EFTA02638859

From: jeffrey E. <jeevacation@gmail.com> Sent: Friday, August 25, 2017 10:45 AM To: Richard Kahn Subject: Re: Next pretty funny Neale. even ,the=silly open gate proposal was in essence stepping into your shoes =AO for only 6 million cash. BACK THEN !! then proposin= to distribute what they estimated to be almost the full total=-ie 14 of the 15 million of cash on the balance sheet ( I point out that t=at is .more than it totals today , -for chris ). and then =AO having joel ,them and faith leverage themselves up by borro=ing at 7!! percent against the entire co in order to make a further =istribution of an additional 15 m/ . on paper =AO creating a highly inflated enterprise value . he only proposed 6 =illion cash infusion. around the same amount that you are curr=ntly being offered. they valued faiths and joel ongoing equity=, that they proposd they) " keep in" , silly, at 8 m. =AO roughly the same as we suggested. Financial engineering don= well is like lipstick.. however not done well. is also =ike lipstick. . :) This is a personal service busi=ess. no more no less. suggesting that they leverage themselve= up so you that they can pay themselves a higher salary . =AO fails the HBS first year class that im aware youve taken. re the =8 million , we have distributions from Next directly to the former s=areholders of the claxon offshore entity of approx 3. =AO re receivables . you can ask millie . sor=y PS Faith and j=el will have to borrow the money to buy you out at S.. can be done, but n=t so easy. they have never taken out real money from the co..C2 - in any form. salary etc. hence little net worth ,and c=rrent lenders are not that comfortable with the potential liab=lites. . On Fri, Aug 25= 2017 at 5:27 AM, Richard Kahn < wrote: Please =dvise. Thank you. Richard Kahn HBRK Associates Inc. =div>575 Lexington Avenue, 4th Floor New York, NY 10022 <tel Fax <te Cell <= href="tel ' value="a' target="_blank" Begin forwarded message: From: Neale Attenborough < Date: August 24, 2017 at 4:50:55 PM EDT To: Ricriard Kahn Cc: Chris Lawler <mailto =a» > > > > EFTA_R1_01870839 EFTA02638859 Subject: RE: Next I look forward to our con=ersation. For the record, we did ac=ually pay $18MM for 42% of this business in 2008. At the time that r=presented an -13x multiple of EBITDA. That is not a fictitious number. In addition we did receive a bid for about the same amount f=om Open Gate Capital, a reputable private equity firm. I do not unde=stand why you say that ii is "hardly legitimate". Wh=le I did say we didn't expect to receive what we paid, I did not say it was immaterial. I don't follow mo=t of what you say below and look forward to hearing your clarification. =AO However, can you please clarify one statement specifically? What do you mean when you say the current receivables have not be reviewed in y=ars? Thanks, Neale From: Richard =ahn <mailto > ] Sent: Thursday, August 24, 2017 3:45 PM To: Neale Attenborough Cc: Chris Lawler Subject: Next confirmed thank you We have reviewed your statements that you sent to us=along with the K-1's and some financials. Frankly, so=e of the numbers are inaccurate as a result of millie. Your annual f=nancial statements were reviewed but not audited - shame on all of you... Your calculation of Ebitda includes th=ngs like adding back foreign exchange costs? board fees etc. T=at is not the way we look at what is unfortunately for all merely a=personal service business. 2 EFTA_R1_01870840 EFTA02638860 Faith and Joel make up the business, nothing more.=C2 We calculate the Ebidta, which we think is an odd way of measu=ing value of a personal service biz with lots of competition and small gro=th opportuinties if any. Giving you the benefit of the doubt, and ignoring how much you paid or if some of that mone= was repaid directly to the former owners of Claxon and not truly understa=ding what you described as a fixed tax payment per quarter (ie based on wh=t I think looking back over the past three years) ebitda looks like 4-5 million. We have bought ma=y small biz and usually pay mom and pops for 1- 3 times ebita or more usua=ly 4 times net income. We are finding it difficult to ge= to more than a 15 million total value for Next ( not including liabilities). The 18 million dollar bid that you mentioned Faith said was =ardly legitimate. I think further review of the accounting tax etc.=is probably a waste of all our time. As you rightly said, what you i=itially paid is somewhat if not totatly immaterial to todays value. You have not factored in the liabilities, =AO both reputationally and fiscal yet. I think the 5 million cash o=fer or 6m over time is fair. I look forward to our conversation on =uesday. As another note, the current receivables have not been reviewed for years... Rich On Au 24, 2017, at 3:28 PM, Neale Attenborough <=a href="mailto wrote: Disclaimer: This message contains infor=ation that may be confidential and/or privileged and is intended only for =he person(s) named. Any use, distribution, copying or disclosure to any other person is strictly prohibited. If you received this transmiss=on in error, please notify the sender by reply e-mail and then destroy the=message. Opinions, conclusions, and other information in this message that=do not relate to the official business of Golden Gate Capital shall be understood to be neither given nor endorse= by the company. Where applicable, any information contained in this e-mai= is subject to the terms and conditions in the relevant governing agreemen=. <=span> =C2 <Mail Attachment.ics> 3 EFTA_R1_01870841 EFTA02638861 please note Th= information contained in this communication is confidential, may be at=orney-client privileged, may constitute inside information, and is inte=ded only for the use of the addressee. It is the property of JEE =nauthorized use, disclosure or copying of this communication or any par= thereof is strictly prohibited and may be unlawful. If you have receiv=d this communication in error, please notify us immediately by recur= e-mail or by e-mail to conversation-id 33896 date-last-viewed 0 date-received 1503657911 flags 8590195713 gmail-label-ids 7 6 remote-id 743256 <mailtojeevacation@gmail.com> 4 EFTA_R1_01870842 EFTA02638862