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Investment Criteria

Meritage is very selective when evaluating potential investment opportunities. We look for business plans that fall within our investment focus and have the following characteristics:

Network-Enabled Service - Meritage focuses exclusively on businesses that leverage wired, wireless and/or virtual networks to connect people, enterprises and devices in order to: (i) enable communications; (ii) deliver content; and (iii) facilitate commerce.

Recurring Revenue Based Business Model - Meritage targets companies with recurring revenue-based business models because they are highly scalable, provide substantial operating leverage, produce predictable cash flows and represent highly attractive acquisition targets to both financial and strategic buyers.

Large Markets with Strong Growth Prospects - Meritage targets large and growing billion-dollar market opportunities. The network-enabled services sector presents a wealth of emerging market opportunities. The Fund will make an early assessment of the market opportunity and quantify the risk and potential success of each prospective investment.

Businesses with Proven Technology - A company that fills a market niche with a proprietary technology, a product license or franchise, or a dominant sales channel has the potential to become a market leader.

Attractive Price-to-Value Ratio - Meritage always seeks to invest at attractive valuations relative to a company's potential growth and where the firm can apply the Team's extensive industry expertise and operating experience to create value.

Strong Entrepreneur and Qualified Management Team - Management is a critical success factor in all investments, and much of the firm's due diligence efforts are centered on evaluating the competency of management. Meritage insists on managerial excellence and leverages the Principals' substantial operating experience, deep contact network, and excellent industry reputation to identify, recruit, train, motivate and work closely with high-quality management teams and entrepreneurs.

Sustainable Competitive Advantage - Meritage seeks to identify companies with a significant and sustainable competitive advantage. A firm that fills a market niche by virtue of a proprietary technology, service, license or franchise, or because of dominance of a specific marketing channel, may be positioned to become a market leader. Similarly, a company with a "first mover" advantage may satisfy this criterion if the advantage is sustainable over time.

If you would like to submit a business plan to Meritage, please send it to bizplans@meritagefunds.com.

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