Public Market Investment Strategy

Chapter IV seeks to invest in excellent companies in "special situations."

Investments are targeted toward companies that trade at discounts of 25% or more to: (i) their intrinsic value (based on a discounted cash flow model), (ii) their likely value to private equity buyers and/or (iii) their value to strategic acquirors.

Situations of particular interest include:

• Companies in situations that are analytically intensive and difficult for many public investors to understand for certain periods of time
• Less liquid companies that may trade at a discount because of the lack of a desirable float for larger institutional investors
• Companies whose securities trade at a value that has been temporarily "infected" by the herd psychology of the investment marketplace
• Companies whose publicly traded status should be limited in time (e.g., because Sarbanes-Oxley regulation, inadequate research coverage, limited float or other factors make it more sensible for such companies' Boards of Directors to consider a going-private transaction or bids from strategic buyers willing to pay a premium)

Our focus is long-term "value," not short-term trading. We seek to minimize turnover.

We anticipate that public investments will be limited to U.S. based companies.

Private Equity Investment Strategy

Chapter IV seeks to invest between $10-$50 million per transaction.

Chapter IV is comfortable investing as both a majority/lead investor and as a minority investor.

Chapter IV is industry agnostic but does not invest in venture capital or early stage growth investments.

Our private equity strategy focuses on three types of transactions:

• Large buyout (or recapitalization) opportunities (from $200 million to $5 billion) initiated by Chapter IV and co-investors in our Fund
• Small buyout (or recapitalization) opportunities (from $50 million to $200 million) initiated exclusively (or primarily) for our Fund
• Co-investment situations developed by investors in our Fund or other "friends of Chapter IV"

Chapter IV’s private equity deals take the shape of:

• Management-led buyouts of private companies (or divisions of public companies)
• Recapitalizations of closely-held family businesses
• Private companies that require capital to fund identified growth/acquisition opportunities
• Public-to-private transactions
• Structured equity investments

Chapter IV customizes its relationship for each portfolio company but generally seeks to add value through:

• Assisting management teams with strategic planning initiatives
• Assisting in the identification and execution of add-on acquisitions
• Improving overall financial management of the enterprises in which we invest