Moderator Biography – Mr Bill Roman
• Mr. Roman manages Harris Williams & Co.'s Boston Office. Mr. Roman has been engaged in a
variety of advisory and fi
i f d i d financial engagements since commencing hi i
i l i i his investment b ki career
• Previous experience includes Managing Director and head of the Boston Investment Banking
office of Dean Witter Reynolds, Inc. (now Morgan Stanley). Prior to joining Harris Williams &
Co., Mr. Roman was co-Head of I
C M R H d f Investment B ki at T k A th
t t Banking t Tucker Anthony S t (Sutro (now RBC
• Mr. Roman earned an M.B.A. at the Darden Graduate School of Business Administration at the
University of Virginia and a B.A. with Honors at Brown University.
Harris Williams & Co. is one of the country’s leading M&A advisors focused exclusively on the
middle market. Services include private company sales, corporate divestitures, acquisitions,
management buyouts, fairness opinions, restructuring advisory, and complex valuations. Harris
Williams & Co. represents private equity groups as well as publicly and privately held companies
worldwide. The firm was named “Middle Market Investment Bank of the Year” in 2008 by
Investment Dealers’ Digest. For more information visit, www.harriswilliams.com. Member
Panelist Biography – Mr John Black
Mr. John Black
Managing Director • Mr. Black is a Managing Director of H.I.G. Capital and heads the Firm’s Boston Office.
• Since joining H.I.G. in 1996, Mr. Black has led more than 35 middle market transactions
including acquisitions, leveraged recapitalizations and industry consolidations of both public
and private companies.
• Prior to H.I.G., Mr. Black was a senior professional with several leading consulting firms,
working with middle market companies to develop and implement strategic and operational
• Mr. Black is a graduate of Harvard University with a dual degree in applied mathematics and
H.I.G. Capital is a leading global private equity firm focused on management buyouts and
recapitalizations of leading middle market companies as well as growth equity investments. With
more than $7.5 billion of equity capital under management and more than 150 investment
professionals H I G is dedicated to using its in house operating expertise to help talented
management teams and entrepreneurs build companies of significant value. H.I.G. works closely
with its portfolio companies and provides capital, operating and strategic expertise, and a network
of strategic industry contacts to help them become industry leaders. H.I.G. is a significant investor
in over fifty companies in the U.S. and Europe in a diverse range of industries, with combined
annual revenues in excess of $7 billion.
Exclusively Devoted to the Middle Market
Transactions from $25 to $500 million of enterprise value
ti f t illi f t i l
• $10 to $100 million in EBITDA at closing or a “highly visible” path to $10 million in EBITDA
through short-term operating improvements or immediate acquisitions
• H I G specializes in complex transactions where we identify opportunities for value creation
• Over 150 investment professionals, half of which have consulting / operating backgrounds
• Transactions typically have one or more of the following characteristics:
- Corporate divestitures - Contingent / simultaneous mergers
- Owner operated recapitalizations - Bankruptcy (363 or reorganization)
- “Buy and build” consolidation plays - Restructuring
Operational opportunities / t
ti l t iti turnarounds
d - St t l / transactional complexity
Structural t ti l l it
- Industry in transition - Public-to-private transactions
- Managerial transition / deficiency - Growth capital infusions
H.I.G. provides flexible transaction structures to the middle market in a wide range
of business situations where we can create value for all stakeholders by utilizing
our extensive operational and restructuring process experience
H.I.G. Family of Funds
Leading Middle Market Focused Private Investment Firm
Leading Middle Market Focused Private Investment Firm
US / EUR PE Distressed Debt Venture Capital Hedge Fund Real Estate
$2.3 Billion $3.5 Billion $0.5 Billion $1.0 Billion $0.2 Billion
Traditional Buyouts Chapter 11, Plan of Minority Ownership Small and Mid‐ Distressed Situations
Buy‐and‐Build / Reorganization Positions in Rapidly Capitalization Publicly Lender / Developer
Consolidation Chapter 11, §363 Sales Growing Businesses Traded Companies Divestitures
St t i Out‐of‐Court Expansion Capital
E i C it l Limited Liquidity, Non‐
Li it d Li idit N Sectors and Markets
Corporate Divestitures Restructurings / Founder Liquidity Control Situations with Improving
w/ or w/o Turnarounds PIPEs (Acquisition or Fundamentals
Infrastructure Public‐to‐Private Liquidity Financing) Performing and Non‐
Early Stage Institutional Performing Loans
Owner Operator Transactions Funding Long / Short Positions
Recapitalizations Equity Investments
Equity Investments Preferred Stock
Preferred Stock Urban Housing
Public‐to‐Private Purchase of Distressed Investments Asset Repositioning /
Transactions Securities Turnaround
Operational Special Situation Real Estate Dependent
Turnarounds Lending Business (Long‐Term
Add‐On Acquisitions Care, Hotels, Etc.)
$7.5 Billion Under Management
Panelist Biography – Mr Charles Cherington
Mr. Charles Cherington
Managing Partner • Mr. Cherington co-founded Intervale Capital to build on the success of Cherington Capital, a
private equity fi f
i i firm focused on i
d investments i middle market energy companies.
in iddl k i
• Prior to founding Cherington Capital, Mr. Cherington co-founded a smaller fund which also
focused on middle market buyouts.
• Before launching his first fund, Mr. Cherington spent several years as a vice president at the
Vietnam Fund, a British private equity fund.
• Mr. Cherington also worked for CS First Boston in New York and Vietnam.
• Mr. Cherington earned an M.B.A., with honors, from the University of Chicago and a B.A. in
History from Wesleyan University.
Intervale Capital is a private equity firm, based in Houston and Boston, focusing exclusively on
investments in middle-market oilfield services companies and related technologies. Intervale,
together with its predecessor entities, manages eight platform investments, and is currently
investing out of its $280 million fund
• Intervale was founded in 2007 by Curtis Huff and Charles Cherington, two
seasoned energy services investors
Background • Four senior investment professionals operating out of Boston and Houston
Managing P t
i Partners hhave ddeep shared hi t
h d history
– Eight transactions executed together since Intervale formed
• Lower middle market buyouts and growth capital focused on oilfield services
• Only fund building oilfield services platforms with proprietary add-on technologies
• $281MM fund, closed May 2008
• $24MM GP commitment
• 28% of capital invested as of Q1 2009
• 6.8x ROI and 33% IRR track record by Cherington and Huff
Track – $328MM invested generating total value of $2.2B+
• Since 2003, Cherington and Huff have invested $125MM, including over $30MM
Record of personal money, acquiring 10 platform companies and 6 add-ons
• Represents the backbone of the energy industry
Oilfield • Virtually all activities at the wellhead are outsourced
Services • Typical energy funds adopt a multi-sector approach (necessary to invest multi-
billion dollar funds)
• Intervale focuses on an inefficient niche, to seek to maximize returns, not fund size
• Depleted reservoirs require enhanced technology
• New technologies lower the cost of drilling and enable market share capture
• Operators are reluctant to buy from start-ups, creating opportunity for larger
Focused platforms to acquire and deploy new technology
• Innovation and activity, not cycle, drive investment performance
• Intervale buys platforms, builds management and adds technology to achieve
Proven • Target companies in specific verticals with favorable characteristics
Model • Proven history of sourcing deals outside of auctions
• Portfolio companies continue to outperform the oilfield services industry
Panelist Biography – Mr Richard D. Tadler
Mr. Richard D. Tadler
Managing Partner • Mr. Tadler is a Managing Director of TA Associates. Mr. Tadler heads the Boston office
H lh Group, specializing i h l h
i li i in healthcare and service-related b i
d i l d businesses, and h i also a
d he is l
member of TA Associates’ executive committee.
• Prior to joining the firm in 1987, he was a General Partner with Investments Orange Nassau
Inc. He has also served as an Assistant to the President of several divisions at Armco Inc.
• Mr. Tadler received a M.B.A. in from The Wharton School at the University of Pennsylvania,
and a B.S., with distinction, in Finance from the University of Virginia.
Founded in 1968, TA Associates is one of the largest and most experienced private equity firms.
, g p p q y
With offices in Boston, Menlo Park and London, the firm manages $10 billion in capital and has
invested in more than 360 companies. TA Associates provides growth equity capital, leveraged
recapitalization and management buyout financing primarily for technology, financial services,
business services, consumer and healthcare businesses.
Overview of TA Associates
Founded in 1968
Offices in Boston, Menlo Park, London and Mumbai
$12 billion under management; $6 billion in active funds
Investment size generally $60 - $350 million
Invest in profitable growth companies, entrepreneurial managers, proprietary
products or services
Industry focus on technology, financial services, healthcare, business services
and consumer industries
Market Overview – Economic Conditions
Although general market conditions remain challenging, key indicators suggest the
market may have bottomed.
• The quarterly decline in GDP appears to have stabilized in the first quarter.
• The Consumer Confidence Index has rebounded after hitting an all-time low in February 2009.
Economic Conditions – GDP Consumer Confidence and Unemployment1
For the Last Five Years Ended Q1 2009 and Projected Q2 – Q4 2009 For the Months Ended January 2000 – April 2009
($ in trillions)
Real GDP Projected GDP
Actual Year-Over-Year Change 10.0% 160
Projected Year-Over-Year Change Projected Unemployment Rate
1.0% Consumer Confidence
$10.5 -6% 0.0% 0
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2004 2005 2006 2007 2008 2009E
Source: Capital IQ. Source: The Conference Board and U.S. Bureau of Labor Statistics.
Market Overview – Equity Market Conditions
Although still well below record highs, equity markets are up significantly from first
• D it recent market weakness, th S&P 500 h risen 34 0% since M h 9th 2009
Despite t k t k the has i 34.0% i March 9th, 2009.
Equity Market Performance – S&P 500 Equity Market Performance – S&P 500
For the Period of January 1, 2004 – May 28, 2009 For the Period of January 1, 2009 – May 28, 2009
S&P (18.2%) since 2004 Stimulus bill
1,500 signed into law.
1 400 900
700 announces plan
800 Obama budget to bail out
introduced into automakers.
Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jan-09 Feb-09 Mar-09 Apr-09
Source: Capital IQ. Source: Capital IQ.
Market Overview – Debt Market Conditions
The credit market remains tight…
• Over the past 18 months, leverage multiples have contracted materially from peak levels,
availability has evaporated and loan defaults have accelerated
Middle Market Debt/EBITDA Multiples1 Lagging 12-month Default Rate by Number of Issuers
For the Years Ended December 31, 2001 – 2008; H1 and H2 2008; and For the Period of December 1998 – April 2009
Average: 4.3x Recessions
5.0x 4.7x 9.0%
4.0x 3.7x Current: 5.4%
2001 2002 2003 2004 2005 2006 2007 H1 H2 Q1
2008 2008 2009
Source: Standard & Poor’s and industry research. Source: Standard & Poor’s.
For Q1 2009 data represents HW&Co. internal estimate.
(1) For issuers with less than $50 million EBITDA.
Market Overview – Debt Market Conditions (continued)
… but is showing signs of life.
• Investors have bid up the secondary market in recent months, and leverage loan issuances
appear t h
to have rebounded, if only marginally.
b d d l i ll
New Leveraged Loan Issuances and Average Institutional Flow-Name Loan Bid
For the P i d f A il 2
F th Period of April 2, 2008 – M 28 2009
($ in billions; bid price in cents relative to $1.00 par value)
Leveraged Loan Volume (in bill
Low: 63.5 80
Leveraged Loan - New Issuances Avg.
Avg Institutional Flow Name Bid
Source: S&P LCD.
Market Overview – Middle Market M&A Activity
In concert with the general economy, debt markets, and equity markets, M&A
activity has declined significantly from its 2006/2007 peak.
• M&A volume declined throughout 2008 and into the first quarter of 2009 but the market appears
to have found a floor.
Middle Market M&A Transaction Activity1 Middle Market M&A Transaction Activity1
For the Years Ended 1989 – 2008 & for the First Quarters 2008 & 2009 For the Months Ended January 2008 through April 2009
y g p
De al Value ($ in billions)
Deal Value ($ in billions) `
# of Transactions `
# of Transactions
1,000 $20 200
Deal Value Number of Transactions Deal Value Number of Transactions
Source: Thomson Financial – SDC database. Source: Thomson Financial – SDC database.
(1) Includes transactions valued between $25 - $500 million with the target based in the United States (1) Includes transactions valued between $25 - $500 million with the target based in the United States
or Canada. Excludes financial institutions. or Canada. Excludes financial institutions.
Market Overview – Middle Market M&A Valuations
Market forces have pushed M&A multiples down over the past 12 – 18 months.
Average Purchase Price Multiple for Transactions below $500 Million1
For the Years Ended December 31, 2001 – 2008 and YTD 2009
8.0x 8-Year Average: 7.1x 7.8x
6.5x 6.3x 6.3x
2001 2002 2003 2004 2005 2006 2007 2008 2009YTD
Source: Standard & Poor’s and industry research.
(1) Purchase price multiple calculated as average purchase price / pro forma trailing EBITDA.
Market Overview – Buyer Health
Financial and strategic buyers appear to be well positioned to increase acquisition
• Deal activity remains limited despite a significant amount of uninvested private equity
capital and corporate cash on the sidelines.
Private Equity Buyers Strategic Buyers
Cumulative Uninvested Private Equity Capital S&P 500 – Aggregate Cash Balance
For the Years Ended December 31, 1998 – 2008 For the Years Ended December 31, 1998 – 2008
($ in billions) ($ in billions)
$550 $507 Billion $1,200
in Aggregate Cash
sted Private Equity Ca pital___
Significant $350 $800
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Buyouts and Thomson Financial
Financial. Source: CapitalIQ
Public vs. Private Valuation Disconnect
Bottlenecks Focus on Value/Distressed Opportunities
Lack of Debt Financing Maintaining Liquidity