Presentation - World Services Group

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M&A: The Year in Review and a Look AheadOutlook for 2013 – What’s Motivating Buyers?S&P 500 Cash BalancesUninvested PE Capital($ in billions )($ in billions)$2,500$2,000$1,500$1,000$989 $99910%$1,703$1,601$1,49713% 12% 13%$2,06014%25%20%15%10%$600$500$400$300$200$428$501$481$433$373$348$5007%5%$100$02007 2008 2009 2010 2011 2012Cash on Hand Cash as % of Enterprise ValueSource: Capital IQ0%$0Source: Pitchbook2007 2008 2009 2010 2011 2012• Despite recent increased earnings following recession-era cost cutting measures, companies have beenincreasingly challenged to grow revenue organically given the limits of a slowly improving economy• Acquisitions have been tapped to accelerate market share expansion and improve distributionefficiencies• S&P 500 cash balances have reached a ten-year high at over $2.0 trillion, while near zero interest ratesand higher dividend taxation provide incentive for corporate reinvestment• Low leverage and wide availability of capital from financial sponsors and commercial lenders areconducive to increased M&A activityCLEVELAND ● COLUMBUS ● DALLAS10
M&A: The Year in Review and a Look AheadOutlook for 2013 – Strengthening Lending EnvironmentMiddle Market Debt / EBITDA MultiplesMiddle Market Loan Volume(Debt / EBITDA)4.0x3.3x3.3x3.1x3.2x3.3x3.4x3.4x 3.4x3.5x3.1x3.2x2.9x3.0x0.9x0.9x0.8x0.8x0.9x1.2x0.9x0.9x2.5x0.7x0.9x0.9x2.5x0.4x2.0x1.5x1.0x 2.2x 2.1x2.4x 2.3x 2.4x 2.3x 2.2x2.5x2.2x 2.2x2.4x 2.5x0.5x0.0xQ1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12Sub DebtSenior DebtSource: GF Data*Middle Market = transaction enterprise value between $10 and $250 million($ in billions)$40$35.4$36.4$35$31.8$30$26.9$25$20$14.3$15$9.5$9.2$11.5$9.9$10$5.4$5$02003 2004 2005 2006 2007 2008 2009 2010 2011 2012Source: S&P* Middle Market = issuers with EBITDA of ≤ $50 million• Lenders remain hungry to put money to work, and competition can be fierce for high quality credits• Overall debt multiples (senior and sub) have held steady above 3.0x EBITDA in the middle market• A premium of nearly 1.0x EBITDA for deal values above $100 million has emerged• Despite more favorable lending conditions, middle market loan volume was down significantly below2011 levels• A significant maturity wall in 2013 exists which, if coupled with an uptick in M&A activity, could supportan increase in loan volumeCLEVELAND ● COLUMBUS ● DALLAS11
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Page 6 and 7: M&A: The Year in Review and a Look
Page 8 and 9: Q2'95Q1'96Q4'96Q3'97Q2'98Q1'99Q4'99
Page 12 and 13: M&A: The Year in Review and a Look
Page 14 and 15: M&A Valuation MethodologiesJeffrey
Page 16 and 17: Discounted Cash Flow Method16
Page 18 and 19: Simplified FCF Calculation (One Yea
Page 20 and 21: Discounted Cash Flow: Projections
Page 22 and 23: Current Issues Impacting DCF Method
Page 24 and 25: Guideline Public Company Method (GP
Page 26 and 27: Considerations for GPCM (cont’d)
Page 28 and 29: Current Issues Impacting GPC Method
Page 30 and 31: Precedent Transactions• Steps:1)
Page 32 and 33: Current Issues Impacting Precedent
Page 34 and 35: Summary and Other Considerations•
Page 36 and 37: ‣ One of the larger locally owned
Page 38 and 39: ‣ Medical Practice Acquisitions
Page 40 and 41: ‣ Financial Modeling- Valuation-
Page 42: ‣ Accounting - Post-Close- Audit-

Presentation - World Services Group

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