equity Bonanza © 2008 LG Management Corporation

2. April 24, 20082008 CEBI Executive Summit 2 Harry D. Loyle, CFE 7086 Corporate Way Dayton, OH 45459-4294 Phone: 937-291-1900 ext. 255 Email: hloyle@gmail.com “Empowering the American Dream” Current Portfolio Includes...

3.  Venture Capital  Investment in a new or developing company  Buy-out  Acquisition usually with control  Special Situation  Unique opportunity... distressed, macro change  Merchant Banking April 24, 20082008 CEBI Executive Summit 3... a broad term that encompasses a range of strategies for investing in companies whose stock is not traded on public stock exchanges.

4.  Deal Flow Approaching $200B per QT  Appearance of Higher Transaction Values  Limited Transparency and Public Information  Tax Treatment: Debt – Capital Gains – Public  Concern with Wealth Distribution Disparity April 24, 20082008 CEBI Executive Summit 4

5.  Exit Strategies  Partial Sale, Complete Sale, Recapitalization  Carried Interest  Percentage of transaction profits (80/20 split)  Management Fees Charged to...  Minority Investors (typically 1.5% to 2.0%)  Portfolio Company (shared with Minority Investors)  Transaction Fees April 24, 20082008 CEBI Executive Summit 5

6. VALUATION - QUANTITATIVEEVALUATION - QUALITATIVE  Book Value  Liquidation or Net Asset Value  Comparable Companies Earnings Multiple  Discounted Cash Flow  Precedent Transactions or Replacement Value  People VALUES  “Warren Buffet” Business Model Understanding  Professional Management  Clean, Straightforward Structure and Governance  Other Investors  VISION and Business Opportunities April 24, 20082008 CEBI Executive Summit 6

7. Company Operating Performance ReinvestmentPersonal Benefit  Net Profit (NOI)  EBITDA: Earnings Before Interest Taxes Depreciation and Amortization  Post-Debt Cash Flow  W-2 Income  Standard of Living (SOL)  Owner Distributions or Withdrawals  ∆ Equity: Change in Equity Over Time April 24, 20082008 CEBI Executive Summit 7

8.  CASH for Equity Sale (±80%)  Opportunity for “Second Bite of the Apple” (±20%)  Potential for Continued Employment  Potential Equity for Management Team April 24, 20082008 CEBI Executive Summit 8

9.  Decision on Consulting Representation  Prepare Confidential Investment Memorandum  Research, Select and Submit to PE Firm Options  Receive Preliminary Indication of Interest  Meet and Review Detailed Information  Receive Letter of Intent (LOI: price, structure, etc.)  Due Diligence: Legal, Accounting, IT, Customers, etc.  Review and Negotiate Definitive Acquisition Agreement (APA)  PE to Arrange Debt Financing (Your Obligations?)  Completion of Due Diligence and Credit Agreement(s)  Negotiate Any Management Employment Agreements  Exercise Definitive Agreements  Settlement... Back to Operations! April 24, 20082008 CEBI Executive Summit 9

10.  Clear Exit Goal: Buy – Fix – Grow – Sell  With a 3 to 5 Year Horizon Driving Change is Paramount  EVERYONE Knows You’re On a Sprint  Compensation is Clearly Tied to the Goal  Often Managers have “Skin in the Game”  Back a Superb Management Team and Liberate Them  The Board is “On Board” and Focused and Involved  Private versus Public Reduces QT Whipsaws and the Reporting and Stock Market Attention Required  The Objective is Clear... CASH April 24, 20082008 CEBI Executive Summit 10

11. POTENTIAL ADVANTAGESPOTENTIAL DISADVANTAGES  CASH  Marketplace Valuations  “Professional” Buyers  Potential for Continued Management Involvement  Management Team Equity  Additional Resources: Money, People, Knowledge, etc.  Additional Opportunity to Sell  It’s NOT your company anymore... “Yes Boss”  “Professional” Buyers  Extensive Due Diligence  Financing Contingency  Management Accountability  Relatively Short Term Focus  Transactional Focus April 24, 20082008 CEBI Executive Summit 11

12.  People VALUES  Industry Experience  Situational Experience  Typical Size of Portfolio Companies  Management Style: Active versus Passive  Planned or Discussed Exit Strategy  Capital Structure: Debt versus Equity %  Willingness for Additional Cash Injection April 24, 20082008 CEBI Executive Summit 12

13.  1. Lending / Financial Investments  Creative Non-bank Lending with Security  Interest Coupled with Participation and/or Equity Kicker  2. Operating Partnerships (OP)  Marriage of Strengths... Management & Operations  50% Financial and 50% Equity Investment  3. Acquisitions / Active Management  Active OR Competent in Daily Management  100% Financial and Minimum of 80% Equity  Plus... Company Consulting and Personal Coaching April 24, 20082008 CEBI Executive Summit 13 Portfolio Company Transaction Options:

14.  Make the PEOPLE Decisions First  Portfolio Composition and Balancing  ROI: Internal Rate of Return Objective of 25% to 35%  Transaction Exposure of 5% to 10% of Portfolio  Bias Toward Operating Partnerships  Company and Concept Search Criteria  Existing Management and Structure Considerations  Understandable Product and Business Model  Our Ability to Add Value through the Transaction  Management or Operations Upside (with Discount)  Financial Turnaround  Relationship Challenges: Vendors, Franchisees, Associates, etc.  Organizational Improvements: HR, etc.  Synergy with Existing Companies or Brands  Overhead Reduction  Real Estate  Complementary Business: Consumer or Company / Brand April 24, 20082008 CEBI Executive Summit 14

15. 363 Bankruptcy Filing PUBLIC to PRIVATE Moto Photo, Inc. (NASDAQ: MOTO) April 24, 20082008 CEBI Executive Summit 15 In 2001 Moto Photo was Hit by “The Perfect Storm”... 1. Photography Industry Revolution 2. Macro Economics 3. Cumulative Poor Company Financials

16.  General Vendors  Critical Vendors  Kodak  Agfa & Trebla  Board of Directors  Senior Management  Company Associates  Franchisees  Area Developers  Master Licensee (CAN)  Building Partnership  FUJI Photo Film USA  Bank(s)  Retail Consumers  Trade Competition  Retail Landlords  Personal  Family  Business Partners  Post-Transaction  City and County  Business Community April 24, 20082008 CEBI Executive Summit 16

17.  Equity (LG Management Corporation at 75%)  Area Developer Participation Equity (6 entities at 25%)  Personal Loan to Facilitate an AD Participant  Critical A/P Vendor into Debt Assumption  KODAK – Discounted for Non-secured Creditors  Agfa & Trebla – Face Value  Mezzanine Financing (LG Management Corporation)  Fifth Third Bank Financing  Working Capital – 2 Different Term(s) Loans  Building Mortgage Financing  Montgomery County ED/GE Grant  Vendor Trade Payables April 24, 20082008 CEBI Executive Summit 17

18. April 24, 20082008 CEBI Executive Summit 18 The good news is that you do not have to wait for a PE firm to swoop into your organization. By using private-equity strategies you can improve your results and become more successful, starting right now! Show Me The Money!