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  1. 1. M&A MERGER TRACKER Market Monthly Overview of Global Analysis Middle-Market M&A Activity December 2009 Steven M. Bernard, CFA Director of M&A Market Analysis sbernard@williamblair.com 312.364.8221
  2. 2. Table of Contents Commentary 1  Global Activity 3  Regional Transactions 3  Middle-Market Regional Transactions 4  Annual Transactions 5  U.S. M&A Activity 6  Transaction Detail 6  Annual Activity 7  Valuation Multiples 8  Private-Equity Transaction Analysis 9  Transaction Breakdown 11  Industry Breakdown 13  Cross-Border Transaction Analysis 14  U.S. Financing Markets 16  Debt Capital Markets 16  Equity Capital Markets 18  Guest Column 19  Dykema M&A Survey Report 19  Special Situations & Restructuring Market Update 31  European M&A Activity 34  Transaction Detail 34  Annual Activity 35  Valuation Multiples 36  Private-Equity Transaction Analysis 37  Emerging Markets M&A Activity 38  Select William Blair & Company Transactions 39  William Blair & Company Corporate Finance Contact List 42  Notes 44  Disclosures 45  www.williamblair.com
  3. 3. Commentary Commentary OVERVIEW Global M&A activity for November reinforced the belief that the M&A markets may have finally turned the corner. For several months we have pointed to the increasingly positive signs that would help fuel the rebound in activity. These signs included a surging stock market, near-record amount of private-equity capital available for investment, and increased optimism that the worst of the economic downturn and financial crisis has passed. While the economic outlook remains uncertain, we sense a more positive tone and outlook among our clients and an increased willingness to entertain and consider acquisition opportunities. These factors have contributed to the recent uptick in the $1 billion-plus transactions announced over the past month several months, including the recent announcements of the third-biggest transaction of the year and the largest private-equity transaction for the year. The $26 billion purchase of Burlington Northern Santa Fe by Warren Buffett and the $4 billion take- private transaction of IMS Health by TPG and the Canadian Pension Plan both took place the first week of November, providing significant year-end momentum that has so far continued in the first half of December and should carry over into the at least the first half of 2010. GLOBAL M&A HIGHLIGHTS For November, the number of announced global transactions totaled 2,637, a modest decline of 1.6% compared with the corresponding period last year. The total disclosed dollar volume for the month was $232.9 billion, a gain of 154.2% compared with the corresponding period last year. This total was the highest monthly dollar volume total since July 2008 and has now exceeded $200 billion in two of the past three months (averaging $195 billion) after averaging just $150 billion for the first eight months. For the year-to-date period, the total number of transactions remains down double digits both in aggregate and for each individual geographic region compared with the corresponding period last year. Given the current level of activity, it is likely that the 2009 full-year totals will fall far short of the totals reached in 2008. Overall, the year-to-date total number of transactions has declined 15.7%, ranging from an 8.3% decline for Europe to a 29.8% decline for Latin America. The total number of announced middle-market transactions rose a modest 2.7% compared with the corresponding period last year, driven by modest increases for North America and Asia-Pacific. More impressive, however, was the 48.6% increase in the total announced dollar volume compared with the corresponding period last year, as four of the five regions reported sizable increases. As is the case with the overall market, all regions remain solidly down for the year-to-date period compared with the corresponding period last year, and will likely fall well short of the 2008 levels. U.S. M&A HIGHLIGHTS U.S. M&A activity in November showed continued improvement. Announced U.S. M&A activity in November totaled 683 transactions, a decline of just 7.2% compared with the corresponding period last year and also below the trailing-12-month monthly average of 740. However, the dollar volume of transactions totaled $98.7 billion, a significant jump from just $30.3 billion last year and 51% above the monthly average of $65.5 billion. The increase in dollar volume reflected a sizable increase in the number of large transactions. The 20 deals valued at more than $750 million was the second highest total since July 2008. Average deal size for the month was $297.3 million, raising the year-to-date average size to $204.4 million, compared with $220.5 million for all of 2008. Year-to-date, total U.S. dollar volume has declined 28.9% compared with the corresponding period last year, although the decline in the number of transactions has been slightly less dramatic, down 23.5%. www.williamblair.com 1
  4. 4. Commentary (cont'd) Commentary (cont'd) Middle-market activity for the month was also relatively strong, as the number of deals increased 5.1% compared with the corresponding period last year, while the announced dollar volume increased 57.1%. For the month, there were just 82 U.S.-related private-equity transactions, almost 15% below the year-ago period and also well below the monthly average of 110. However, the dollar value of $17.1 billion was more than twice the comparable period last year due to an almost 140% increase in dollar volume for transactions in excess of $750 million. The computer and electronics sector remains the most active sector for private-equity investors, with 305 announced transactions year-to-date. This total remains more than the next two sectors combined —  healthcare and professional services with 145 deals each. These three industries alone continue to represent approximately 50% of the total year-to-date announced deals. Private companies have continued to take advantage of the market turmoil and increased their acquisition activity relative to the other market participants. Private companies now represent 46.7% of acquirers, up from 38.3% in 2008. This increase has come primarily at the expense of public companies, although private- equity firms and foreign acquirers have also seen their share of the total decline compared with 2008 results. Private companies also continue to account for the majority (62.1%) of all transaction targets, although their share has declined from 2008. Overall EBITDA multiples continue to decline, reflecting the slowdown in the economy and reduced competition between strategic buyers and private-equity firms. For the overall market, the valuation multiple has declined to 8.1x EBITDA, compared with 9.3x for 2008. In the middle market, the multiple has declined from 8.2x EBITDA in 2008 to 7.3x EBITDA. EUROPEAN M&A HIGHLIGHTS European M&A activity for November was also quite active, mirroring the U.S. and global activity levels. The total number of announced deals for the month was 1,014, a modest 1.7% increase compared with the corresponding period last year, although this number was a below the trailing-12-month monthly average of 1,199. The total dollar volume for the month jumped to $87.9 billion, an increase of 176% compared with the corresponding period last year and significantly above the trailing-12-month monthly average of $64.0 billion. However, European middle-market activity was just 365 announced deals, down 8.5% compared with the corresponding period last year, while the dollar volume of $21.7 billion represented a 10.8% increase. The median enterprise value/EBITDA multiple for all European transactions continues to decline, coming in at 7.1x for the LTM period, down from 9.4x for all of 2008 and 11.0x for 2007. For middle-market deals over the past 12 months, the median enterprise value/EBITDA multiple has declined to 6.9x, from 8.6x EBITDA for 2008. www.williamblair.com 2
  5. 5. Global Activity Global Activity Regional Transactions Global M&A activity finally appears to be turning the corner. For November, the number of announced global transactions totaled 2,637, a modest decline of 1.6% compared with the corresponding period last year. The total disclosed dollar volume for the month was $232.9 billion, a gain of 154.2% compared with the corresponding period last year. Global M&A activity turned in its highest monthly dollar volume total since July 2008 and has exceeded $200 billion in two of the past three months (averaging $195 billion) after averaging just $150 billion. For the year-to-date period, the total number of transactions remains down double digits both in aggregate and for each individual geographic region compared with the corresponding period last year. Given the current level of activity, it is likely that the 2009 full-year totals will fall far short of the totals reached in 2008. Overall, the year-to-date total number of transactions has declined 15.7%, ranging from an 8.3% decline for Europe to a 29.8% decline for Latin America. The announced dollar volume has experienced a much steeper decline, with the year-to-date total amounting to just $1.78 trillion, representing a decline of almost 30.0% compared with the corresponding period last year. This decline is primarily attributable to significant declines in the two most active markets, with Europe experiencing a significant decline of 51.4% and North America experiencing a 28.6% decline. Global M&A Activity Detail NUMBER OF DEALS DEAL VALUE % Change % Change 2007 2008 2009 '09 vs. '08 2007 2008 2009 '09 vs. '08 NOVEMBER North America 1,106 706 640 (9.3%) $80,043 $21,196 $87,470 312.7% Latin America 98 67 64 (4.5%) $6,836 $15,115 $5,177 (65.8%) Europe 1,239 855 911 6.5% $152,436 $23,633 $62,772 165.6% Africa / Middle East 90 57 58 1.8% $5,320 $2,902 $3,182 9.7% Asia Pacific 1,285 994 964 (3.0%) $56,194 $28,761 $74,250 158.2% TOTAL 3,818 2,679 2,637 (1.6%) $300,829 $91,605 $232,850 154.2% YTD North America 11,475 9,870 7,565 (23.4%) $1,496,388 $921,289 $658,181 (28.6%) Latin America 1,127 989 694 (29.8%) $84,824 $96,511 $75,394 (21.9%) Europe 12,135 12,973 11,890 (8.3%) $1,655,954 $986,914 $479,484 (51.4%) Africa / Middle East 701 937 668 (28.7%) $86,377 $51,476 $56,889 10.5% Asia Pacific 12,871 12,897 10,924 (15.3%) $597,920 $488,404 $514,052 5.3% TOTAL 38,309 37,666 31,741 (15.7%) $3,921,462 $2,544,593 $1,783,999 (29.9%) LTM North America 12,074 10,834 9,097 (16.0%) $1,636,864 $1,040,681 $687,819 (33.9%) Latin America 1,208 1,072 842 (21.5%) $97,953 $105,308 $83,678 (20.5%) Europe 13,057 14,165 13,744 (3.0%) $1,818,208 $1,129,228 $535,282 (52.6%) Africa / Middle East 730 1,010 781 (22.7%) $89,301 $72,326 $60,544 (16.3%) Asia Pacific 14,021 14,263 13,233 (7.2%) $664,684 $549,741 $575,429 4.7% TOTAL 41,090 41,344 37,697 (8.8%) $4,307,010 $2,897,283 $1,942,753 (32.9%) Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. www.williamblair.com 3
  6. 6. Global Activity (cont'd) Global Activity (cont'd) Middle-Market Regional Transactions In November, the total number of announced middle-market transactions rose a modest 2.7% compared with the corresponding period last year, driven by modest increases for North America and Asia-Pacific. More impressive, however, was the 48.6% increase in the total announced dollar volume compared with the corresponding period last year, as four of the five regions reported sizable increases. As is the case with the overall market, all regions still remain solidly down for the year-to-date period compared with the corresponding period last year, and will likely fall well short of the 2008 levels. Overall, the total year-to-date number of transactions has declined 19.3% compared with the corresponding period last year, with three of the five regions continuing to show declines in excess of 25%. The year-to-date disclosed dollar volume also remains significantly below the corresponding period last year. The current dollar volume of $666.4 billion is 35.0% below the corresponding period last year. Latin America has fared the best, experiencing a modest decline of just 1.5%, while Europe continues to struggle and is still down more than down 50.0% compared with last year. Global Middle-Market M&A Activity Detail NUMBER OF DEALS DEAL VALUE % Change % Change 2007 2008 2009 '09 vs. '08 2007 2008 2009 '09 vs. '08 NOVEMBER North America 435 301 309 2.7% $32,124 $12,144 $22,675 86.7% Latin America 66 33 31 (6.1%) $3,886 $1,447 $2,992 106.7% Europe 519 314 309 (1.6%) $41,708 $15,553 $17,027 9.5% Africa / Middle East 56 37 34 (8.1%) $4,420 $2,902 $1,682 (42.0%) Asia Pacific 1,013 718 758 5.6% $41,063 $17,993 $29,972 66.6% TOTAL 2,089 1,403 1,441 2.7% $123,200 $50,039 $74,347 48.6% YTD North America 3,846 4,231 3,497 (17.3%) $357,511 $269,231 $181,190 (32.7%) Latin America 605 503 357 (29.0%) $51,079 $33,793 $33,275 (1.5%) Europe 5,059 5,006 3,611 (27.9%) $449,785 $382,016 $181,257 (52.6%) Africa / Middle East 466 520 369 (29.0%) $41,132 $34,282 $20,941 (38.9%) Asia Pacific 9,817 9,620 8,212 (14.6%) $355,520 $305,230 $249,773 (18.2%) TOTAL 19,793 19,880 16,046 (19.3%) $1,255,027 $1,024,552 $666,437 (35.0%) LTM North America 4,088 4,588 3,895 (15.1%) $388,432 $298,977 $198,132 (33.7%) Latin America 640 543 404 (25.6%) $54,941 $38,776 $35,775 (7.7%) Europe 5,512 5,511 3,991 (27.6%) $495,869 $428,818 $200,386 (53.3%) Africa / Middle East 485 556 402 (27.7%) $43,175 $36,843 $23,192 (37.1%) Asia Pacific 10,710 10,715 9,226 (13.9%) $389,855 $343,765 $278,201 (19.1%) TOTAL 21,435 21,913 17,918 (18.2%) $1,372,273 $1,147,180 $735,686 (35.9%) Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. www.williamblair.com 4
  7. 7. Global Activity (cont'd) Global Activity (cont'd) Annual Transactions Global M&A Activity Undisclosed Middle Market >$750M Deal Value Deal Value Number of Deals ($ in billions) 45,000 42,027 $4,500 41,008 40,000 37,729 $4,000 36,224 35,000 $3,500 30,925 31,785 27,301 30,791 30,000 $3,000 26,644 25,905 22,898 24,928 25,000 22,813 $2,500 20,000 $2,000 15,000 $1,500 10,000 $1,000 5,000 $500 0 $0 Number 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 11/08 11/09 of Deals YTD YTD >$750M 405 563 645 340 296 293 439 580 800 1,025 601 568 357 Middle Market 11,860 12,932 15,898 13,017 12,421 11,949 13,787 16,796 18,884 21,828 21,753 19,881 16,046 Undisclosed 10,633 13,806 14,248 13,287 12,211 10,571 11,679 13,549 16,540 19,174 18,654 17,280 15,382 Deal Value $2,222 $3,060 $3,032 $1,572 $1,240 $1,356 $1,945 $2,754 $3,632 $4,274 $2,703 $2,545 $1,784 Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. www.williamblair.com 5
  8. 8. U.S. M&A Activity U.S. M&A Activity Transaction Detail Announced U.S. M&A activity in November totaled 683 transactions, a decline of just 7.2% compared with the corresponding period last year and also below the trailing-12-month monthly average of 740. The dollar volume of transactions totaled $98.7 billion, a significant jump from just $30.3 billion last year and 51% above the monthly average of $65.5 billion. It was also the third highest total in the past 16 months. Middle-market activity for the month was also relatively strong, as the number of deals increased 5.1% compared with the corresponding period last year, while the announced dollar volume increased 57.1%. Year-to-date, total U.S. dollar volume has declined 28.9% compared with the corresponding period last year, although the decline in the number of transactions has been slightly less dramatic, down 23.5%. Overall, the lower end of the middle market continues to show the most strength, although it has weakened somewhat over the past few months. Transactions in the less-than-$50 million segment have declined just 5.8% year-to-date compared with the corresponding period last year, while the dollar volume of these transactions has declined 19.5%. U.S. M&A Activity Detail NUMBER OF DEALS DEAL VALUE % Chg. % Chg. 2007 2008 2009 '09 vs. '08 2007 2008 2009 '09 vs. '08 NOVEMBER < $50M 266 231 217 (6.1%) $3,866 $3,092 $2,773 (10.3%) $50M-$250M 116 49 63 28.6% $13,626 $5,338 $6,997 31.1% $250M-$750M 50 17 32 88.2% $20,799 $6,107 $13,063 113.9% Total Middle-Market 432 297 312 5.1% $38,291 $14,537 $22,833 57.1% Monthly Average 368 392 326 (16.8%) $39,059 $31,386 $18,602 (40.7%) > 750M 28 6 20 233.3% $55,491 $15,803 $75,873 380.1% Undisclosed 642 433 351 (18.9%) – – – – Total Deals 1,102 736 683 (7.2%) $93,782 $30,340 $98,707 225.3% Monthly Average 1,074 961 740 (23.0%) $147,917 $99,790 $65,471 (34.4%) YTD < $50M 2,304 2,798 2,637 (5.8%) $37,736 $40,875 $32,920 (19.5%) $50M-$250M 1,222 1,123 651 (42.0%) $141,291 $126,055 $73,541 (41.7%) $250M-$750M 577 408 241 (40.9%) $248,041 $171,792 $98,247 (42.8%) Total Middle-Market 4,103 4,329 3,529 (18.5%) $427,068 $338,722 $204,708 (39.6%) > 750M 422 220 139 (36.8%) $1,184,100 $716,278 $545,122 (23.9%) Undisclosed 7,658 5,959 4,366 (26.7%) – – – – Total Deals 12,183 10,508 8,034 (23.5%) $1,611,168 $1,055,000 $749,830 (28.9%) LTM < $50M 2,451 3,018 2,936 (2.7%) $40,684 $44,358 $37,292 (15.9%) $50M-$250M 1,341 1,229 723 (41.2%) $156,037 $138,739 $81,735 (41.1%) $250M-$750M 627 457 257 (43.8%) $271,991 $193,534 $104,196 (46.2%) Total Middle-Market 4,419 4,704 3,916 (16.8%) $468,712 $376,630 $223,223 (40.7%) > 750M 455 260 150 (42.3%) $1,306,297 $820,851 $562,424 (31.5%) Undisclosed 8,017 6,566 4,815 (26.7%) – – – – Total Deals 12,891 11,530 8,881 (23.0%) $1,775,009 $1,197,482 $785,647 (34.4%) Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. www.williamblair.com 6
  9. 9. U.S. M&A Activity (cont'd) U.S. M&A Activity (cont'd) Annual Activity U.S. M&A Activity Undisclosed Middle Market >$750M Deal Value Number of Deals Deal Value ($ in billions) 15,000 $2,400 13,099 12,730 13,205 12,793 12,359 11,355 10,091 10,074 10,508 $1,800 9,928 10,000 8,948 8,790 8,034 $1,200 5,000 $600 0 $0 Number 11/08 11/09 of Deals 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 YTD YTD >$750M 265 252 327 190 128 146 233 281 364 462 231 220 139 Middle Market 6,399 5,351 6,791 4,624 4,019 4,237 4,532 4,465 4,524 4,478 4,716 4,329 3,529 Undisclosed 6,435 7,127 5,675 5,277 4,801 4,407 5,163 5,328 7,471 8,265 6,408 5,959 4,366 Deal Value $1,583 $1,719 $1,608 $871 $569 $688 $995 $1,300 $1,657 $1,754 $1,091 $1,055 $750 Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. U.S. Middle-Market M&A Activity <$50M $50-250M $250-750M Deal Value Number of Deals Deal Value ($ in billions) 7,000 6,399 6,791 $600 6,000 5,351 $500 5,000 4,624 4,524 4,716 4,532 4,465 4,478 4,237 4,329 $400 4,019 4,000 3,529 $300 3,000 $200 2,000 1,000 $100 0 $0 Number 11/08 11/09 of Deals 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 YTD YTD $250-750M 429 527 514 298 291 315 409 427 535 626 424 408 241 $50-250M 1,446 1,426 1,588 1,010 897 1,071 1,226 1,276 1,295 1,328 1,195 1,123 651 <$50M 4,524 3,398 4,689 3,316 2,831 2,851 2,897 2,762 2,694 2,524 3,097 2,798 2,637 Deal Value $403 $441 $463 $280 $259 $293 $354 $366 $420 $465 $357 $339 $205 Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. . www.williamblair.com 7
  10. 10. U.S. M&A Activity (cont'd) U.S. M&A Activity (cont'd) Valuation Multiples Overall, acquisition multiples as measured by enterprise value/EBITDA remain well below their 2008 levels, reflecting the uncertain economic outlook, reduced corporate profits, tight credit markets, volatile equity markets, and reduced competition between strategic and financial buyers. The one-week and four-week acquisition premiums paid for public companies have reached their highest levels in more than a decade. However, given the recent sharp rebound in equity prices, we believe that these premiums will likely begin to trend lower. U.S. EV/EBITDA Valuation Multiples(1) 12.0x Middle Market Overall Market 9.0x 6.0x 3.0x 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM Middle Market 9.2x 8.0x 7.4x 6.9x 8.2x 7.4x 8.5x 10.6x 9.6x 9.2x 8.2x 7.3x Overall Market 9.6x 8.5x 7.8x 7.3x 8.0x 8.0x 9.0x 10.4x 10.3x 10.4x 9.3x 8.1x (1) Effective with the July 2009 issue, we revised our parameters to exclude transactions in the financial institutions sector. All periods have been recalculated and the current results are not comparable to those published prior to July 2009. Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. U.S. EV/EBITDA Middle-Market Valuation Multiples(1) < $50M $50M-$250M $250M-$750M 12.0x 9.0x 6.0x 3.0x 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM < $50M 8.0x 7.8x 7.0x 6.0x 7.2x 8.3x 8.0x 7.9x 10.2x 7.8x 6.0x 5.6x $50M-$250M 9.9x 8.1x 7.4x 7.8x 7.7x 6.7x 8.2x 11.1x 9.0x 9.3x 10.6x 7.8x $250M-$750M 10.9x 8.5x 8.0x 7.2x 9.6x 7.9x 9.1x 11.2x 9.5x 9.3x 10.1x 7.8x (1) Effective with the July 2009 issue, we revised our parameters to exclude transactions in the financial institutions sector. All periods have been recalculated and the current results are not comparable to those published prior to July 2009. Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. Median Acquisition Premiums 1-Week Premium 4-Week Premium 60.0% 40.0% 20.0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM 1-Week Premium 38.4% 38.9% 41.2% 47.1% 45.0% 35.3% 26.4% 32.1% 27.6% 29.4% 38.0% 46.0% 4-Week Premium 42.3% 47.0% 49.0% 52.8% 47.5% 41.8% 29.8% 36.0% 30.4% 31.5% 43.0% 55.8% Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. www.williamblair.com 8
  11. 11. U.S. M&A Activity (cont'd) U.S. M&A Activity (cont'd) Private-Equity Transaction Analysis For the month, there were just 82 U.S. related private-equity transactions, almost 15% below the year- ago period and also well below the monthly average of 110. However, the dollar value of $17.1 billion was more than twice the comparable period last year and 58% above the monthly average. This increase in volume was attributable to a number of larger transactions, resulting in an almost 140% increase in dollar volume for transactions in excess of $750 million. Year-to-date, there have been just 1,199 announced transactions, 31.3% less than the corresponding period last year. The dollar volume has experienced an even more dramatic decline, down 40.2% year- to-date compared with the corresponding period last year and down a staggering 79.3% compared with 2007. U.S. Private-Equity Activity Detail NUMBER OF DEALS DEAL VALUE % Chg. % Chg. 2007 2008 2009 '09 vs. '08 2007 2008 2009 '09 vs. '08 NOVEMBER Middle-Market 70 40 38 (5.0%) $9,657 $3,147 $6,291 99.9% Monthly Average 73 70 56 (20.1%) $11,813 $8,093 $4,369 (46.0%) > 750M 3 3 5 66.7% $9,900 $4,550 $10,850 138.5% Undisclosed 123 53 39 (26.4%) – – – – Total Deals 196 96 82 (14.6%) $19,557 $7,697 $17,141 122.7% Monthly Average 205 161 110 (31.6%) $54,800 $21,167 $10,755 (49.2%) YTD Middle-Market 805 765 610 (20.3%) $127,436 $85,986 $48,590 (43.5%) > 750M 145 49 34 (30.6%) $471,895 $121,184 $75,338 (37.8%) Undisclosed 1,354 932 555 (40.5%) – – – – Total Deals 2,304 1,746 1,199 (31.3%) $599,331 $207,170 $123,928 (40.2%) LTM Middle-Market 879 840 671 (20.1%) $141,761 $97,111 $52,426 (46.0%) > 750M 156 65 35 (46.2%) $515,839 $156,893 $76,638 (51.2%) Undisclosed 1,430 1,021 611 (40.2%) – – – – Total Deals 2,465 1,926 1,317 (31.6%) $657,600 $254,004 $129,064 (49.2%) Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. U.S. Private-Equity Activity Undisclosed Middle Market >$750M Deal Value Deal Value Number of Deals ($ in billions) 2,434 2,484 2,500 $700 2,088 1,882 1,864 $600 2,000 1,746 $500 1,500 1,314 1,382 1,199 $400 1,071 1,066 1,125 1,000 $300 718 $200 500 $100 0 $0 Number 11/08 11/09 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 of Deals YTD YTD >$750M 24 32 29 21 26 34 74 92 119 161 50 49 34 Middle Market 367 546 775 557 618 715 1,013 989 1,094 880 826 765 610 Undisclosed 327 493 510 488 481 633 795 1,007 1,221 1,443 988 932 555 Deal Value $93 $130 $134 $87 $98 $133 $252 $332 $578 $646 $212 $207 $124 Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. www.williamblair.com 9
  12. 12. U.S. M&A Activity (cont'd) U.S. M&A Activity (cont'd) Private-Equity Transaction Analysis (cont’d) The computer and electronics sector remains the most active sector for private-equity investors, with 305 announced transactions year-to-date. This total remains more than the next two sectors combined — healthcare and professional services with 145 deals each. These three industries alone continue to represent approximately 50% of the total year-to-date announced deals. Based on dollar volume, the finance sector remains the most active area, with $29.1 billion in announced year-to-date dollar volume and accounting for almost 25% of the total. Remaining in second place is computers and electronics, which has dramatically narrowed the gap and is now less than $2 billion behind the finance industry for most active. Private Equity Activity by Target Sector NUMBER OF DEALS DOLLAR VOLUME 2006 2007 2008 2009 YTD 2006 2007 2008 2009 YTD Aerospace 17 19 11 6 $4,947 $7,769 $2,555 $1,050 Agribusiness 9 7 7 4 – $75 $150 $52 Auto/Truck 57 55 46 35 $5,266 $19,588 $746 $1,113 Chemicals 61 83 55 27 $14,190 $18,982 $5,357 $1,457 Computers & Electronics 496 412 389 305 $56,687 $44,044 $22,953 $27,143 Construction/Building 92 85 77 37 $10,229 $15,784 $3,504 $648 Consumer Products 93 138 68 30 $9,650 $15,922 $5,947 $2,320 Defense 3 7 4 1 $410 $905 $25 $214 Dining & Lodging 49 48 30 14 $19,024 $39,553 $3,710 $896 Finance 83 129 97 60 $20,757 $77,639 $33,303 $29,121 Food & Beverage 65 57 55 28 $9,952 $16,277 $8,380 $7,082 Forestry & Paper 23 28 14 3 $5,136 $7,474 $750 $15 Government 2 4 2 – $8 – $8 – Healthcare 244 230 180 145 $81,648 $48,210 $15,431 $13,863 Holding Companies 18 25 16 5 $4,172 $6,801 $1,857 $65 Insurance 41 60 42 21 $4,775 $13,572 $3,106 $3,319 Leisure & Recreation 37 39 27 24 $33,925 $7,456 $2,212 $3,834 Machinery 70 81 53 31 $5,374 $4,762 $1,791 $2,077 Metal & Steel 61 57 45 23 $8,124 $6,999 $3,027 $662 Mining 11 15 11 5 $1,673 $2,630 $911 $14 Oil & Gas 74 59 62 33 $12,584 $19,089 $8,272 $3,320 Professional Services 327 348 248 145 $29,767 $41,555 $16,103 $5,762 Publishing 79 76 34 36 $8,921 $7,247 $1,416 $2,172 Real Estate/Property 38 41 45 16 $77,603 $46,315 $4,937 $3,375 Retail 73 94 65 47 $37,620 $27,252 $4,527 $4,035 Telecommunications 150 118 68 52 $64,281 $66,592 $37,522 $4,560 Textile 26 28 17 5 $825 $6,130 $1,206 $228 Transportation 73 84 55 27 $20,877 $14,720 $3,230 $1,099 Utility & Energy 62 57 41 34 $29,494 $62,826 $19,371 $4,433 TOTAL 2,434 2,484 1,864 1,199 $577,918 $646,166 $212,307 $123,928 Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. www.williamblair.com 10
  13. 13. U.S. M&A Activity (cont'd) U.S. M&A Activity (cont'd) Transaction Breakdown Private companies have continued to take advantage of the market turmoil and increased their acquisition activity relative to the other market participants. Private companies now represent 46.7% of acquirers, up from 38.3% in 2008. This increase has come primarily at the expense of public companies, although private-equity firms and foreign acquirers have also seen their share of the total decline compared with 2008 results. Private companies continue to account for the majority (62.1%) of all transaction targets, although their share has declined from 2008. Both private-equity exits and public companies have also seen a decline as a percent of the total, while the divestiture activity has increased dramatically over the past two years. U.S. Middle-Market M&A Activity by Acquirer(1) Percent of Deals Private Public Private Equity Foreign 75.0% 50.0% 25.0% 0.0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM Private 16.6% 23.1% 32.7% 28.3% 29.4% 32.4% 29.2% 27.7% 37.3% 38.9% 38.3% 46.7% Public 71.5% 59.6% 46.5% 48.9% 46.8% 43.6% 44.7% 40.3% 32.1% 30.3% 30.2% 25.3% Private Equity 5.0% 7.9% 8.9% 8.1% 10.4% 13.8% 15.2% 17.5% 16.9% 15.6% 13.6% 12.0% Foreign 6.9% 9.4% 11.9% 14.7% 13.5% 10.2% 11.0% 14.5% 13.7% 15.2% 17.9% 16.0% (1) As of November 2009, we have adjusted the data to include transactions with no disclosed value, rather than just middle-market deals Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. U.S. Middle-Market M&A Activity by Target(1) Percent Deals Private Public Private Equity Divestiture 75.0% 50.0% 25.0% 0.0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM Private 59.2% 61.4% 63.9% 49.6% 48.9% 42.9% 52.4% 64.1% 67.3% 69.5% 64.6% 62.1% Public 7.1% 9.4% 8.8% 7.4% 6.2% 6.2% 4.2% 3.9% 3.3% 3.7% 4.4% 4.2% Private Equity 1.0% 1.3% 2.1% 3.4% 3.8% 5.3% 6.5% 6.8% 5.6% 5.5% 4.4% 3.6% Divestiture 32.7% 27.9% 25.1% 39.6% 41.1% 45.6% 37.0% 25.2% 23.7% 21.3% 26.5% 30.0% (1) As of November 2009, we have adjusted the data to include transactions with no disclosed value, rather than just middle-market deals Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. www.williamblair.com 11
  14. 14. U.S. M&A Activity (cont'd) U.S. M&A Activity (cont'd) Transaction Breakdown (cont’d) Distressed U.S. M&A Activity Undisclosed Middle Market >$750M Deal Value Deal Value Number of Deals ($ in billions) 350 $100 323 308 307 300 $80 250 $60 200 184 147 150 $40 101 100 70 62 $20 50 40 41 36 29 0 $0 Number 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 of Deals YTD >$750M 2 5 1 10 10 13 13 2 2 5 11 14 Middle Market 20 36 24 92 219 230 124 24 14 30 42 142 Undisclosed 7 21 15 45 79 64 47 15 20 35 48 167 Deal Value $7.6 $16.5 $4.0 $31.3 $49.3 $45.6 $30.0 $8.6 $5.6 $18.6 $42.8 $58.7 Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. U.S. Take Private Transaction Activity Middle Market >750M Deal Value Deal Value Number of Deals ($ in billions) 75 $300 63 66 $250 50 $200 39 32 $150 24 25 23 23 25 21 21 21 $100 17 13 $50 0 $0 Number 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 of Deals YTD >750M 7 4 4 2 2 4 2 10 13 33 35 5 1 Middle Market 16 17 35 19 11 17 22 13 19 30 31 20 16 Deal Value $12.7 $8.7 $13.9 $9.4 $5.2 $8.3 $7.1 $27.6 $49.6 $268.7 $262.0 $10.3 $4.4 Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. www.williamblair.com 12
  15. 15. U.S. M&A Activity (cont'd) U.S. M&A Activity (cont'd) Industry Breakdown For the overall market, just one (healthcare) of the 14 industry sectors we track currently is showing an increase in the year-to-date number of deals compared with the corresponding period last year. In terms of dollar volume, just 3 segments (industrial products, healthcare, and transportation) are experiencing a year-over-year increase, while just 4 of the 14 segments (an improvement from 7 last month and 11 just two months ago) remain down in excess of 50% compared with the corresponding period last year. In the middle market, the picture is similar, with just three industries seeing an increased number of transactions compared with the corresponding period last year. In terms of dollar volume, just one industry is showing an increase in dollar volume and four are currently down more than 50% (compared with six in the prior month). Transaction Activity by Target Sector 2006 2007 2008 2008 YTD 2009 YTD TRANSACTIONS Mid-Mkt Total Mid-Mkt Total Mid-Mkt Total Mid-Mkt Total Mid-Mkt Total Business Services 361 1,710 344 1,746 361 1,294 333 1,199 297 912 Computers & Electronics 701 1,800 619 1,731 726 1,671 649 1,527 730 1,470 Construction/Building 82 407 79 398 73 312 67 292 37 175 Consumer Products 74 291 111 455 83 238 79 227 43 135 Consumer Services 241 696 177 667 152 422 140 396 143 313 Energy & Power 291 685 306 729 398 710 377 671 296 550 Financial 279 889 271 1,007 254 770 229 691 150 577 Food & Beverage 57 215 41 203 47 172 42 156 31 103 Healthcare 431 963 350 934 438 879 395 805 470 818 Industrial Products 114 499 118 499 129 420 122 391 77 230 Materials 162 533 188 647 219 576 202 545 146 355 Real Estate/Property 280 548 240 560 200 424 181 385 114 216 Telecommunications 217 489 159 451 161 342 147 320 125 270 Transportation 69 222 57 250 56 197 50 185 27 92 Other 60 223 60 223 64 178 58 161 23 90 TOTAL 3,419 10,170 3,120 10,500 3,361 8,605 3,071 7,951 2,709 6,306 $ VOLUME (B) Business Services $25,528 $61,236 $26,028 $91,436 $19,402 $31,466 $18,961 $31,025 $11,059 $18,025 Computers & Electronics $43,862 $115,675 $42,451 $119,923 $29,275 $75,718 $27,933 $74,377 $21,546 $69,112 Construction/Building $8,588 $31,685 $7,630 $45,398 $5,464 $8,666 $5,335 $8,537 $2,199 $5,304 Consumer Products $7,311 $17,554 $7,514 $29,011 $5,152 $21,286 $5,052 $21,187 $1,796 $7,183 Consumer Services $27,396 $130,789 $21,491 $85,664 $11,491 $24,417 $11,138 $23,289 $9,249 $20,077 Energy & Power $34,729 $160,738 $44,072 $210,626 $45,830 $103,429 $43,949 $97,048 $24,274 $50,494 Financial $32,248 $174,809 $33,110 $210,613 $24,786 $143,635 $23,193 $140,302 $14,885 $85,993 Food & Beverage $7,773 $11,854 $4,444 $30,007 $4,114 $98,723 $3,690 $95,795 $2,011 $18,667 Healthcare $35,561 $177,872 $32,385 $140,861 $27,727 $137,279 $25,984 $134,416 $23,248 $167,674 Industrial Products $9,712 $25,278 $14,064 $45,482 $9,371 $11,321 $8,617 $10,567 $4,704 $15,444 Materials $19,482 $90,651 $23,026 $100,655 $14,998 $61,227 $14,167 $60,396 $8,541 $26,172 Real Estate/Property $32,163 $164,892 $36,752 $139,495 $21,166 $33,404 $19,670 $31,907 $7,673 $8,973 Telecommunications $18,185 $204,510 $18,633 $83,260 $10,345 $82,439 $9,957 $82,051 $10,183 $46,255 Transportation $7,626 $22,135 $8,938 $31,248 $5,010 $11,726 $4,473 $10,038 $1,768 $37,682 Other $4,622 $9,219 $5,419 $18,720 $5,667 $6,489 $5,455 $6,277 $1,105 $3,655 TOTAL $314,786 $1,398,896 $325,958 $1,382,401 $239,798 $851,225 $227,573 $827,210 $144,239 $580,710 ENT. VALUE/ EBITDA Business Services 11.8x 12.1x 11.2x 13.3x 8.9x 10.8x 8.9x 10.8x 11.8x 10.9x Computers & Electronics 14.6x 15.1x 14.7x 15.3x 13.5x 13.3x 13.5x 13.3x 10.6x 11.9x Construction/Building 8.7x 10.7x 8.8x 10.2x 4.9x 6.4x 4.9x 6.4x NA NA Consumer Products 11.0x 10.4x 10.1x 11.7x NA 10.9x NA 10.9x NA NA Consumer Services 12.4x 13.0x 11.2x 13.4x 10.9x 11.3x 10.9x 11.3x 12.3x 11.4x Energy & Power 11.9x 11.7x 8.0x 9.9x 12.1x 12.9x 12.1x 12.9x 6.0x 8.7x Financial 10.6x 10.4x 10.2x 10.8x 9.5x 9.5x 9.7x 9.7x 8.9x 8.8x Food & Beverage 7.7x 7.6x 16.0x 16.7x 4.9x 13.5x NA 13.5x 9.0x 9.2x Healthcare 12.8x 14.9x 10.9x 13.9x 12.9x 16.7x 4.9x 16.5x 7.7x 10.0x Industrial Products 9.1x 11.6x 13.3x 11.6x 11.9x 11.9x 12.9x 11.9x 11.4x 11.4x Materials 9.5x 10.7x 9.7x 9.9x 10.7x 12.1x 11.9x 12.1x 6.8x 6.2x Real Estate/Property 11.4x 16.1x 12.1x 14.2x 20.0x 17.4x NA 14.7x 5.7x 5.7x Telecommunications 13.1x 13.9x 13.3x 13.7x 18.0x 12.5x 10.7x 12.5x 10.3x 11.0x Transportation 13.4x 13.2x 11.5x 12.4x NA 7.5x NA 7.5x 7.3x 8.0x Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. www.williamblair.com 13
  16. 16. U.S. M&A Activity (cont'd) U.S. M&A Activity (cont'd) Cross-Border Transaction Analysis Total U.S. cross-border activity and middle-market cross-border activity continue to decline moderately from prior levels. For the overall market, the LTM transaction breakdown is about 60%/40% in favor of outbound transactions, similar to the totals for all of 2006 and 2007. In the middle market, the LTM transaction breakdown favors the outbound transactions 60% to 40%. For middle-market and undisclosed transactions, the most actively targeted U.S. industries by foreign buyers are computers/electronics, healthcare, and professional services. The most active foreign buyers making acquisitions in the United States remain the same, Canada, the United Kingdom, and Japan. The top industries outside the United States targeted by U.S. buyers remain the same: computer/electronics, professional services, and healthcare. The top countries targeted by U.S. buyers were Canada followed by the United Kingdom and China. U.S. Middle-Market Cross-Border M&A by Number of Deals Outbound Inbound Inbound Deal Value Outbound Deal Value Deal Value Number of Deals ($ in billions) 2,500 $120 2,089 2,141 1,927 $100 2,000 1,846 1,703 1,615 $80 1,448 1,421 1,442 1,4091,430 1,500 1,320 1,268 1,119 $60 1,081 1,021 1,018 1,052 1,001 1,000 867 851 791 680 $40 622 500 $20 0 $0 Number 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM of Deals Inbound Middle Market 383 469 684 572 442 365 434 526 517 615 738 531 Undisclosed 297 398 397 449 409 257 357 526 751 827 671 470 Value $37.2 $46.8 $65.2 $38.5 $30.2 $24.3 $39.9 $44.2 $57.0 $65.8 $50.9 $35.1 Outbound Middle Market 757 844 871 676 557 525 699 748 818 1,072 1,091 703 Undisclosed 946 1,002 1,056 772 562 493 621 673 797 1,017 1,050 727 Value $55.6 $77.5 $71.6 $49.3 $36.2 $39.0 $59.4 $61.2 $71.7 $105.2 $91.4 $45.4 Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. www.williamblair.com 14
  17. 17. U.S. M&A Activity (cont'd) U.S. M&A Activity (cont'd) Cross-Border Transaction Analysis (cont’d) U.S. Cross-Border M&A — Number of Transactions INBOUND OUTBOUND TOTAL 2007 2008 2009 YTD 2007 2008 2009 YTD 2007 2008 2009 YTD Middle Market 615 738 476 1,072 1,091 632 1,687 1,829 1,108 > $750M 93 53 18 64 38 22 157 91 40 Undisclosed 827 671 423 1,017 1,050 659 1,844 1,721 1,082 Total 1,535 1,462 917 2,153 2,179 1,313 3,688 3,641 2,230 U.S. Cross-Border M&A — Transaction Value INBOUND OUTBOUND TOTAL 2007 2008 2009 YTD 2007 2008 2009 YTD 2007 2008 2009 YTD Middle Market $65,770 $50,948 $33,580 $105,204 $91,372 $41,220 $170,974 $142,319 $74,800 > $750M $297,322 $233,800 $43,379 $149,044 $86,460 $61,046 $446,366 $320,260 $104,424 Undisclosed – – – – – – – – – Total $363,093 $284,748 $76,959 $254,248 $177,831 $102,265 $617,340 $462,579 $179,224 U.S. Cross-Border M&A Transactions — 2009 YTD INBOUND to U.S. OUTBOUND from U.S. Target Industry Deals Acquiror Country Deals Target Industry Deals Acquiror Country Deals Computers & Electronics 170 Canada 252 Computers & Electronics 260 Canada 220 Healthcare 120 United Kingdom 131 Professional Services 162 United Kingdom 163 Professional Services 79 Japan 68 Healthcare 111 China 111 Mining 74 Australia 62 Mining 77 Germany 75 Oil & Gas 73 Switzerland 40 Finance 72 Japan 74 U.S. Cross-Border M&A Transactions — 2008 INBOUND to U.S. OUTBOUND from U.S. Target Industry Deals Acquiror Country Deals Target Industry Deals Acquiror Country Deals Computers & Electronics 262 Canada 382 Computers & Electronics 417 Canada 304 Healthcare 145 United Kingdom 184 Professional Services 229 United Kingdom 267 Professional Services 140 Australia 88 Finance 158 China 213 Mining 109 Japan 80 Healthcare 122 Japan 163 Oil & Gas 103 Germany 74 Real Estate/Property 102 India 141 www.williamblair.com 15
  18. 18. U.S. Financing Markets U.S. Financing Markets Debt Capital Markets The average debt multiple for LBO loans continues to decline, with total debt/EBITDA for transactions with companies below $50 million of EBITDA currently at 3.5x, down from 4.4x at the beginning of the year and 5.3x at the beginning of 2008. For companies with more than $50 million in EBITDA, the leverage multiples have ticked up slightly, and now stand at 3.9x total debt and 3.2x senior debt. This compares with total debt of 4.0x and senior debt of 3.4x at the beginning of the year. The average total equity contribution for the LTM period through September 30, 2009, was 43.9% for all transactions, which is at the top end of the historical range. Average Pro Forma Adjusted Credit Statistics of Middle-Market LBO Loans (Issuers with EBITDA of Less Than $50M) Total Debt/EBITDA Senior Debt/EBITDA 7.0x 7.0x 6.0x 6.0x 5.3x 5.0x 4.9x 5.0x 5.0x 4.4x 4.4x 3.8x 4.0x 4.1x 3.9x 3.5x 3.6x 4.8x 4.6x 4.0x 4.0x 3.5x 4.4x 3.9x 3.0x 3.4x 3.0x 3.2x 3.3x 3.1x 3.0x 3.3x 2.4x 2.7x 2.0x 2.0x 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 (1) Total Equity equals common, preferred and rollover equity. Source: S&P’s Leveraged Lending Review. Average Pro Forma Adjusted Credit Statistics of Middle-Market LBO Loans (Issuers with EBITDA of More Than $50M) Total Debt/EBITDA Senior Debt/EBITDA 7.0x 5.8x 7.0x 5.7x 5.6x 6.0x 6.0x 4.9x 5.0x 5.8x 4.5x 4.6x 5.0x 5.0x 4.1x 5.2x 3.9x 4.0x 3.8x 3.9x 4.0x 3.7x 4.0x 4.4x 3.0x 3.4x 3.0x 3.2x 3.3x 3.2x 3.2x 2.8x 2.9x 2.8x 2.0x 2.0x 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: S&P’s Leveraged Lending Review. www.williamblair.com 16
  19. 19. U.S. Financing Markets U.S. Financing Markets (Cont'd) Average Total Equity Contribution Less than $50 million EBITDA More than $50 million EBITDA 50.0% (1) 45.3% 43.9% 40.8% 41.5% 37.9% 39.7% 40.0% 37.0% 36.1% 36.3% 36.7% 35.4% 34.2% 34.2% 32.4% 31.5% 32.3% 29.9% 30.0% 31.0% 31.5% 28.9% 29.6% 29.9% 30.0% 26.8% 25.2% 20.0% 10.0% 0.0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM 10/31/09 (1) Total Equity equals common, preferred and rollover equity. Source: S&P’s Leveraged Lending Review. www.williamblair.com 17

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