Tech M

1
Tech MA TodayWhat Dealsters Want

• February 12, 2004
• Patrick J. Spain

2
Who We Are Why Were Here

• Patrick Spain CEO of HighBeam Research, LLC an
  online research engine. Sold Hoovers, Inc.
  Bought assets to create HighBeam
• Randy Patterson President of Turnaround
  Crisis Management, Inc. Expert seller of
  under-performing companies or their divisions
• Don Gibson Director of Operational Integration
  for SSA Global, purchaser of ERP/SCM software
  companies to accelerate growth, consolidate
  fragmented software segments
• John Raveret VP, Corporate Development,
  Cognizant Technology Solutions. Experienced in
  closing purchases of targeted small to mid-size
  technical services vendors

3
Selling Hoovers

• Motivation
• Business at inflection point growth had slowed
  we were profitable
• Unsolicited offer came in
• In a public environment mere fact of an offer
  triggers requirement to consider selling
• Liquidity/diversification of original pre-public
  shareholders
• Process
• In a public environment there is only one
  legitimate reason to sell or, for that matter to
  do anything if it maximizes shareholder value
• Hired a banker to help us calculate value to
  solicit other offers
• Gave qualified candidates a look see and took
  offers
• None met our valuation requirements
• After rejecting all offers, one party raised its
  offer, repeatedly, to hit the number that the
  bankers and board decided was fair
• Other Factors
• Emotion is an underrated ingredient
• What management wanted could do going forward
• Internal MA skills less important as bankers can
  really do a lot

4
Buying HighBeam Components

• Motivation
• Get somewhere faster than I could build it
• Access customers, technology/product and/or
  people immediately to see if my idea would work
• It was a good deal better than alternatives
• Process
• It was simple to do, even though I was buying
  from a public co.
• One to one negotiations made it straightforward
• Bankers played a background role establishing
  valuation, suggesting structure keeping parties
  on track
• Other Factors
• Due diligence regarding technology was the number
  one issue we used outside experts
• Had no money when we started the process. Had to
  get the assets under contract to raise the cash.

5
The Results

• Hoovers, with 32 mil. of sales, 1.1 mil of TTM
  earnings and 40 mil. of cash, sold for 119 mil.
  to DB in March 2003
• HighBeam acquired technology customer assets,
  with 4 mil. of revenue and positive cash flow,
  for 1.5 mil. in August of 2002

6
Finis

• Patrick Spain, Chairman CEO
  pjspain_at_highbeam.com

HighBeam Research, LLC 360 N. Michigan Ave.
Suite 1320 Chicago, IL 60601 P
312-782-3900 www.highbeam.com