Gores Technology Group formed in 1987

1
Introduction

• Gores Technology Group formed in 1987
• founded software business in 1979
• sold business and began acquiring
  under-performing businesses
• Unique investment strategy and approach
• 15 year evolution from operators to buyout
  specialists
• talented finance professionals combined with
  experienced operators
• refined transaction negotiation and execution
  capabilities
• Significant personal capital commitment alongside
  limited partners
• highly disciplined approach
• conviction in investment strategy and business
  model
• alignment of interests with limited partners

2
Tech/Telecom Focus (contd)
Limited strategic and financial buyer competition
Competitive Landscape for Technology and Telecom
Deals
Mature Business
(Substantial Revenues)
Traditional Private Equity Firms
Significant Strategic Buyer Interest
Limited Buyer Interest
Stage of
Development
Venture Capital
(Limited Revenues)
Operating Performance
3
Track Record
Proven track record of superior returns and
capital preservation

• Realized 12 of 22 investments since 1995
• 145 IRR
• 6.1x multiple of invested capital
• average holding period of 23 months
• 21 of 22 investments have generated positive
  returns
• Investment philosophy geared towards downside
  protection and capital preservation

4
History of Gores Technology Group
Alec Gores sells EBS to CONTEL and forms Gores
Technology Group
Manac
CPT
2001
1978
1986
1988
1992
1993
1994
1995
1996
1997
1998
1999
2000
2002
Infinium? Financials
Alec Gores founds Executive Business Systems (EBS)
5
Investment Process
Deal Sourcing

• Business Development Group focused solely on new
  opportunities
• Extensive relationship network

Due Diligence Process

• Consistent, rigorous approach to investment
  selection
• Development of detailed pro forma operating plan

Transaction Negotiation Execution

• Creative approach to negotiating and structuring
  transactions
• Use of seller financing, asset-based lending,
  royalties, guarantees

Portfolio Company Management

• Hands-on approach to portfolio company
  management
• Operating group provides ongoing strategic
  guidance

Exit

• GTG employs multiple exit strategies, including
  sales, cash sweeps, recapitalizations and other
  creative strategies

6
Investment Strategy
Characteristics of target companies

• Defensible core business
• established customer base with substantial
  recurring revenues
• mature products and services with high switching
  costs
• Operationally challenged
• unfocused business strategies
• bloated expense structures
• deteriorating employee and customer relationships
• Under-utilized assets
• working capital
• real estate
• intellectual property

7
Case Study

• Company Description
• Developer and marketer of consumer software

• Investment Thesis
• Strong brands with leading market position
• 63 separate acquisitions had not been assimilated
• Detailed operating plan developed by GTG team
• integrate 63 previous acquisitions and realign
  organization into five business units
• redirect product development investments to
  profitable product lines
• streamline excess cost structure

• Background
• Mattel acquired TLC in May 1999 for 3.5 billion
• Highly problematic acquisition for Mattel
• Revenues and operating losses of 478 million and
  (365) million, respectively

• Transaction Outcome
• GTG completed necessary operating restructuring
• Positive operating profit generated within 75
  days
• GTG sold 5 business units separately for
  collective consideration of approximately 151
  million
• GTG, Mattel and Foothill Capital shared in sale
  proceeds

• GTG Acquisition
• GTG acquired The Learning Co. in October 2000
• No upfront consideration
• Mattel would share in up to 50 of sale proceeds
• GTG committed up to 80 million of capital to
  fund TLCs operating losses
• 5 million ultimately invested by GTG

8
Case Study

• Transaction Outcome
• Total value generated of approx. 227 million
• GTG recouped 40 million investment within five
  months
• sold 85 stake to GTCR for 155 million in June
  2002
• retained leasing business and significant future
  cash flow

• Company Description
• Provider of transaction systems for debt, credit,
  check and smart cards

301038LO_Investor Presentation.xlsVerifone
Operating Performane?Chart 2

• Background
• Hewlett-Packard acquired VeriFone in 1997 for
  approximately 1.3 billion
• In FY 2000, VeriFone generated revenues and
  operating losses of 355 and (101) million,
  respectively

Operating Profit

• GTG Acquisition
• GTG acquired VeriFone from HP in July 2001
• 50 million purchase price
• 40 million in cash
• 10 million in seller note

50
24.0
0
(mm)
(50)

• Investment Thesis
• Detailed operating plan developed by GTG team
• refocus VeriFone on core business
• streamline excess cost structure
• spin-out leasing business into separate entity

(100)
(101.0)
(150)
Pre-Acquisition
Post-Acquisition


9
Case Study
301038LO_Investor Presentation.xlsMicronPC
Operating Performance?Chart 2

• Company Description
• Markets personal computers and related accessories

• Transaction Outcome
• Implemented turnaround
• Positive operating profit generated within 4
  months
• GTG has received gt20 million in cash
  distributions
• through October 2002
• MicronPC remains a GTG portfolio company

• Background
• Subsidiary of Micron Electronics
• Micron aimed to divest or shut down its PC
  division as part of broader restructuring effort
• Revenues and operating losses of approximately
  1.0 billion and (109) million, respectively

Operating Profit

• GTG Acquisition
• GTG acquired MicronPC in June 2001
• GTG guaranteed 70 million in capital to fund
  losses
• 5 million ultimately invested by GTG

• Investment Thesis
• Detailed operating plan developed to rapidly
  drive MicronPC to profitability
• refocus on low cost customer sales(particularly,
  government and large corporate clients)
• exit retail channel
• reduction in headcount by gt830 employees