OUR BUSINESS

Financial Analysis and Compliance Team (FACT)

FACT includes over 80 in-house Certified Public Accountants, Chartered Accountants and accounting and finance professionals whose three core responsibilities include: performing both pre and post investment financial due diligence, monitoring the current portfolio of more than 270 companies, as well as valuing each of the portfolio investments on a quarterly basis. In conjunction these responsibilities supply valuable insight to our Investment Teams and Investment Committee by providing accounting and financial assessments, findings and recommendations.

Financial Due Diligence

FACT assists our Investment and Operations Teams in conducting extensive financial due diligence of each target company that passes the initial screening process. This includes one or more on-site visits, a review of the target company’s historical and prospective financial information and performance, identifying and confirming pro-forma financial adjustments and results, interviews with and assessments of management and employees, review of the adequacy of the target company’s information systems, review the tax aspects and risks of transactions, and research on the target company’s products, services and industry. FACT’s assessment of the financial performance and identification of risks help to determine the target company’s run rate performance, which is used to derive baseline historical and prospective earnings to facilitate pricing discussions.

Quarterly Valuations

With the assistance of our Investment Team, and subject to the oversight of senior management and the Audit and Compliance Committee, FACT prepares a quarterly valuation of each of our portfolio company investments through the use of a proprietary valuation model and automated system. The valuation model utilizes standard valuation methodologies including discounted cash flows, guideline comparable public companies and comparable M&A transactions. Our Board of Directors approves these portfolio valuations as required by the 1940 Act. ACAS have also engaged the independent financial advisory firm of Houlihan Lokey Howard & Zukin Financial Advisory, Inc. to assist in this process by reviewing each quarter a selection of our portfolio companies and to report their conclusions to the Audit and Compliance Committee.

Portfolio Management

In addition to the extensive due diligence at the time of the original investment decision, ACAS seeks to preserve and enhance the performance of our portfolio companies under management through our active monitoring and involvement with the portfolio companies. Our Investment Team and FACT regularly review portfolio company monthly financial statements, quarterly board packages, and other various materials to assess performance and trends, as well as to ensure compliance with loan covenants. In addition, FACT periodically conducts on-site financial and operational reviews of portfolio companies in order to evaluate industry and/or company specific issues that may affect the performance and ultimately impact value of the portfolio company.

FACT Leadership

Jay Beam – Senior Vice President, Financial Analysis and Compliance Team

Mr. Beam joined American Capital in October 2001 as Director of the FACT Group to manage Financial Due Diligence, Valuations and Portfolio Monitoring in the Bethesda office. He has more than 20 years of due diligence, finance and accounting experience. Prior to joining American Capital, Mr. Beam was the Chief Financial Officer of a venture-backed specialty finance company. Mr. Beam was also the co-founder and executive vice president of a due diligence subsidiary of the healthcare division of Heller Financial, Inc. (formerly Healthcare Financial Partners). While at Heller, he built a team of more than 30 Certified Public Accountants and other finance professionals to perform all accounting and financial due diligence engagements, both pre-loan and recurring engagements, on behalf of Heller's healthcare division. He has supervised, managed and participated in over 500 due diligence engagements throughout his career. Mr. Beam's other experience was partner and founder of a local consulting and accounting firm; he has also worked for several public accounting firms in both the audit and tax departments, including the Washington, DC branch of a former national accounting firm.

Mr. Beam holds a Bachelor of Science in Accounting from the University of Maryland and is a Certified Valuation Analyst and Certified Public Accountant.