Merger Tracker Monthly March2009.2
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Merger Tracker Monthly March2009.2 Document Transcript

  • 1. MERGER TRACKER M&A Market Monthly Overview of Global Analysis Middle-Market M&A Activity March 2009 Steven M. Bernard, CFA Director of M&A Market Analysis sbernard@williamblair.com 312.364.8221
  • 2. Table of Contents Commentary 1 Global Activity 3 Regional Transactions 3 Middle-Market Regional Transactions 4 U.S. M&A Activity 5 Annual Transactions 5 Transaction Detail 6 Valuation Multiples 7 Private-Equity Transactions 8 Transaction Detail 9 Sector Breakdown 10 Cross-Border Transactions 11 U.S. Financing Markets 13 Debt Capital Markets 13 Equity Capital Markets 14 European M&A Activity 15 Transaction Detail 15 Annual Transactions 16 Valuation Multiples 17 Private-Equity Transactions 18 Emerging Markets M&A Activity 19 Select William Blair & Company Transactions 20 William Blair & Company Corporate Finance Contact List 23 Notes 24 Disclosures 25
  • 3. Commentary Commentary OVERVIEW Two months into 2009, global M&A activity remains anemic and prospects for any meaningful near-term bounce appear remote. This weakness is affecting all global regions and industry sectors as well as strategic and financial buyer regardless of deal size. While there has been the occasional multibillion-dollar transaction, the majority of activity remains in the small sub-$50 million category. We expect this pattern to remain the norm and believe that the near-term outlook remains negative. The continued weakness in the equity markets has made it difficult to finance transactions with equity, while the credit markets remain mostly closed, limiting access to debt financing. Furthermore, the uncertainty regarding the economic outlook has forced most corporate CEOs to focus inward on their own financial performance rather than assessing acquisition opportunities. GLOBAL M&A HIGHLIGHTS February M&A activity was down significantly across all geographic regions. The total number of global transactions for the month was 2,125, representing a 37.9% decline compared with last year while the total dollar volume declined 52.8%, to just $97.2 billion. Both North America and Europe saw declines of more than 30% in the number of transactions. The dollar volume declined in excess of 35% for all regions, with an 80% decline in Latin America. Results for middle-market activity were also extremely weak. The global number of deals for the month totaled 1,139, a decline of 37.1%, while the dollar volume of disclosed transactions was $41.0 billion, a decline of 63.8%. U.S. M&A HIGHLIGHTS U.S. M&A activity remains on a downward spiral, reflecting the weak economic environment, declining stock prices, and near shut-down of the credit markets, which have been weighing on the market for more than a year. Overall, U.S. M&A activity in February totaled just 584 announced deals, down 36.0% from last year and 32.0% below the trailing-12-month monthly average of 859. This transaction total was the lowest monthly total since mid-2003. The dollar volume of transactions totaled just $34.1 billion, a 52.2% decrease from the corresponding period last year and significantly below the depressed trailing-12-month monthly average of $94.5 billion. In the middle market, the number of transactions totaled 234, a decline of 43.5% from the year-ago period, while the dollar volume of middle-market transactions declined 70.9%. The best-performing segment continues to be the lower end of the middle market, where the number of transactions under $50 million declined by less than 20% in February. However, the dollar volume of these transactions declined more than 35%, indicating that even this segment was experiencing a decline in transaction size. The U.S. private-equity market remains under significant pressure. For the month, there were just 47 private- equity transactions, representing a year-over-year decline of 73.6%, while the total dollar volume declined 18.2%. As a result of this weakness, middle-market transactions involving acquisitions by private-equity firms declined to 11.3% of all deals, down from 11.4% at the end of 2008 and 15.2% in 2007. Overall EBITDA multiples continue to decline, reflecting the slowdown in the economy and reduced competition between strategic buyers and private-equity firms. For the LTM, the overall valuation multiple for all transactions was 9.9x EBITDA, compared with 11.0x EBITDA during 2008 Public companies remain the most active middle-market acquirers, representing 33.2% of all transactions, although private-company acquirers and foreign acquirers have both continued to significantly increase their share of the total compared with recent totals. For middle-market transactions and those with an undisclosed dollar value, the most actively targeted industries by foreign buyers were computers/electronics and healthcare. Companies from Canada and the United Kingdom were the most active buyers of U.S. middle-market companies. 1
  • 4. Commentary (cont'd) Commentary (cont'd) EUROPEAN M&A HIGHLIGHTS European M&A activity also remains extremely weak. In February, there were 781 announced transactions involving European companies. This total represented a decline of 44.5% compared with the corresponding period last year. The total dollar volume of $46.1 billion was more than 60% below the trailing-12-month monthly average of $103.9 billion. European middle-market activity was also very weak, with the number of deals down 53.6%, while the dollar volume declined 73.3% compared with the corresponding period last year. European private equity was also down significantly as the number of transactions was just 56, down 66.5% from the corresponding period last year. For middle-market deals over the past 12 months, the EBITDA multiple continues to decline and is currently 8.7x EBITDA, compared with 9.5x for 2008. The EBITDA multiple for all European transactions also continues to decline, coming in at 9.4x for the LTM, ending at 9.4 in February, down from 10.2x at the end of 2008 and 11.5x for 2007. Global M&A Activity Number of Deals Deal Value Undisclosed Middle Market >$750M Deal Value ($ in billions) 40,689 45,000 $4,500 40,550 35,997 40,000 $4,000 35,000 $3,500 30,721 30,792 30,000 $3,000 26,573 27,251 25,811 24,880 22,864 22,758 25,000 $2,500 20,000 $2,000 15,000 $1,500 6,980 10,000 $1,000 4,659 5,000 $500 0 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2/08 2/09 YTD YTD Number of Deals >$750M 404 563 646 340 296 292 439 580 799 1,032 625 118 47 Middle Market 11,853 12,923 15,870 12,998 12,412 11,932 13,745 16,742 18,756 21,468 21,131 3,611 2,369 Undisclosed 10,607 13,765 14,205 13,235 12,172 10,534 11,627 13,470 16,442 18,189 16,973 3,251 2,243 $2,224 $3,059 $3,031 $1,575 $1,242 $1,355 $1,943 $2,751 $3,648 $4,275 $2,781 $429 $290 Deal Value Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 2
  • 5. Global Activity Regional Transactions Global Activity The pace of global M&A activity continues to decline substantially from prior-year levels. No region has been spared, with significant double-digit declines in both the number of deals and dollar volume experienced across all major geographic regions. The one exception is North America, which has a modest year-to-date increase in dollar volume due to the impact of the Pfizer/Wyeth transaction. Without the impact of that transaction, it would also show a sizable double-digit decline. Global M&A Activity Detail NUMBER OF DEALS DEAL VALUE % Change % Change 2009 '09 vs. '08 2009 '09 vs. '08 2007 2008 2007 2008 FEBRUARY North America 874 923 574 (37.8%) $178,054 $52,243 $33,024 (36.8% ) Latin America 78 73 38 (47.9%) $4,517 $5,400 $1,050 (80.6% ) Europe 952 1,250 685 (45.2%) $93,340 $95,162 $37,196 (60.9% ) Africa / Middle East 44 74 42 (43.2%) $8,730 $7,637 $2,189 (71.3% ) Asia Pacific 832 1,102 786 (28.7%) $49,897 $45,661 $23,726 (48.0% ) TOTAL 2,780 3,422 2,125 (37.9%) $334,539 $206,103 $97,185 (52.8%) YTD North America 1,889 1,986 1,347 (32.2%) $271,346 $122,973 $147,044 19.6% Latin America 154 167 85 (49.1%) $7,664 $15,680 $9,407 (40.0% ) Europe 1,847 2,410 1,567 (35.0%) $171,576 $181,029 $81,185 (55.2% ) Africa / Middle East 110 151 98 (35.1%) $12,279 $13,352 $5,362 (59.8% ) Asia Pacific 1,691 2,254 1,558 (30.9%) $75,572 $95,927 $47,019 (51.0% ) TOTAL 5,691 6,968 4,655 (33.2%) $538,436 $428,962 $290,016 (32.4%) LTM North America 11,323 12,403 9,894 (20.2%) $1,650,180 $1,468,400 $1,015,826 (30.8% ) Latin America 866 1,218 975 (20.0%) $79,540 $101,438 $103,749 2.3% Europe 11,672 13,146 11,469 (12.8%) $1,370,444 $1,799,546 $945,464 (47.5% ) Africa / Middle East 646 798 870 9.0% $73,474 $108,219 $46,240 (57.3% ) Asia Pacific 11,470 14,361 13,142 (8.5%) $552,040 $687,970 $530,798 (22.8% ) TOTAL 35,977 41,926 36,350 (13.3%) $3,725,677 $4,165,572 $2,642,076 (36.6%) Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 3
  • 6. Global Activity (cont'd) Middle-Market Regional Transactions Global Activity (cont'd) Global middle-market activity was also down in February, with all regions showing significant declines (more than 50% in most cases) in dollar volume. In aggregate, the total deal value was down 63.8% compared with the year-ago period. The number of transactions also declined dramatically for the month, down 37.1% from the year-ago period, with North America down 35% and Europe declining 56.1%. Two months into the new year, all the regions remain solidly down for the year. Overall, the total number of transactions has declined 34.4%, ranging from North America down 24.3% to Latin America down 60.2%. The dollar volume year-to-date is also down significantly, with an overall decline of 58.7%. The Asia-Pacific region had the smallest decline, at 43.6% while Europe declined 72.3%, the largest of all regions. Global Middle-Market M&A Activity Detail NUMBER OF DEALS DEAL VALUE % Change % Change 2009 '09 vs. '08 2009 '09 vs. '08 2007 2008 2007 2008 FEBRUARY North America 253 381 247 (35.2%) $27,300 $27,799 $10,568 (62.0% ) Latin America 38 44 20 (54.5%) $4,517 $3,050 $1,050 (65.6% ) Europe 398 553 243 (56.1%) $35,392 $47,472 $10,587 (77.7% ) Africa / Middle East 30 39 25 (35.9%) $3,813 $4,036 $1,262 (68.7% ) Asia Pacific 608 793 604 (23.8%) $25,667 $30,917 $17,539 (43.3% ) TOTAL 1,327 1,810 1,139 (37.1%) $96,688 $113,274 $41,007 (63.8%) YTD North America 492 758 574 (24.3%) $58,076 $53,595 $23,179 (56.8% ) Latin America 74 93 37 (60.2%) $7,664 $5,534 $2,419 (56.3% ) Europe 766 1,015 535 (47.3%) $63,004 $84,342 $23,385 (72.3% ) Africa / Middle East 69 79 55 (30.4%) $7,361 $6,291 $3,539 (43.7% ) Asia Pacific 1,260 1,665 1,168 (29.8%) $49,156 $62,096 $35,024 (43.6% ) TOTAL 2,661 3,610 2,369 (34.4%) $185,260 $211,857 $87,546 (58.7%) LTM North America 3,922 4,399 4,384 (0.3%) $361,205 $378,572 $261,947 (30.8% ) Latin America 425 662 489 (26.1%) $41,272 $53,733 $34,045 (36.6% ) Europe 5,269 5,781 4,655 (19.5%) $429,788 $517,764 $335,893 (35.1% ) Africa / Middle East 379 500 479 (4.2%) $34,621 $42,546 $31,950 (24.9% ) Asia Pacific 8,587 11,073 9,882 (10.8%) $294,756 $406,610 $314,232 (22.7% ) TOTAL 18,582 22,415 19,889 (11.3%) $1,161,643 $1,399,225 $978,066 (30.1%) Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 4
  • 7. U.S. M&A Activity Annual Transactions U.S. M&A Activity Total announced U.S. M&A activity in February was just 584 transactions, down 36.0% from last year and 32.0% below the trailing-12-month monthly average of 859. This transaction total was the lowest monthly total since mid-2003. The dollar volume of transactions totaled just $34.1 billion, a 52.2% decrease from the corresponding period last year and significantly below the depressed trailing-12-month monthly average of $94.5 billion. Middle-market activity was equally weak this month, with the number of deals down 43.5% and the dollar volume down a staggering 70.9%. The best-performing segment continues to be the lower end of the middle market, where the number of transactions under $50 million declined by less than 20% in February. However, the dollar volume of these transactions declined more than 35%, indicating that even this segment was experiencing a decline in transaction size. Year-to-date, the U.S. dollar volume has declined just 6.0%, which reflects the impact of the Pfizer/Wyeth transaction rather than a pickup in activity. U.S. M&A Activity Detail NUMBER OF DEALS DEAL VALUE % Chg. % Chg. 2009 '09 vs. '08 '09 vs. '08 2007 2008 2007 2008 2009 FEBRUARY < $50M 163 223 180 (19.3%) $3,105 $3,470 $2,244 (35.3% ) $50M-$250M 100 138 43 (68.8%) $11,579 $15,875 $4,962 (68.7% ) $250M-$750M 47 53 11 (79.2%) $19,906 $22,104 $4,869 (78.0% ) (43.5%) Total Middle-Market 310 414 234 $34,590 $41,449 $12,075 (70.9%) Monthly Average 361 386 364 (5.6%) $35,498 $38,801 $26,232 (32.4% ) > 750M 42 18 8 (55.6%) $145,277 $29,770 $21,988 (26.1% ) – – – – Undisclosed 601 481 342 (28.9%) Total Deals 953 913 584 (36.0%) $179,867 $71,219 $34,063 (52.2%) Monthly Average 1,019 1,075 859 (20.2%) $145,767 $135,754 $94,452 (30.4% ) YTD < $50M 310 485 442 (8.9%) $5,593 $7,520 $5,363 (28.7% ) $50M-$250M 195 252 96 (61.9%) $23,292 $28,720 $10,350 (64.0% ) $250M-$750M 96 95 24 (74.7%) $40,959 $38,154 $10,071 (73.6% ) Total Middle-Market 601 832 562 (32.5%) $69,844 $74,393 $25,785 (65.3%) > 750M 76 49 20 (59.2%) $214,340 $86,709 $125,649 44.9% – – – – Undisclosed 1,232 1,050 811 (22.8%) Total Deals 1,909 1,931 1,393 (27.9%) $284,184 $161,102 $151,434 (6.0%) LTM < $50M 2,503 2,635 2,968 12.6% $43,016 $42,123 $41,937 (0.4% ) $50M-$250M 1,288 1,372 1,036 (24.5%) $149,935 $157,736 $116,272 (26.3% ) $250M-$750M 544 624 366 (41.3%) $233,024 $265,750 $156,569 (41.1% ) Total Middle-Market 4,335 4,631 4,370 (5.6%) $425,975 $465,609 $314,778 (32.4%) > 750M 392 438 219 (50.0%) $1,323,225 $1,163,443 $818,645 (29.6% ) – – – – Undisclosed 7,499 7,835 5,714 (27.1%) Total Deals 12,226 12,904 10,303 (20.2%) $1,749,201 $1,629,053 $1,133,423 (30.4%) Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 5
  • 8. U.S. M&A Activity (cont'd) Transaction Detail U.S. M&A Activity (cont'd) U.S. M&A Activity Number of Deals Deal Value Undisclosed Middle Market > $750M Deal Value ($ in billions) 13,308 15,000 $2,400 12,882 12,817 12,411 12,268 10,841 10,385 $1,800 9,910 10,072 10,000 8,928 8,749 $1,200 5,000 $600 1,931 1,393 0 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2/08 2/09 Number YTD YTD of Deals >$750M 264 252 327 191 129 144 231 282 363 465 248 49 20 Middle Market 6,397 5,337 6,772 4,613 4,007 4,215 4,499 4,442 4,484 4,400 4,640 832 562 Undisclosed 6,647 7,228 5,169 5,268 4,613 4,569 5,180 5,661 7,564 8,017 5,953 1,050 811 $1,585 $1,717 $1,608 $875 $569 $683 $991 $1,302 $1,657 $1,752 $1,143 $161 $151 Deal Value Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. U.S. Middle-Market M&A Activity Number of Deals Deal Value < $50M $50-250M $250-750M Deal Value 6,772 ($ in billions) 6,397 7,000 $600 6,000 5,337 $500 4,613 4,640 4,499 5,000 4,442 4,484 4,400 4,215 $400 4,007 4,000 $300 3,000 $200 2,000 832 562 $100 1,000 0 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2/08 2/09 YTD YTD Number of Deals $250-750M 432 527 515 298 291 313 405 424 537 625 437 95 24 $50-250M 1,444 1,420 1,582 1,006 894 1,065 1,221 1,277 1,285 1,315 1,192 252 96 < $50M 4,521 3,390 4,675 3,309 2,822 2,837 2,873 2,741 2,662 2,460 3,011 485 442 $404 $439 $463 $280 $259 $291 $352 $365 $420 $461 $363 $74 $26 Deal Value Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 6
  • 9. U.S. M&A Activity (cont'd) Valuation Multiples U.S. M&A Activity (cont'd) Overall EBITDA multiples continue to decline, reflecting the slowdown in the economy and reduced competition between strategic buyers and private-equity firms. However, multiples have not fallen as much as one might expect, given the decreased availability of quality companies for sale. The data are also slightly skewed by the heavy reliance on public-company transactions, which tend to have a higher valuation than private-company transactions. One-week and four-week acquisition premiums for public companies continue to creep upward as buyers continue to see attractive valuations despite sharply lower stock prices. U.S. EV/EBITDA Valuation Multiples 12.0x Middle Market Overall Market 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM Middle Market 9.8x 8.5x 7.5x 8.1x 9.2x 8.0x 9.1x 11.2x 12.1x 9.9x 9.2x 8.6x Overall Market 10.4x 9.1x 8.1x 8.5x 9.3x 8.5x 9.5x 11.2x 12.0x 12.4x 11.0x 9.9x Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. U.S. EV/EBITDA Middle-Market Valuation Multiples < $50M $50M-$250M $250M-$750M 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM < $50M 8.2x 7.9x 7.1x 6.6x 9.5x 8.3x 8.8x 8.9x 11.8x 9.2x 6.7x 5.8x $50M-$250M 10.7x 9.2x 7.4x 8.6x 8.5x 7.3x 9.2x 11.7x 12.0x 11.4x 10.0x 10.0x $250M-$750M 11.3x 8.9x 8.2x 8.4x 9.6x 9.3x 9.3x 11.2x 12.2x 9.8x 12.5x 11.4x Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. Median Acquisition Premiums 1-W eek Premium 4-Week Premium 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM Premium 1-Week 38.4% 39.2% 41.2% 47.3% 44.9% 35.3% 26.2% 32.3% 27.5% 29.3% 37.4% 41.3% 4-Week 42.3% 47.2% 49.0% 53.1% 47.3% 41.8% 29.6% 36.1% 30.3% 31.3% 41.0% 43.0% Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 7
  • 10. U.S. M&A Activity (cont'd) Private-Equity Transactions U.S. M&A Activity (cont'd) Private-equity transaction activity continues to significantly lag the prior-year periods, especially for transactions over $750 million. For the month, there were just 47 private-equity transactions, representing a year-over-year decline of 73.6%, while the total dollar volume declined 18.2%. Year-to-date, the total number of transactions is down 53.2%, with each of the three size bands all registering a 50% or greater decline. U.S. Private-Equity Activity Detail NUMBER OF DEALS DEAL VALUE % Chg. % Chg. 2009 '09 vs. '08 '09 vs. '08 2007 2008 2007 2008 2009 FEBRUARY Middle-Market 57 85 24 (71.8%) $9,069 $13,382 $1,049 (92.2% ) Monthly Average 82 71 53 (26.1%) $10,648 $11,243 $5,681 (49.5% ) > 750M 18 2 1 (50.0%) $75,037 $3,183 $12,500 292.7% – – – – Undisclosed 101 91 22 (75.8%) Total Deals 176 178 47 (73.6%) $84,107 $16,565 $13,549 (18.2%) Monthly Average 184 183 120 (34.5%) $52,295 $47,227 $17,189 (63.6% ) YTD Middle-Market 115 159 77 (51.6%) $17,919 $20,168 $3,163 (84.3% ) > 750M 27 11 3 (72.7%) $95,141 $20,076 $27,700 38.0% – – – – Undisclosed 211 185 86 (53.5%) Total Deals 353 355 166 (53.2%) $113,060 $40,244 $30,863 (23.3%) LTM Middle-Market 978 855 632 (26.1%) $127,771 $134,920 $68,176 (49.5% ) > 750M 130 146 46 (68.5%) $499,773 $431,803 $138,094 (68.0% ) – – – – Undisclosed 1,103 1,198 762 (36.4%) Total Deals 2,211 2,199 1,440 (34.5%) $627,544 $566,723 $206,269 (63.6%) Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. U.S. Private-Equity Activity Deal Value Number of Deals Undisclosed Middle Market >$750M Deal Value ($ in billions) 2,242 2,500 $800 2,197 2,021 1,828 2,000 1,629 $600 1,358 1,500 1,221 1,071 1,012 1,010 $400 1,000 686 355 $200 166 500 0 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2/08 2/09 Number YTD YTD of Deals >$750M 23 32 29 21 26 33 74 92 117 162 54 11 3 Middle Market 347 521 717 530 588 695 973 963 1,039 811 714 159 77 Undisclosed 316 459 475 459 457 630 781 966 1,086 1,224 861 185 86 $89 $128 $130 $85 $96 $131 $250 $331 $572 $640 $216 $40 $31 Deal Value Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 8
  • 11. U.S. M&A Activity (cont'd) Transaction Detail U.S. M&A Activity (cont'd) There continues to be a shift in the composition of acquirers, with private-equity firms continuing to account for a decreasing percentage of the overall market. Private equity currently accounts for just 11.3% of transactions for the LTM period, compared with 15.2% for all of 2007 and down slightly from 11.4% in 2008. Public companies still account for the largest number of acquirers in middle-market transactions, at 33.2%, although this number has declined in recent months due to the sharp drop in equity prices. Foreign acquirers and private companies both continue to increase their share of the total compared with the year-ago period, although foreign acquirers have slowed down in recent months. Private companies continue to account for the majority (54.7%) of all transaction targets, although the number of deals involving divestitures and public companies has been increasing steadily. Public-company targets now represent 12.4% of the total, a level not seen since the last bear market in 2002, while private-equity portfolio company exits continue to represent a shrinking percentage of the total. U.S. Middle-Market M&A Activity by Acquiror Percent of Deals Private Private Equity Foreign Public 100.0% 75.0% 50.0% 25.0% 0.0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM Private 9.7% 17.1% 35.3% 21.6% 21.3% 26.2% 19.2% 17.5% 22.0% 22.5% 30.2% 32.0% 77.9% 61.8% 43.0% 52.6% 51.5% 47.4% 50.9% 46.7% 40.4% 40.7% 34.2% 33.2% Public Private Equity 4.9% 9.1% 8.5% 8.1% 11.5% 14.1% 16.3% 18.6% 21.0% 15.2% 11.4% 11.3% 7.5% 12.1% 13.2% 17.6% 15.6% 12.3% 13.5% 17.3% 16.5% 21.6% 24.2% 23.5% Foreign Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. U.S. Middle-Market M&A Activity by Target Percent of Deals Private Priv ate Equity Divestiture Public 100.0% 75.0% 50.0% 25.0% 0.0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM Private 51.2% 48.1% 58.9% 39.8% 36.4% 30.8% 40.1% 54.7% 54.8% 56.5% 55.5% 54.7% 12.3% 18.8% 13.9% 13.7% 12.8% 11.5% 7.8% 8.0% 9.3% 10.7% 11.3% 12.4% Public 1.0% 0.2% 2.3% 4.3% 5.2% 6.5% 9.1% 8.6% 8.6% 7.3% 4.3% 3.8% Private Equity 35.5% 33.0% 24.9% 42.2% 45.6% 51.2% 43.0% 28.6% 27.3% 25.4% 28.9% 29.1% Divestiture Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 9
  • 12. U.S. M&A Activity (cont'd) Sector Breakdown U.S. M&A Activity (cont'd) The downturn remains steep and broad, with virtually no sector left untouched. For both the overall market and the middle market, not a single industry of the 14 we track is currently experiencing an increase in the number of transactions. The consumer products sector has suffered the largest decline in the number of transactions, with a 63.2% decline in middle-market deals and a 62.1% decline overall. In terms of dollar volume, none of the 14 segments in the middle market had a year-over-year increase, with the consumer products segment experiencing a 90.8% decline. Looking at the broader market, 12 of the 14 industry categories have experienced lower year-to-date dollar volume. The healthcare and financial segments are the only segments to show an increase in activity compared to last year. 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 356 1,699 335 1,727 354 1,271 62 268 41 170 Computers & Electronics 694 1,791 595 1,698 703 1,634 123 324 117 259 Construction/Building 85 406 77 394 72 290 14 66 9 39 Consumer Products 76 293 110 449 87 240 19 58 7 22 Consumer Services 240 695 172 660 157 417 35 84 31 65 Energy & Power 290 681 304 719 398 709 68 122 49 80 Financial 274 882 268 996 248 758 35 150 24 98 Food & Beverage 56 212 39 201 45 169 10 35 5 19 Healthcare 426 957 345 930 430 861 84 162 61 129 Industrial Products 111 495 116 493 127 415 22 78 10 40 Materials 160 530 185 640 220 573 25 95 25 73 Real Estate/Property 278 546 236 554 203 430 36 78 29 61 Telecommunications 215 488 156 447 158 336 26 64 14 32 Transportation 70 222 58 247 56 189 11 42 6 22 Other 60 222 60 222 65 181 14 44 5 14 TOTAL 3,391 10,119 3,056 10,377 3,323 8,473 584 1,670 433 1,123 $ VOLUME (M) Business Services $25,193 $60,900 $25,729 $91,137 $20,540 $28,512 $3,608 $6,940 $517 $517 Computers & Electronics $43,816 $115,629 $42,188 $119,338 $28,885 $76,728 $5,300 $14,420 $3,526 $4,301 Construction/Building $9,777 $32,124 $7,610 $45,379 $5,423 $8,625 $1,473 $3,813 $356 $356 Consumer Products $7,549 $17,792 $7,178 $28,675 $5,313 $21,448 $1,959 $1,959 $180 $180 Consumer Services $27,509 $129,702 $21,125 $87,050 $13,157 $26,896 $2,791 $3,736 $1,251 $3,101 Energy & Power $34,728 $160,737 $43,974 $210,528 $47,956 $119,497 $9,256 $15,428 $2,757 $2,757 Financial $33,470 $177,328 $32,445 $209,148 $25,951 $155,137 $3,021 $27,312 $940 $39,640 Food & Beverage $7,768 $11,849 $3,679 $30,195 $3,967 $98,577 $845 $2,069 $364 $364 Healthcare $35,092 $177,421 $32,799 $141,275 $28,430 $136,523 $6,036 $9,070 $3,198 $76,218 Industrial Products $9,211 $24,777 $13,985 $46,378 $9,267 $11,217 $2,121 $3,021 $640 $640 Materials $19,093 $90,262 $22,845 $100,474 $14,665 $70,445 $2,673 $12,686 $1,374 $7,808 Real Estate/Property $31,936 $164,666 $35,402 $136,942 $23,420 $37,519 $4,740 $7,705 $1,390 $2,196 Telecommunications $18,692 $205,017 $18,529 $83,155 $9,701 $81,557 $1,566 $1,566 $794 $794 Transportation $7,766 $22,275 $8,916 $31,226 $4,982 $13,068 $1,244 $1,244 $1,163 $1,163 Other $4,732 $9,329 $6,152 $19,454 $5,685 $7,657 $664 $664 $190 $190 TOTAL $316,333 $1,399,808 $322,557 $1,380,355 $247,340 $893,406 $47,295 $111,631 $18,638 $140,223 ENT. VALUE/ EBITDA Business Services 12.0x 12.5x 11.3x 14.1x 13.3x 12.6x 0.0x 10.3x 17.7x 17.7x Computers & Electronics 17.9x 17.0x 16.7x 16.8x 15.9x 15.8x 0.0x 0.0x 10.0x 10.0x Construction/Building 0.0x 11.5x 10.6x 11.3x 8.2x 8.2x 0.0x 0.0x 0.0x 0.0x Consumer Products 13.4x 11.9x 10.5x 12.2x 6.4x 10.1x 0.0x 0.0x 0.0x 0.0x Consumer Services 14.0x 13.9x 10.7x 13.4x 11.2x 12.8x 0.0x 0.0x 0.0x 0.0x Energy & Power 12.4x 11.5x 11.7x 11.8x 17.5x 14.1x 0.0x 0.0x 7.4x 7.4x Financial 13.4x 12.7x 11.4x 11.7x 10.5x 10.7x 17.7x 23.1x 5.0x 5.0x Food & Beverage 7.3x 7.3x 0.0x 19.7x 12.8x 15.1x 0.0x 17.4x 5.8x 5.8x Healthcare 14.4x 16.7x 13.9x 15.4x 15.0x 17.3x 8.7x 10.3x 0.0x 17.3x Industrial Products 10.6x 12.9x 0.0x 10.8x 15.4x 15.4x 0.0x 0.0x 0.0x 0.0x Materials 12.5x 13.0x 10.7x 10.9x 9.4x 12.1x 18.0x 10.8x 6.5x 5.0x Real Estate/Property 11.1x 16.4x 15.7x 16.4x 12.2x 13.0x 0.0x 0.0x 6.6x 11.8x Telecommunications 15.3x 15.4x 15.9x 15.2x 15.8x 12.3x 0.0x 0.0x 0.0x 0.0x Transportation 18.0x 14.1x 12.7x 13.2x 3.2x 5.4x 0.0x 0.0x 3.9x 3.9x Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 10
  • 13. U.S. M&A Activity (cont'd) Cross-Border Transactions U.S. M&A Activity (cont'd) Overall U.S. cross-border activity and middle-market cross-border 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 were computers/electronics, healthcare, and mining. The most active country buying in the United States is Canada, followed by the United Kingdom and Germany. The top foreign industries targeted by U.S. buyers were technology, business/professional services, and mining. The top country targeted by U.S. buyers was Canada, followed by the United Kingdom and Japan. U.S. Middle-Market Cross-Border M&A by Number of Deals Number of Deals Deal Value Outbound Inbound Inbound Deal Value Outbound Deal Value ($ in billions) 2,500 $120 2,060 2,006 $100 1,919 1,881 2,000 1,837 1,699 1,602 $80 1,078 1,439 1,410 1,413 1,362 1,500 1,301 1,271 1,255 1,116 $60 1,050 1,018 1,013 786 864 1,000 850 679 $40 620 500 $20 Number 0 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM of Deals Inbound Middle Market 383 471 682 572 442 366 435 527 514 603 737 687 Undisclosed 296 393 396 446 408 254 351 523 741 810 625 584 Value $37.2 $47.6 $65.2 $38.9 $30.2 $24.3 $40.6 $44.5 $57.5 $64.6 $53.5 $47.8 Outbound Middle Market 755 838 867 671 553 521 689 744 810 1,059 1,064 966 Undisclosed 944 999 1,052 768 563 492 612 666 792 947 996 915 Value $55.6 $76.3 $72.0 $49.0 $36.7 $38.5 $57.5 $61.0 $70.8 $104.4 $90.6 $74.4 Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 11
  • 14. U.S. M&A Activity (cont'd) Cross-Border Transactions U.S. M&A Activity (cont'd) U.S. Cross-Border M&A — Number of Transactions INBOUND OUTBOUND TOTAL 2009 YTD 2009 YTD 2007 2008 2007 2008 2009 YTD 2007 2008 Middle Market 603 737 67 1,059 1,064 105 1,662 1,801 172 > $750M 93 54 7 65 39 3 158 93 10 Undisclosed 810 625 83 947 996 115 1,757 1,621 198 Total 1,506 1,416 157 2,071 2,099 223 3,577 3,515 380 U.S. Cross-Border M&A — Transaction Value INBOUND OUTBOUND TOTAL 2009 YTD 2009 YTD 2007 2008 2007 2008 2009 YTD 2007 2008 Middle Market $64,630 $53,480 $3,269 $104,400 $90,624 $5,055 $169,030 $144,104 $8,324 > $750M $297,267 $232,367 $20,831 $150,092 $95,211 $3,044 $447,358 $327,578 $23,875 Undisclosed Total $361,897 $285,847 $24,099 $254,491 $185,835 $8,100 $616,388 $471,682 $32,199 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 Target Country Deals Computers & Electronics 33 Canada 45 Computers & Electronics 26 Canada 35 Healthcare 25 United Kingdom 26 Professional Services 16 United Kingdom 10 Mining 15 Germany 12 Mining 11 Japan 8 Professional Services 12 Japan 10 Healthcare 9 Germany 7 Oil & Gas 9 Switzerland 9 Telecommunications 7 China 7 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 Target 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 12
  • 15. U.S. Financing Markets Debt Capital Markets U.S. Financing Markets The tight credit markets continue to force buyers to put up significantly more cash to finance LBO transactions. The average equity contribution for 2008 rose to 40.2% for transactions involving companies with EBITDA of less than $50 million. For the second half of 2008, this number rose 42.9%. The IPO backlog continues to shrink, as a record numbers of filings are withdrawn or postponed. Loan pricing is up significantly due to the near absence of institutional investors and heading higher as a result of the current turmoil. For 2008, the average spread of LBO loans was LIBOR +364, up from +270 in 2007. For transactions with over $50 million of EBITDA, the spread was +338, compared with +270 in 2007. For transactions with less than $50 million of EBITDA, the spread jumped from +292 in 2007 to +431 in 2008. Average Equity Contribution 50.0% 42.9% 40.8% 41.9% 40.2% 39.7% 37.9% 36.3% 36.1% 38.3% 36.7% 35.4% 40.0% 34.2% 34.1% 32.4% 32.1% 31.0% 31.5% 29.9% 29.9% 30.3% 28.9% 29.2% 29.6% 30.0% 26.8% 30.0% 25.2% 20.0% 10.0% 0.0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2H08 Left Column - less than $50 million EBITDA Right Column - more than $50 million EBITDA Source: S&P’s Leveraged Lending Review. LBO Debt Multiples 7.0x Series7 Series1 6.2x 5.7x 5.6x 6.0x 5.4x 5.4x 0.8x 5.2x 4.9x 4.9x 4.9x 0.4x 4.8x 4.8x 4.8x 4.6x 4.7x 4.6x 4.5x 0.7x 4.5x 5.0x 1.7x 4.3x 4.0x 4.2x 4.1x 4.1x 4.1x 4.0x 0.4x 1.3x 0.6x 0.8x 3.8x 1.2x 2.2x 1.3x 0.8x 1.6x 0.8x 1.6x 4.0x 1.3x 1.4x 3.4x 0.7x 0.7x 0.8x 1.0x 0.8x 1.8x 1.4x 1.5x 0.6x 3.0x 5.2x 5.4x 4.7x 4.2x 3.9x 4.2x 3.7x 4.1x 2.0x 3.6x 4.0x 3.6x 3.2x 3.5x 3.3x 3.4x 3.2x 3.4x 3.3x 3.3x 3.2x 3.2x 3.0x 2.7x 2.8x 2.7x 2.5x 1.0x 0.0x 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2H 2008 Left Column = Less than $50MM EBITDA Right Column = More than $50MM EBITDA Source: S&P’s Leveraged Lending Review. Average Spread of LBO Loans Libor EBITDA of $50M or less All LBOs EBITDA More than $50M +450 441 +400 400 377 +350 +300 +250 +200 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2H08 Source: S&P’s Leveraged Lending Review. 13
  • 16. U.S. Financing Markets (cont'd) Equity Capital Markets U.S. Financing Markets (cont'd) IPO Pricings by Sector — Last 4 Quarters: 24 Total Deals Consumer Q4 2008 1 1 Q3 2008 Healthcare 3 4 Q1 2008 Other 10 11 Tech 5 Q2 2008 10 Finance 3 IPO Filings by Sector — Last 4 Quarters: 98 Total Deals Oil & Gas Consumer Q4 2008 4 Q1 2008 6 8 24 Other 30 Finance 15 Q3 2008 31 Healthcare 19 Tech Q2 2008 24 35 Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. IPO Backlog Number of Deals Backlog Pricings Filings Withdrawn 140 40 124 35 120 109 104 30 100 88 86 84 83 82 25 80 64 64 20 61 60 59 58 56 60 50 48 15 43 35 36 40 32 31 10 20 5 0 0 06/07 07/07 08/07 09/07 10/07 11/07 12/07 01/08 02/08 03/08 04/08 05/08 06/08 07/08 08/08 09/08 10/08 11/08 12/08 01/09 02/09 03/09 Pricings 17 21 11 2 22 19 12 4 4 3 2 4 4 2 1 0 0 1 0 0 1 0 Filings 13 27 37 22 8 16 16 15 3 8 10 16 9 14 11 6 1 4 3 3 0 0 Withdrawn 7 2 8 3 11 16 8 12 9 7 4 5 5 1 5 6 12 8 11 2 3 1 Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 14
  • 17. European M&A Activity Transaction Detail European M&A Activity European M&A activity for February was extremely weak, with double-digit declines across the board. There was a 44.5% decline in the number of deals and a 60.3% decline in dollar volume compared with last year. The total dollar volume of $46.1 billion was more than 56% below the trailing-12-month monthly average of $103.9 billion. European middle-market activity was also very weak in February, with the number of deals down 53.6%, while the dollar volume declined 73.3% compared with the corresponding period last year. European M&A Activity Detail NUMBER OF DEALS DEAL VALUE % Change % Change 2009 '09 vs. '08 '09 vs. '08 2007 2008 2007 2008 2009 FEBRUARY < $50M 297 409 218 (46.7%) $4,337 $5,632 $2,311 (59.0% ) $50M-$250M 118 153 62 (59.5%) $12,994 $18,699 $6,414 (65.7% ) $250M-$750M 64 71 14 (80.3%) $28,028 $30,632 $5,924 (80.7% ) (53.6%) Total Middle-Market 479 633 294 $45,359 $54,962 $14,648 (73.3%) Monthly Average 512 571 471 (17.5%) $43,312 $52,393 $34,860 (33.5% ) > 750M 42 27 11 (59.3%) $95,437 $61,029 $31,440 (48.5% ) – – – – Undisclosed 592 746 476 (36.2%) Total Deals 1,113 1,406 781 (44.5%) $140,795 $115,991 $46,088 (60.3%) Monthly Average 1,174 1,332 1,167 (12.4%) $139,377 $188,901 $103,976 (45.0% ) YTD < $50M 566 759 492 (35.2%) $8,458 $10,001 $4,980 (50.2% ) $50M-$250M 254 310 119 (61.6%) $28,171 $36,670 $12,767 (65.2% ) $250M-$750M 104 125 30 (76.0%) $43,285 $53,465 $13,912 (74.0% ) Total Middle-Market 924 1,194 641 (46.3%) $79,914 $100,136 $31,658 (68.4%) > 750M 69 61 21 (65.6%) $154,420 $118,292 $66,706 (43.6% ) – – – – Undisclosed 1,183 1,508 1,119 (25.8%) (35.5%) (55.0% ) Total Deals 2,176 2,763 1,781 $234,334 $218,428 $98,364 LTM < $50M 3,888 4,148 3,827 (7.7%) $52,585 $61,432 $49,927 (18.7% ) $50M-$250M 1,606 1,895 1,350 (28.8%) $187,671 $220,948 $156,582 (29.1% ) $250M-$750M 650 812 480 (40.9%) $279,484 $346,335 $211,811 (38.8% ) Total Middle-Market 6,144 6,855 5,657 (17.5%) $519,741 $628,715 $418,320 (33.5%) > 750M 422 533 296 (44.5%) $1,152,784 $1,638,094 $829,388 (49.4% ) – – – – Undisclosed 7,518 8,600 8,054 (6.3%) Total Deals 14,084 15,988 14,007 (12.4%) $1,672,525 $2,266,809 $1,247,708 (45.0%) Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 15
  • 18. European M&A Activity (cont'd) Annual Transactions European M&A Activity (cont'd) European M&A Activity Middle Market > $750M # of Deals Deal Value Deal Value Number of Deals ($ in billions) 20,000 $2,400 14,810 14,618 14,227 13,676 15,000 $1,800 13,041 12,940 12,019 11,369 10,657 9,914 8,526 10,000 $1,200 5,000 $600 2,763 1,781 0 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 YTD YTD Number 2/08 2/09 of Deals >$750M 163 300 356 162 172 149 198 287 392 541 336 61 21 Middle Market 4,140 5,400 6,577 5,721 5,144 4,653 4,920 5,919 6,186 6,585 6,210 1,194 641 Undisclosed 4,223 6,319 7,685 7,158 6,053 5,112 5,539 6,734 7,098 7,684 7,681 1,508 1,119 $773 $1,498 $1,536 $677 $639 $624 $840 $1,221 $1,700 $2,283 $1,368 $218 $98 Deal Value Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. . 16
  • 19. European M&A Activity (cont'd) Valuation Multiples European M&A Activity (cont'd) For middle-market deals over the past 12 months, the EBITDA multiple continues to decline and is currently at 8.7x, compared with 9.5x for 2008. The EBITDA multiple for all European transactions also continues to decline, coming in at 9.4x for the LTM period, down from 10.2x at the end of 2008 and 11.5x for 2007. One-week and four-week acquisition premiums continue to be at near-record highs due to the weak equity markets. European Middle-Market Valuation Multiples 14.0x Middle Market Overall Market 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM Middle Market 9.9x 8.8x 8.7x 8.6x 8.3x 8.6x 8.7x 9.7x 11.0x 10.6x 9.5x 8.7x Overall Market 10.2x 9.0x 8.9x 8.9x 8.5x 8.7x 8.8x 10.1x 11.3x 11.5x 10.2x 9.4x Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. European Middle-Market Valuation Multiples 14.0x < $50M $50M-$250M $250M-$750M 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM Size < $50M 7.8x 7.9x 7.3x 7.8x 7.9x 8.2x 10.5x 9.6x 8.1x 7.6x $50M-$250M 9.9x 9.4x 9.2x 8.7x 9.2x 10.5x 10.7x 11.2x 9.0x 9.0x $250M-$750M 9.3x 9.4x 10.8x 10.3x 9.6x 11.8x 12.3x 12.3x 12.2x 10.9x Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. European Middle-Market Median Acquisition Premiums 35.0% 1-Week Premium 4-Week Premium 30.0% 25.0% 20.0% 15.0% 10.0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 LTM 1-Week Premium 23.2% 23.7% 26.3% 23.3% 23.0% 17.0% 17.1% 16.3% 14.5% 19.1% 30.0% 29.8% 4-Week Premium 31.3% 30.0% 32.1% 26.4% 23.3% 22.1% 19.3% 21.1% 17.7% 22.6% 31.0% 31.6% Source: Dealogisc and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 17
  • 20. European M&A Activity (cont'd) Private-Equity Transactions European M&A Activity (cont'd) European private-equity activity is down substantially, mirroring the activity in the United States. For the month, the total number of deals was just 56, down 66.5% from the corresponding period last year. The dollar volume for the month was just $1.6 billion, a decline of 89.7% from the $15.7 billion in February 2008. European Private-Equity Activity Number of Deals 2,229 Deal Value Undisclos ed Middle Market >$750M Deal Value ($ in billions) 2,107 2,031 2,250 $500 2,000 $400 1,584 1,750 1,558 1,369 1,367 1,500 1,297 1,271 $300 1,250 955 1,000 $200 646 750 337 500 $100 122 250 0 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 YTD YTD 2/08 2/09 Number of Deals >$750M 12 22 29 21 31 39 62 88 103 149 61 9 1 Middle Market 422 554 767 714 709 717 829 957 864 930 679 133 49 Undisclosed 224 379 571 562 531 613 667 1,062 1,064 1,150 844 195 72 $44 $75 $91 $74 $95 $134 $213 $275 $353 $444 $177 $29 $4 Deal Value Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 18
  • 21. Emerging Markets M&A Activity Emerging Markets M&A Activity Latin American M&A Activity Number of Deals Deal Value Middle Market >$750M # of Deals Deal Value ($ in billions) 1,500 $140 1,130 1,255 $120 1,250 $100 884 854 1,000 749 $80 750 625 618 575 565 520 $60 449 500 $40 97 250 54 $20 0 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 YTD YTD Number 2/08 2/09 of Deals >$750M 15 18 34 8 13 8 13 13 30 33 37 4 5 Middle Market 363 424 389 310 202 290 329 310 438 665 590 50 20 Undisclosed 247 412 326 300 234 222 233 242 416 557 503 43 29 Deal Value $68 $76 $94 $47 $38 $30 $59 $48 $130 $106 $118 $10 $8 Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. Asian M&A Activity Deal Value Undisclosed Middle Market >$750M Deal Value Number of Deals ($ in billions) 15,059 14,912 16,000 $900 $800 13,500 12,161 $700 11,000 9,814 $600 8,500 7,053 $500 5,844 5,485 5,269 5,137 $400 6,000 3,990 $300 2,519 2,453 3,500 1,677 $200 1,000 $100 Number -1,500 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 YTD YTD $0 of Deals 2/08 2/09 >$750M 27 58 73 51 50 47 86 105 157 200 149 30 12 Middle Market 1,549 2,525 3,421 3,241 3,770 3,583 5,045 7,130 8,975 11,287 11,068 1,784 1,225 Undisclosed 943 1,407 1,991 1,845 2,024 1,639 1,922 2,579 3,029 3,425 3,842 639 440 Deal Value $124 $305 $388 $254 $201 $226 $397 $520 $691 $842 $724 $124 $65 Source: Dealogic and William Blair & Company, L.L.C. Mergers and Acquisitions market analysis. 19
  • 22. Select William Blair & Company Transactions Select William Blair & Company Transactions CLOSE DEAL DATE TARGET TARGET DESCRIPTION ACQUIROR ACQUIROR DESCRIPTION VALUE Photo Therapeutics, Limited 2/27/09 Aesthetic dermatological devices PhotoMedex, Inc. Offers a wide range of medical products and $13.3 services Payformance Corporation 2/9/09 Healthcare IT ABS Capital Partners Private-equity firm ND Saleen, Inc. 1/30/09 Manufacturer of high-performance niche Hancock Park Associates Manufacturer of automotive parts ND automobiles and aftermarket parts. Niman Ranch 1/23/09 Producer of all-natural fresh beef, pork, Natural Food Holdings Holding company $28.0 and lamb, as well as prepared foods Xactly Corporation 1/22/09 Centive, Inc Provider of on-demand sales Leading software-as-a-service (SaaS) ND compensation solutions provider of on-demand sales compensation solutions Dougherty Funding, LLC 12/31/08 Gateway Ethanol Ethanol plant production DIP Lender 63.0 Pensar Electronic 12/22/08 Provider of low-to-medium volume, high LaBarge, Inc. Engages in the design, manufacture, and $45.0 Solutions, LLC mix (broad line of relatively shorter run assistance of electronic, electromechanical, SKUs) outsourced electronic solutions and interconnect systems on a contract across a diverse range of end markets basis Sorex Holdings Ltd. BASF SE 12/19/08 Independent manufacturer and supplier BASF is the world’s leading chemical ND (Indigo Capital LLP) of a broad range of chemical and company non-chemical pest-control systems TDX Group Limited 12/15/08 Multinational provider of proprietary, Investcorp Technology Technology private equity arm of alternative $110.2 (Blenheim Chalcot) analytics-based arrears management Partners investment manager Investcorp solutions for defaulted consumer debt. Francisco Partners 11/20/08 API Software, Inc. Develops labor cost management Global private-equity firm focused ND applications for hospitals and health exclusively on investments in technology systems companies Stainton Metal Company 11/18/08 Designer, manufacturer and supplier of Valmont Industries, Inc. Global designer and manufacturer of poles ND Limited an extensive range of galvanized and and towers, irrigation equipment and (NVM Private Equity) stainless-steel support structures commercial tubing. Chockstone, Inc. 11/14/08 Loyalty card provider and marketing Heartland Payments Systems, Delivers credit/debit/prepaid card ND services Inc. processing, payroll, check management, and payments solutions The J.M. Smucker Company 11/6/08 Folgers Coffee Company (Procter Produces whole bean, ground, and Manufactures and markets branded food $3,000.0 & Gamble) instant coffees products Molex Incorporated 11/05 Frederick A. Krehbiel Purchase of related-party stockholdings Manufactures and sells electronic $26.7 components 10/31/08 TMG Health, Inc. Business process outsourcing services Health Care Service The largest customer-owned health insurer ND firm providing a variety of administrative Corporation in the United States and the fourth-largest services to the Medicare and Medicaid health insurer in the country overall health plan markets IntelliTax 10/23/08 Tax software company Wolters Kluwer Leading global information services and ND (a division of TRE Financial) publishing company (Platform Partners) EBEWE Pharma Ges.m.b.H 10/17/08 Liba Laboratuarlari Anonim Sirketi Distributor of pharmaceutical products International pharmaceutical company ND Nfg.Kg. for a number of leading international companies within Turkey Coria Laboratories, Ltd. 10/16/08 Pharmaceutical company specializing in Valeant Pharmaceuticals Specialty pharmaceutical company $95.0 research, development and marketing International of dermatology products CBOT Metals Complex 10/8/08 Commodities Exchange NYSE Euronext Securities Exchange ND (a division of CME Group) Wm. Wrigley Jr. Company 10/6/08 Chewing gum company Mars, Inc. & Berkshire Confectionary company $23,100.0 Hathaway Note: Bold denotes William Blair & Company, L.L.C. client. 20
  • 23. Select William Blair & Company Transactions (cont'd) Select William Blair & Company Transactions (cont'd) CLOSE DEAL DATE TARGET TARGET DESCRIPTION ACQUIROR ACQUIROR DESCRIPTION VALUE MicroCal, LLC 9/29/08 Designs and manufacturers GE Healthcare, Ltd. Provides a variety of medical products and ND microcalorimeters used in drug discovery healthcare information technologies and the life sciences ChartOne, Inc. 9/23/08 Provider of medical record workflow HealthPort Technologies, LLC Provides healthcare information technology ND (Warburg Pincus) solutions to hospitals and physician clinics and strategic solutions Allied Richard Bertram 9/22/08 Aftersales service and marketing of new Ferretti, SpA Luxury yacht dealer ND Marine Group and pre-owned motoryachts MedVenture Technology Corp. 8/29/08 Medical outsource solutions provider Ampersand Ventures Private equity ND International energy and metals exchange CME Group 8/22/08 New York Mercantile Exchange International commodities exchange $7,914.0 Habeas 8/22/08 Provides email reputation intelligence ReturnPath Provides integrated e-mail reputation ND management and deliverability services Bemrose Booth 8/01/08 Specialist in security printing and American Industrial Acquisition Investment fund ND associated services Corporation Skywire Software LLC 7/31/08 Provides software and services to the Oracle Corporation World’s largest enterprise software ND (Hall Financial Group) insurance industry company BPO operations of Skywire 7/21/08 Provides BPO services such as print and KUBRA Data Transfer, Ltd Develops and markets customer ND Software mail services, Web publishing, electronic communication management (CCM) bill payment, and Web hosting solutions NetSpend Corporation 7/15/08 Skylight Financial, Inc. Issuer, acquirer, marketer, and processor Leading marketer and processor of prepaid ND (JLL Partners) of debit accounts and stored-value cards payment solutions 180 Connect 7/08/08 Provides residential media installation DirecTV Group Provides direct-to-home digital television $105.0 services for cable and satellite providers services and multichannel video programming distribution CelluTissue Holdings, Inc. 7/02/08 Atlantic Paper & Foil Convertor and distributor of tissue and Manufactures and markets a variety of ND (Weston Presidio) paper products specialty tissue hard rolls and machine- glazed paper Belron SA 6/30/08 Diamond Glass Provider of auto glass replacement World’s leading vehicle glass repair and $50.0 services replacement company FirstService Security 6/30/08 Provides full suite of integrated security ADT Security, a Division Provides electronic security and surveillance $187.5 (First Service Corporation) services of Tyco International systems Signicast Corporation 6/30/08 Investment caster for top OEM The Pritzker Group Middle-market private-equity firm ND manufacturers High End Systems, Inc. 6/10/08 Manufacturer of automated lighting Barco nv Designs and develops imaging products $55.0 (Generation Partners) solutions for a variety of industries Premier Research 6/06/08 Full-service, global CRO providing clinical ECI Partners U.K. private-equity group $220.0 Group plc research and development services AIH Acquisition, LLC 6/04/08 American IronHorse Designs and manufactures customized Dealer of high-end, customized motorcycles ND Motorcycle Company, Inc. motorcycles, including cruisers and choppers Accuro Healthcare Solutions, 6/03/08 Provides revenue management solutions MedAssets, Inc. Provides integrated spend management and $350.0 Inc. (Welsh Carson Anderson for healthcare providers revenue cycle solutions for healthcare & Stowe) providers The Hi-Tech Group, Inc., 4/04/08 Provides outsourced design and Parker Hannifen Manufactures motion and control ND (Red Diamond Capital, Century manufacturing services for the medical technologies and systems Park Capital Partners) device industry National Computer Print, Inc. 4/01/08 Provides personalized, time-sensitive, and Lion AVI Holdings, LLC Joint venture of private-equity firms Lion ND (GTCR Golder Rauner, LLC) confidential business communications Equity Partners Holdings, LLC and Access Value Investors LLC Optimal Solutions 3/31/08 High-end SAP consulting and staffing firm Tailwind Capital Middle-market private-equity firm ND Integration, Inc. Ranir, LLC 3/21/08 Manufactures a broad spectrum of private- Kayak Holdings, LLC Investment group ND label oral care products Williams Foods, Inc. 3/11/08 Produces dry seasonings, sauce mixes, C.H. Guenther & Son, Inc. Produces flours, baking mixes, gravies, ND and meal-enhancing products sauces, and baked products Note: Bold denotes William Blair & Company, L.L.C. client. 21
  • 24. Select William Blair & Company Transactions (cont'd) Select William Blair & Company Transactions (cont'd) CLOSE DEAL DATE TARGET TARGET DESCRIPTION ACQUIROR ACQUIROR DESCRIPTION VALUE nSpired Natural Foods, Inc. 3/06/08 Provides natural and organic mainstream Hain Celestial Group, Inc Produces natural and organic food and ND (American Capital Strategies) food products personal care products DocuData Solutions, LLC 3/04/08 Provides document management and BancTec Provides payment processing, document ND media storage services and content processing, and IT services CMS, Inc. (Brown Brothers 3/04/08 Leader in the development, sales, and Elekta AB International medical technology company $75.0 Harriman) support of radiation therapy planning software solutions Tandem Labs 2/29/08 Bioanalytical and immunoanalytical Laboratory Corporation of Clinical laboratories offering a broad range ND (DW Healthcare Partners) contract research organization America Holdings of genomic and esoteric testing services CMC Biologics A/S 2/29/08 Provides process development and Monitor Clipper Partners, LLC Private-equity firm investing in middle- ND manufacturing services, to the market companies in North America and biopharmaceutical and biotechnology Europe. industries Corporate Payments Division 2/29/08 Provides integrated electronic payment SunGard AvantGard LLC Provides software and processing solutions ND of Payformance Corp. solutions, print services, and corporate for financial services, higher education, and payment software systems the public sector ACI Electronics, LLC 2/08/08 Distributor of electronic components used Arrow Electronics, Inc. Global provider of electronic components $60.0 in defense and aerospace applications and computer products Note: Bold denotes William Blair & Company, L.L.C. client. 22
  • 25. William Blair & Company Corporate Finance Contact List William Blair & Company Corporate Finance Contact List Mark Brady Brent Felitto Matt Gooch Brent Gledhill Head of Product Groups Head of Industry Groups Head of European and Asian Banking Head of Corporate Finance 312.364.8853 312.364.8013 +44 20 7868 4545 312.364.8420 mbrady@williamblair.com bfelitto@williamblair.com U.S. voicemail: 312.364.5475 bgledhill@williamblair.com mgooch@williamblair.com Mergers & Acquisitions Special Situations & Restructuring Geoffrey Richards Mark Brady Kelley Drake Sam Tinaglia Phil Reitz Principal and Head of Special Situations Principal and Group Head of Principal Principal Director and Restructuring M&A 312.364.8936 312.364.8086 312.364.8688 312.364.5436 312.364.8853 kdrake@williamblair.com stinaglia@williamblair.com preitz@williamblair.com grichards@williamblair.com mbrady@williamblair.com Brent Smith Steven M. Bernard, CFA Shay Brokemond Principal Director of M&A Market Principal 312.364.5392 Analysis 312.364.8920 bsmith@williamblair.com 312.364.8221 sbrokemond@williamblair.com sbernard@williamblair.com Business Services Commercial & Industrial Consumer & Retail Scott Patterson Mark Brady Paul Hindsley Tim Carroll Chris Spahr Principal and Co-Head of Principal and Co-Head of Principal Principal and Group Head of Principal Business Services Commercial and Industrial 312.364.8576 Consumer & Retail 312.364.8118 312.364.8821 312.364.8853 phindsley@williamblair.com 312.364.8532 cspahr@williamblair.com spatterson@williamblair.com mbrady@williamblair.com tcarroll@williamblair.com Brent Smith James Bertram Brett Paschke Sam Tinaglia Principal Paul Hindsley Director Principal and Co-Head of Principal and Co-Head of 312.364.5392 Principal 312.364.5426 Business Services Commercial and Industrial bsmith@williamblair.com 312.364.8576 jbertram@williamblair.com 312.364.8657 312.364.8086 phindsley@williamblair.com Phil Reitz bpaschke@williamblair.com stinaglia@williamblair.com Director Britt Trukenbrod Shay Brokemond 312.364.8688 Principal Principal preitz@williamblair.com 312.364.8840 312.364.8920 btrukenbrod@williamblair.com sbrokemond@williamblair.com Laura Van Peenan Kelley Drake Director Principal 312.364.8543 312.364.8936 lvanpeenan@williamblair.com kdrake@williamblair.com Financial Services Healthcare Technology Rob Metzger Brent Felitto Karl Palasz Dan Connolly Mark McNay Principal and Co-Head of Principal and Group Head of Principal Principal and Director Financial Services Health Care 312.364.8932 Group Head of Technology 415.986.5596 312.364.8517 312.364.8013 kpalasz@williamblair.com 312.364.8544 mmcnay@williamblair.com rmetzger@williamblair.com bfelitto@williamblair.com dconnolly@williamblair.com Brian Scullion, M.D. Daniel Daul John Kibler Principal Director Principal 312.364.8948 312.364.8457 312.364.8535 bscullion@williamblair.com ddaul@williamblair.com jkibler@williamblair.com Dewey Martinelli Principal 312.364.8085 dmartinelli@williamblair.com Financial Sponsors Private Placements London San Francisco Brandon Lower Jonathan Skinner Kelly J. Martin Matt Gooch Mark McNay Principal and Group Head of Director Director Head of European and Asian Director Financial Sponsors 617.235.7522 312.364.8832 Banking 415.986.5596 212.237.2716 jskinner@williamblair.com kmartin@williamblair.com +44 20 7868 4545 mmcnay@williamblair.com blower@williamblair.com U.S. voicemail: 312.364.5475 James Wildman PIPES Shanghai mgooch@williamblair.com Vice President 312.364.8076 Brian Doyle Fred Johnson Henry Lu jwildman@williamblair.com Director Director Principal +44 20 7868 4547 312.364.8211 +86 216 1357288 bdoyle@williamblair.com fjohnson@williamblair.com hlu@williamblair.com 23
  • 26. Notes Notes 24
  • 27. Disclosures Disclosures THIS IS NOT IN ANY SENSE A SOLICITATION OR OFFER OF THE PURCHASE OR SALE OF SECURITIES. THE FACTUAL STATEMENTS HEREIN HAVE BEEN TAKEN FROM SOURCES WE BELIEVE TO BE RELIABLE, BUT SUCH STATEMENTS ARE MADE WITHOUT ANY REPRESENTATION AS TO ACCURACY OR COMPLETENESS OR OTHERWISE. OPINIONS EXPRESSED ARE OUR OWN UNLESS OTHERWISE STATED. FROM TIME TO TIME, WILLIAM BLAIR & COMPANY, L.L.C. OR ITS AFFILIATES MAY BUY AND SELL THE SECURITIES REFERRED TO HEREIN, MAY MAKE A MARKET THEREIN AND MAY HAVE A LONG OR SHORT POSITION THEREIN. PRICES SHOWN ARE APPROXIMATE. THIS MATERIAL HAS BEEN APPROVED FOR DISTRIBUTION IN THE UNITED KINGDOM AND APPROPRIATELY PASSPORTED COUNTRIES BY WILLIAM BLAIR INTERNATIONAL, LIMITED (“WBIL”), REGULATED BY THE FINANCIAL SERVICES AUTHORITY (FSA), AND IS DIRECTED AT, AND IS ONLY MADE AVAILABLE TO, AUTHORIZED PERSONS AND OTHER PERSONS FALLING WITHIN COB 3.2.5(1)(b) OF THE FSA HANDBOOK, AND MAY NOT BE PASSED ON TO PRIVATE CUSTOMERS IN THE UNITED KINGDOM. ANY UNAUTHORIZED USE IS PROHIBITED. “WBIL” IS REGISTERED IN ENGLAND UNDER COMPANY NUMBER 3619027 AND ITS REGISTERED OFFICE IS LOCATED AT 3 ST HELENS PLACE, LONDON, ENGLAND ECA6AB. “WILLIAM BLAIR & COMPANY” AND ARE REGISTERED TRADEMARKS OF WILLIAM BLAIR & COMPANY, L.L.C. Copyright 2009, William Blair & Company, L.L.C. March 20, 2009 25
  • 28. OFFICE LOCATIONS Headquarters 3 St. Helen’s Place Kamiyacho MT Building 222 West Adams Street London EC3A 6AB 13th Floor Chicago, IL 60606 England 4-3-20 Toranomon 312.236.1600 +44 20 7868 4400 Minato-ku, Tokyo 105-0001 www.williamblair.com Japan 666 Fifth Avenue +81 3 5470 0720 Two International Place 14th Floor Suite 1700 New York, NY 10103 Stockerstrasse 46 Boston, MA 02110 212.237.2700 8002 Zurich 617.235.7500 Switzerland 343 Sansome Street +41 44 287 9020 Putnam Place Suite 1210 100 Great Meadow Road San Francisco, CA 94104 Suite 606 415.986.5596 Wethersfield, CT 06109 William Blair 1.800.596.2028 Suite 516, Level 5 Funds Placement Group L.L.C. 159 Madang Road Chase Tower 450 East 96th Street North Block, Xintiandi 2200 Ross Avenue Suite 500 Shanghai 200021 Suite 4900W Indianapolis, IN 46240 China Dallas, TX 75201 317.581.6127 +86 21 6135 7288 214.665.7900 William Blair & Company, L.L.C. is a global investment firm offering investment banking, asset management, equity research, institutional and private brokerage, and private capital to individual, institutional, and issuing clients. Since 1935, we have been committed to helping clients achieve their financial objectives. As an independent, employee-owned firm, our philosophy is to serve our clients’ interests first and foremost. We place a high value on the enduring nature of our client relationships, the quality of our products and services, and the continuity and integrity of our people. William Blair & Company is based in Chicago, with office locations including Boston, London, New York, San Francisco, Shanghai, Tokyo, and Zurich. For more information, please visit www.williamblair.com.