Understanding how returns are created at the operating company level is critical for the management team to succeed. We all win when we maximize shareholder returns and ensure the long-term success of the operating company.

By focusing on key levers like debt repayment, EBITDA growth, and multiple expansion, management can drive sustainable growth, reduce risks, and position the company for a successful exit or refinancing. We align incentives to ensure that everyone—from management to investors—is working towards the same goal: increasing the value of the business.

In support of this, management teams drive value by focusing on three primary levers: EBITDA growth, multiple expansion and debt repayment.

Levers:

1. Increase EBITDA
   • Top-Line Growth: Expand via new products, add-ons, services, or markets.
   • Cost Optimization: Reduce costs to improve profitability across gross margin, contribution margin and bottom line.
2. Multiple Expansion
   • Establish a clear strategy (scale, geography, pure-play focus), infrastructure and sophistication that attracts buyers to pay a premium.
3. Pay Down Debt
   • Generate free cash flow to pay down debt and increase equity value.
   • As debt is paid down, reinvest in growth initiatives like add-ons or sales expansion.

Aligning Management Incentives

Management is aligned with shareholders through a combination of salary, bonuses, and equity, ensuring everyone works towards increasing equity value over the long-term.

This ensures alignment with company performance goals, motivating the team to achieve high MOIC (Multiple on Invested Capital) and maximize shareholder value.

Summary: Focus on these levers—debt reduction, EBITDA growth, and multiple expansion—to drive value creation and maximize returns for shareholders and management alike.