Rand Capital Corporation · NASDAQ:RAND
Rand Capital — Merger or Acquisition (January 2019)
16 slides from Rand Capital's merger presentation, Jan 25, 2019
Slide 1: Strategic Update for Rand Capital Shareholders
Strategic Update for Rand Capital Shareholders Allen F. “Pete” Grum, President & CEO Daniel P. Penberthy, Executive Vice President & CFO January 25, 2019 Exhibit 99.2
Slide 2: Important Information: Cautionary Statement Regarding Forward-Looking Statements
Important Information Cautionary Statement Regarding Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, oth
Slide 3: Summary of Key Transactions Terms
Summary of Key Transactions Terms East Asset Management, LLC (“EAM” or “East”) to strategically invest $25 million in Rand Consideration will include a combination of cash and yielding assets EAM receives approximately 8.3 million shares of Rand common stock Purchase price of $3.00 per share, repres
Slide 4: Shareholder-focused Transactions
Rand Capital Corporation (Nasdaq: RAND) RAND shareholders (including EAM) Rand Capital Management, LLC (“RCM”) East Asset Management (“EAM”) Rand issues ~8.33mm shares at $3.00 per share* Externalized investment management agreement* 1.5% management fee 20% incentive fee on net investment income abo
Slide 5: Lower Expense Ratio, Special Dividend, Ongoing Dividends, Scale
Lower Expense Ratio Combination of externalization and strategic investment expected to reduce expense-to-asset ratio Externalization under new investment management agreement with 1.5% management fee on gross assets* Establishes 7% hurdle rate with full catch-up for net investment income incentive
Slide 6: Strategic Investment
Strategic Investment EAM purchases approximately 8.3 million common shares of Rand for $25 million Investment will consist of approximately $13.5 million of cash and $11.5 million of contributed assets* Contributed assets are expected to generate over $1,000,000 in annualized investment income EAM m
Slide 7: One Time Special Distribution + Ongoing Dividend
One Time Special Distribution + Ongoing Dividend What is a RIC and how does it benefit the shareholder? A special type of “pass-through entity” that avoids typical double taxation on income at corporate and individual level on income and capital gains distributed to shareholders To qualify as a RIC
Slide 8: Positioned for Growth, Focused on Shareholder Returns
1 Externalization expected to lower expense ratio and capitalizes on existing management and additional investment talent/knowledge Expected to improve investor returns and provide continuity of leadership with enhanced capabilities 2 Achieving and maintaining RIC tax status Eliminates double taxati
Slide 9: Supplemental Information
Supplemental Information Nasdaq: RAND
Slide 10: History of Rand Capital Corporation
History of Rand Capital Corporation 1969 1971 1996 1997 2001 2002 2009 2011 2016 2018 Rand Capital Corp. founded by George Rand and Don Ross Allen “Pete” Grum named President; Dan Penberthy named CFO and EVP Rand becomes a Business Development Company (BDC); Margaret Brechtel named VP of Finance Rai
Slide 11: Experienced Management Team
Experienced Management Team Allen F. “Pete” Grum – President and Chief Executive Officer Mr. Grum is a seasoned financial services executive with over 20 years of experience with financial services organizations. Mr. Grum oversees the Company’s investment activities and takes an active role in the i
Slide 12: Successful Investment Performance
Successful Investment Performance* Rand Past Ten Years Capital Exits January 1, 2009 - December 31, 2018 Full-Cycle Investments Exited Average Holding Length (years) Total Cash Invested Gross Cash Generated (Income & Gain) Achieved Cash Multiple IRR 25 5.4 $23.8mm $75.4mm 3.2x >29% Tripled cash inve
Slide 13: Portfolio Companies: By Revenue Stage
Portfolio Companies: By Revenue Stage* Start up Revenue: up to $1M Initial Revenue Revenue: $1M to $5M Expansion Revenue: $5M - $20M High Traction Revenue: >$20M * Reflects Rand Capital portfolio companies prior to transaction
Slide 14: Regulated Investment Company (RIC)
Regulated Investment Company (RIC) What is a RIC and how does it benefit the shareholder? A special type of “pass-through entity” that avoids typical double taxation on income at corporate and individual level on income and capital gains distributed to shareholders More cash available for investors
Slide 15: What is a Business Development Company?
What is a Business Development Company? Public BDCs are exchange-traded closed-end funds that enable investors to participate in high yielding private market investing while maintaining daily liquidity BDCs are regulated under the Investment Company Act of 1940 and have the following characteristics
Slide 16: For More Information, Contact
For More Information, Contact: Deborah K. Pawlowski Investor Relations (716) 843-3908 dpawlowski@keiadvisors.com