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KARLAN YAGER: CFOs do heavy lifting, too

The recent economic and financial crisis has left no doubt that the Chief Financial Officer's role in a company is about more than just accounting, says Karlan Yager, CFO of Lenexa-based Broderson Manufacturing Corp. and a member of ACG Kansas City.

Broderson is a 37-year-old, family-owned maker of industrial and rough-terrain cranes. The company's bright yellow cranes lift 5,000 to 30,000 pounds, move like a small truck, and carry loads of heavy machinery or materials around construction sites or industrial facilities. In a challenging environment, Chief Financial Officers now are doing more heavy lifting, too. A CPA with more than 10 years of experience as a CFO, Karlan says he has taken a hands-on role in planning strategy, helping the company exploit growth opportunities, improving operations and the supply chain, and protecting the business from new kinds of risk.

E V E N T S

MAY 14 MARC NAUGHTON CHIEF FINANCIAL OFFICER CERNER CORPORATION Kansas City Marriott Downtown 200 W. 12th Street, Kansas City, MO 7:30 a.m. - 9:00 a.m.

JUNE 8 OPENING NIGHT WINE TASTING RECEPTION The Marquee Bar & Grill at AMC Mainstreet Theatre 5:00 p.m. - 7:00 p.m.

JUNE 9 2010 CAPITAL CONNECTION & PRIVATE EQUITY FORUM Kansas City Marriott Downtown Basie Ballroom 8:00 a.m. - 7:00 p.m.

(continued on page 2)

W H A T

Y O U

M I S S E D SAVE THE DATE: August 23 ACG Kansas City 2010 Golf Tournament

Milburn Golf & Country Club 7501 W. 69th Street, Overland Park

TRADING UP ­ BATS Exchange

Ten years ago, hearing the words "stock exchange" made most people think of New York, London or Tokyo ­ not Kansas City. In 2005, Joe Ratterman was part of an entrepreneurial group that decided to change that by making Kansas City the home of a completely new electronic stock market known as BATS Exchange. It was a revolutionary idea at the time. Joe was ACG Kansas City's breakfast speaker on March 12. "It was just six months from the raw idea to actually processing the first real transactions. We developed 100% of our own software," said Joe. Today, the noisy, paper-littered trading floor of the NYSE processes only about 12% of total U.S. daily trading volume. The NASDAQ is in first place, clearing 18% to 21% of equity volume. BATS is No. 3, averaging above 10% of U.S. equity volume. And that market share is a key measure of success. "We started BATS with a `Go Big, or Go Home' strategy. From day one, we assumed that BATS would be a high-volume operation. So, we set our price for success ­ 2 cents per hundred shares ­ rather than the going rate of 10 cents per hundred shares."

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KARLAN YAGER: CFOs do heavy lifting, too (Continued from page 1)

Thinking strategically

Known as a Cadillac brand in cranes, Broderson sells through dealers to the manufacturing, construction, and industrial markets. The movable cranes are designed for different sizes of load, various lengths of booms and so on. Broderson adds specialized features for needs like moving equipment in an auto plant, shifting cargo around on a dock, or raising building components into place. The economic slowdown has challenged the company as customers in these industrial fields have seen the effects of recession, Karlan says. Broderson has trimmed costs and reached out for new sources of revenue. "What I do as CFO is not only the financial aspect of making sure we have the funds, the working capital and the cash flow," Karlan says. "We have to look way out and try to gauge where our markets are heading, and how we can match our business to the needs."

Looking for growth

The key growth strategy for Broderson is expansion into international markets, Karlan says. The company has traditionally served U.S. and Canadian customers, with only a few cranes going overseas. Broderson is seeking to change that by adding distributors internationally. For the CFO, the global focus adds some new twists financially ­ and calls for close operational involvement. Broderson is ISO-certified, meeting stringent standards for quality that help earn the confidence of North American customers. Moving into Europe and Asia calls for an additional certification called CE Mark, and Karlan is monitoring the cost of that process through financial analysis and modeling. Broderson continually looks at new product opportunities ­ designing cranes for new uses or settings, engineering its cranes for heavier loads, adding features or technologies, and improving the ergonomics for crane operators. Karlan is involved from the start, analyzing the risks and rewards of developing a new product for Broderson's markets. The company also looks at opportunities for acquisition but hasn't found a fit at this point.

W H AT YO U M I S S E D

TRADING UP ­ BATS Exchange (Continued from Page 1)

It was a high-risk strategy. But BATS grew out of an intimate knowledge of stock trading as a spinoff from another successful Kansas City firm, Tradebot Systems. Tradebot uses high-speed digital technology and mathematical algorithms to profitably trade thousands of securities in very high volumes. "The BATS system was built by traders, for traders," explained Joe. "Our software development team knew the business from the inside out. We knew that markets are continuous around the world and built the BATS system to attract market makers. It was all about having the right people on the bus from the get-go." To get the exchange off of the ground, BATS wrote 3,000 letters to industry leaders, comparing the price and performance advantages of the new system to the slow-changing and expensive NYSE system. It worked. In only two years, BATS reached 1,000,000,000 shares traded. The future is bright for BATS, which currently has about 100 employees. "We are just now expanding our operations into other countries, but we are choosing our new markets carefully," Joe said. "There are an amazing number of barriers to discourage new foreign providers. We have just started operations in Europe and now process about 5% of European transactions. Equity options are next on our game plan, because trading options can leverage our existing software." BATS already offers the fastest trade clearing system in the world, free real-time market data and user dashboards. Future plans include offering primary listings to issuers and expanding into Canada and Brazil. Meanwhile, Joe is happy calling KC hometown for this major stock exchange: "Kansas City is a great place to live and work. Talent costs less and the quality of life can't be beat."

Focusing on operations

The CFO provides analytical firepower to help Broderson manage operations, costs and production planning. "We have to make sure we understand how the production flow is going to go, down the road," Karlan says. For example, the crane business tends to lag economic cycles by about six months, so looking at changes in construction starts ­ up or down ­ provides a leading indicator for business trends to come for Broderson. Karlan also studies the company's supply chain including the steel market, where prices have seen extreme swings in the past two years. Steel is the crane maker's primary raw material, so balancing the cost of holding inventory with vulnerability to future price moves makes a big difference for financial results.

Networking through ACG

As a CFO, Karlan says belonging to ACG gives him relationships with other CFOs to discuss business conditions and strategies ­ as well as regular contact with capital providers to talk about financing options, ranging from working capital funding to private equity. Karlan also is active in Financial Executives International, but finds different areas of emphasis in ACG. "One of the reasons I like ACG is that it complements FEI very well ­ with the focus on financing, deals, and presentations on how to build a business," Karlan says. "This gives another view for CFOs who are not purely finance-oriented."

NEW MEMBERS

NEW MEMBER PROFILE

Jeremy Douglas, Wells Fargo Bank Julie Kaplan, SquareTwo Financial Joel LeBlanc, SquareTwo Financial Dave Lucas, SquareTwo Financial Kerry McCane, Zephyr Business Consulting Brian Rathke, M&I Bank Michael Reilly, Ferguson Properties Patrick Shore, IntelliThink, LLC Mark Steele, MPDSS, LLC Scott Wesley, Mariner Wealth Advisors

G O L F, A N Y O N E ?

Get ready for the ACG Kansas City 2010 Golf Tournament. Plans are taking shape for ACG members and guests to hit the links August 23 for fun, food and friendly competition. Practice up, and mark your calendar:

NICHOLAS MCLEAN Managing Partner, West Plaza Capital

To begin, could you tell us what your business is? I would call West Plaza Capital a quasi-private equity firm. We are a fundless sponsor, essentially working on a deal-by-deal basis. West Plaza Capital got off the ground in November 2009. We are looking at companies with EBITDA of less than $1 million, and we feel there are a lot of opportunities that are not typically targeted by private equity firms. Some are solid companies but too small to get the interest of traditional firms, and we also see a lot of distressed deals ­ we're not opposed to that. What type of companies are you looking to invest in? We have about 10 to 15 different criteria. Size is the most important. Our preferred industry is manufacturing, because that's my background, but the deals we've looked at span a wide array of industries. Our preferred investment would be a situation where we come in and take an active day-to-day role. We're looking for what you might call a technician owner ­ somebody who's really good at making the product but maybe not at running or growing the business. In those situations, West Plaza Capital brings a complementary skill set that can help take the business to the next level. What background brought you to the private equity field? After doing my undergrad work in industrial engineering at the University of Missouri, I went to work for Deloitte Consulting and focused on operations, working with manufacturing firms on lean operations and Six Sigma projects. Then I went back to school and got an MBA at the University of Michigan. After the MBA, I worked for Clayton Capital Partners in St. Louis, a middle-market investment banking firm focused on mergers and acquisitions. I quit my job and moved back to Kansas City to start West Plaza Capital in November. Isn't this a tough environment to launch a new venture? Perhaps I'm an eternal optimist, but I look at this as a time when there are tremendous opportunities ­ if you're willing to go in, roll up your sleeves, get your hands dirty, do whatever's required to make the deal work. Certainly, the availability of credit is a huge concern. But in just a few months, from my perspective, things have continued to loosen up. So it is encouraging. What's the biggest challenge you've encountered? Finding deals. Just finding deals. It's a numbers game. When I'm not actively working on a deal, I spend 75% or more of my time networking, because I never know where I'm going to find the next deal. My strategy is to get in front of as many people as possible with a connection to a small business owner. What attracted you to join ACG? I knew about ACG in St. Louis. Shortly after I moved back to Kansas City, there was an ACG meeting. I went to that first meeting and saw several people I had talked to over the phone or knew by name only. And I instantly realized this was the group I needed to join. All the kinds of people I need to talk to are represented in ACG: entrepreneurial business owners, private equity folks who also are looking at deals but with a larger-firm focus, and the service providers, law firms, accounting firms experienced in M&A. It's nice to talk to different practitioners and be able to establish relationships.

Monday, August 23 Milburn Golf & Country Club 7501 W. 69th Street, Overland Park

We'll gather at 11:30 a.m. for registration, putting contest and box lunches. Shotgun start begins at 12:30 p.m. Afterwards, enjoy a buffet dinner, cocktails and preentation of the coveted ACG Golf Tournament Awards.

C A P I TA L C O N N E C T I O N : Plan now for Private Equity Forum

Registration is now open for ACG Kansas City's 2010 Capital Connection & Private Equity Forum on June 8-9, 2010. Visit the ACG chapter website at www.acg.org/kc/ and take advantage of the early registration discount. The Kansas City area's third annual Private Equity Forum is a great time to interact with senior executives of middle-market companies, private equity investors and other capital providers from across the country, and everyone who's active in deal making in KC. We expect more than 200 to attend this year. Sponsorship opportunities are available ­ contact Tony Rock, conference chairman, or ACG administrator Kasey Strahm soon to get details on this valuable exposure for your company. We'll kick off the 2010 conference with a Wine Tasting Reception on Tuesday evening June 8 to give everyone attending a chance to interact informally. Also new this year is a Capital Connection on Wednesday afternoon June 9 ­ a time set aside especially for networking with private equity investors and investment bankers. This unstructured opportunity to talk, test ideas and make new contacts is a favorite feature at other ACG chapters' annual events. The luncheon keynote speaker will be Barbara Corcoran, a motivational, lively, sometimes outrageous speaker who parlayed $1,000 into a $5 billion empire ­ and stars as one of the "sharks" on the ABC network's reality show, "Shark Tank." The Private Equity Forum team is recruiting other exciting, educational speakers, and ACG Kansas City will keep you updated on details as they become available. We look forward to seeing you June 8 and 9 at the ACG Kansas City Capital Connection & Private Equity Forum. Visit www.acg.org/kc/ to register now.

2010 CAPITAL CONNECTION & PRIVATE EQUITY FORUM AGENDA

O U R

S P O NS O R S

Tuesday June 8 5:00-7:00 p.m Wednesday June 9 8:00-9:00 a.m. 9:00-9:45 a.m. 10:00-10:45 a.m. 11:00-11:45 a.m. Noon-1:30 p.m. 1:30-4:00 p.m. 4:00-4:30 p.m 4:30 p.m.

The Marquee at AMC Main Street Opening Night Wine Tasting Reception Kansas City Downtown Marriott Registration/Breakfast/Networking Welcome address and morning keynote speaker The Future of Private Equity - Panel discussion Corporate Innovation & Entrepreneurship - Panel discussion Lunch and Keynote Speaker Barbara Corcoran, The Corcoran Group, "Shark" on ABC's Shark Tank Capital Connection Bringing together investors and deal makers Closing speaker Cocktail Reception

Special thanks for this newsletter to the ACG/KC Marketing Committee, Paul Davies for design & production, and Dick Johnson and John Trewolla for writing.

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