Columbus Mckinnon (VC3) Risk Analysis

We financed a portion of the purchase price for the Kito Crosby Acquisition through the issuance of 800,000 Series A Cumulative Convertible Participating Preferred Shares, par value $1.00 per share (the "Preferred Shares") to CD&R XII Keystone Holdings, L.P., a Cayman Islands exempted limited partnership (the "CD&R Investor") pursuant to the terms of an investment agreement, dated February 10, 2025 (the "Investment Agreement"). The Preferred Shares have rights, preferences, and privileges that are not held by, and are preferential to, the rights of our common stock and have the effect of reducing the relative voting power of the holders of our common stock. Certain of the preferential rights belonging to the Preferred Shares could result in divergent interests between the holders of the Preferred Shares and our common shareholders. Subject to certain restrictions on conversion and voting as described in greater detail in the Investment Agreement and the Certificate of Amendment to the Company's Certificate of Incorporation for the Preferred Shares (the "Certificate of Amendment"), the aggregate number of shares of common stock of the Company into which the Preferred Shares may be converted is initially equal to 21,231,440 common shares, based on the initial conversion price for the Preferred Shares of $37.68, and resulted in the CD&R Investor owning, on an as converted basis, approximately 43% of the Company's outstanding common stock as of the date of issuance. Under the terms of the Investment Agreement, the CD&R Investor has the right to designate up to three directors on our Board of Directors (our "Board"), subject to specified ownership requirements. With such representation on our Board, the CD&R Investor has influence over the appointment of Company management and any action requiring the vote of our Board. As a result of its ability to control a significant percentage of the voting power of our common stock, the CD&R Investor may have substantial control over matters requiring approval by our shareholders, including the election and removal of directors, amendments to our certificate of incorporation, any proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions. The CD&R Investor may have interests that are different from those of other shareholders. In addition, the CD&R Investor and its affiliates are in the business of making or advising on investments in companies, including businesses that may directly or indirectly compete with certain portions of our business. In addition, the CD&R Investor may have an interest in pursuing acquisitions, divestitures, financings, or other transactions that, in their judgment, could enhance their overall equity investment and have a negative impact to holders of our common stock as a whole. We cannot guarantee that we will be able to generate sufficient cash flow to pay dividends at a rate of 7% per annum, compounded quarterly on our Preferred Shares (but subject to an increase to 10% per annum if certain events occur). In addition, our obligations to pay regular dividends to the holders of the Preferred Shares (which we may elect to pay in cash or in-kind) or the exercise of any of our optional redemption rights with respect to the outstanding Preferred Shares could, if paid in cash, impact our liquidity and reduce the amount of cash available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes. Any of the above risks could have a material adverse effect on our business, financial condition, results of operation, cash flows and/or stock price.