Live Oak Acquisition Corp. V Class A Ordinary Shares Small-Cap Virtual Conference

Good afternoon, everyone. I'm, as Brendan said, Michael Brown, co-founder and CEO. My focus today focuses, aside from general leadership duties, really on helping grow the company, which really centers around acquisitions and capital. Within that, let's go to the next slide and talk about Teamshares. We are what people call a programmatic acquirer, but as a mental model, think back to the old days of Roper 30 years ago or any of the 30 diversified industrial type of companies that grow primarily through small acquisitions from family-owned businesses, consolidate and integrate them into a diversified public company, and continue to grow them and focus on organic growth too, but actually, the model allows us to reinvest cash flow and to grow faster than the underlying organic growth rates.

The niche that we focus on is $500,000 to $5 million EBITDA businesses that are very highly free cash flow generative, usually 80% conversion from EBITDA to cash flow. We strictly focus on retiring owners, and then after we acquire the business, we integrate them, hire and train a leader, and also have the employees incentivized and aligned with stock at each operating subsidiary. Our goal is permanent ownership, and we just went public in June, led by T. Rowe Price, and we're hopeful that it is the beginning of a long journey scaling the public markets. To the next slide. If you just take a step back and think about our opportunity set, it's very large. In fact, actually, one of our venture firms said it was among the largest TAMs that they'd ever seen.

The reason for that is that there's 6 million small businesses in the U.S. just as an installed base. About 75% of them are owned by either baby boomers or Gen X, so it's people who are well past retirement age or people who are just approaching retirement. It's a huge amount, 75% of the businesses. We build a lot of technology to automate steps and increase throughput in a semi-industrialized way. We get about 75,000 actively for sale businesses every year. About 15,000 are minimum size qualified, and we'll do real work on 3,000 or more of them. Today, how much EBITDA we can acquire and grow are the way we run the business, but just as an output stat, 90 companies and growing today. If we can go to the next slide.

And just on the scaling point, our vision that we've publicly stated is to be a permanent home for thousands of the highest quality companies, so we believe it's really early inning. The vision was to really try and industrialize, again, with technology and with decentralized aligned leadership the way that businesses could be acquired and transitioned in an industry-agnostic way. The repeatable process and software that pairs with it looks like this. We have an inbound funnel of 75,000 businesses. We sort of just went through some stats before. We'll pick a couple dozen of the very best of those, do rigorous work, due diligence, legal diligence, execute that all in-house, and then enclose them.

We will provide leadership if it's needed, and in this size range, 1 million to 5 million of EBITDA, there often is an external leader needed, and so we've gotten very good at hiring and training leaders who are local from the industry. We have an 80% success rate with that. We grant 10% of the stock of each operating company to the employees, and that helps get people aligned and financially literate in understanding how to grow the businesses. That comes to life through the software that we built called Teamshares OS, that helps us consolidate GAAP financials, which is basically unheard of in the small business economy, and see really advanced analytics, the types of analytics that a public investor or a private equity style investor might see on a company, and that visibility provides both the ability to run the business as well, but provides real scalability, too.

Then like any of the publicly acquisitive holding companies that have come before us, the goal is to continue to reinvest the cash flows of these businesses, which even though it's intuitive, I should stop to just point out the nuance of if you compare and contrast that versus private equity or even a stock index. In private equity or a stock index, the outcome is the summation of individually isolated companies that cannot commingle cash flows. We can not only reinvest those cash flows to buy more businesses, we can actually also reallocate cash flow in select cases where additional capital would help further organic growth at similar rates of return than a new acquisition would. On the next page, please.

If you were to think about us versus the market at the competition level, if you will, or the opportunity level, there's not a broad-based sort of competitor that we have are really sort of competing against individuals, occasionally sort of very small private equity or very small roll-ups, and we win about 50% of our letters of intent. But in terms of how to think about us versus other, there have been, we think, 30-plus acquisitive public companies that grow in this way, that how we're different from those is, again, we're cross-industry and we're driven by structural criteria that we think makes for good business. We'll talk about that next. The typical strategy, as most people know, is to buy the business in part because of the founding CEO or founding leaders, retain him or her, and have them run the business for decades to come.

We deliberately address the retirement end of the market and have a very now proven leadership succession model. The two of those things create a much bigger TAM, being open to most industries or many industries, and being able to provide leadership and addressing retirement creates a really, really large TAM. It also means that we are not subject to the sort of shocks that a single industry roll-up can have or sort of multiple inflation as competition crowds out a single industry. The technology we build helps us really scale both the acquisitions, and I would say even more so on the post-ownership data and oversight of the businesses. We will go to the next slide. This is just to touch on our structural criteria of what we look for.

Obviously, this is very high level, and how we apply this is very rigorous and takes months to assess within a company. Just to hit the highlights, $500,000 to $5 million of EBITDA. Again, that is because we find it generally too big for most individuals, too small for most private equity and institutional buyers. So usually it means we are sort of either the preferred buyer or maybe even negotiating one-to-one. Usually $1 of EBITDA converts to $0.80 of unlevered free cash flow, so these are generally pretty asset light, working capital efficient businesses. Those are the kinds that we like. The reason we target the retirement sale, in addition to being committed to sell and selling now good terms, is that they are very unlikely to re-compete. We have only had one indirect re-compete situation in over 90 acquisitions. The businesses on average are 37 years old.

We target things that are generally 20 years or older. That helps really de-risk the ongoing success of the business. If you study cohorts of business formations, by year 15, it is very unlikely that a business would fail in a given year. We start with the premise that small business is kind of the Wild West, and the financials across the board are not particularly unreliable, and businesses across the board have a lot of key person risk. So we address that market eyes wide open and look for the businesses that have very reliable five years of tax returns, clean bank ledgers. We can do really rigorous in-house financial due diligence work and then start with already annually reliable financials and convert those to U.S. GAAP and have that on a monthly basis going forward.

We also look for businesses where the key person risk is really just retired by the time you get through the transition. People like the owner, they have not written down every process, but they are not driving revenue. So we also look for really low customer concentration risk and low technology risk. We want evergreen businesses that we very genuinely think can be in business 50-plus years from now. Next slide. Just to give you a sense, this is a little stale now because it is from year-end last year, but just to give you a flavor of the types of sectors that are the output of that criteria. It is distributors, it is light manufacturing, it is independent fast food, it is auto services, it is specialty retail. Again, because we are diversified, it provides a nice mix across the cycle. We try and buy really non-cyclical businesses.

Building products is probably the most cyclical, and when we buy it, we buy it off of a mid-cycle. We are going to continue to add more industries in concentric circles. The nice thing is that because these businesses are relatively small, whatever the large cap company pure plays are doing in those industry are less relevant to our growth potential because opening a third store in a grocery chain can provide a very different organic level of growth than an outscale grocery store, for example. I think, Brian, you are probably transitioning next.

Yeah. Thanks, Michael. Our ability to leverage technology is one of the primary drivers of what enables us to scale our operations. In certain cases, we have built our own software, which includes our Buyout app, you will see in the upper left-hand corner. That sources and analyzes acquisitions, and it also streamlines our closing process. Our life cycle software that we built is the Teamshares OS, and that monitors and analyzes financial results. It also enables centralized cash management as well as administers our employee ownership program. In addition to internally developed software, we leverage best-in-class software and AI applications in order to enhance operations at the subsidiary level. Not only does this help us improve efficiency, but it is really powerful in enabling us to maintain quality as we scale, since it can provide real-time better insights into performance of businesses.